July 30, 2018
By: Andrea Hill
I am pleased to bring you this instalment of my blog, rounding up what’s currently happening in the cannabis industry in Canada and abroad.
Out with the LCBO model, in with private dispensaries for retail sale of cannabis in Ontario
- In a seismic shift to Ontario’s recreational cannabis landscape, the provincial government is set to announce this week that retail sale of cannabis will be conducted by licensed private stores, scrapping the existing model under which cannabis would be sold by a government monopoly.
- The provincial government will continue to control the wholesale and distribution of the product to stores, possibly through the already-established Ontario Cannabis Retail Corporation, and will manage online sales. Having a single party as the wholesaler likely means that licensed dispensaries will be faced with similar wholesale prices.
- Few details of Ontario’s licensing scheme, criteria, and timeline are available yet, but the province will need to move quickly: the Cannabis Act takes effect October 17 and most provinces have been angling to have retail stores open for that date.
- Enthusiasm for the privatized model is running high, despite the last-minute change of plans. In an editorial today, the Globe welcomed the change, calling the new path “responsible and intelligent”, calling the prior government-only approach “condescending, impractical and self-defeating”.
- Aside from reducing workload on the government to find, lease, staff, and outfit 40 stores in time for the October 17 deadline (a goal the Ontario Cannabis Store seemed unlikely to achieve), the privatized model may help put illegal dispensaries out of business by being faster to set up than government stores and by directly incentivizing owners and management teams to make their businesses efficient and inviting.
- If adopted, Ontario would join Alberta, Manitoba, and the Northwest Territories in retailing cannabis exclusively through privatized dispensaries (albeit with a government body as the exclusive wholesaler and online vendor). British Columbia plans to allow cannabis sales through a combination of government-run and privatized stores and online vendors. Saskatchewan and Nunavut will offer both privately-run storefronts and online sales, while Quebec, New Brunswick, Nova Scotia, PEI and the Yukon propose to use a crown corporation for all of their bricks-and-mortar storefronts and online sales.
- Alberta’s requirements for private dispensaries include that they have municipal approval, and that the dispensary not be located within 100 metres of a provincial health care facility, a school, or a parcel of land designated as a school reserve. Alberta dispensaries must also be separate from any other business and must only operate for the purpose of a retail cannabis store.
- Manitoba put out a RFP for cannabis retailers and eventually selected four private companies or consortiums that will sell cannabis in the province. Criteria that the Manitoba government considered included the candidate’s experience owning and operating retail stores in a regulated environment, and the candidate’s proposed store locations, business plan, financial plan, and scalability.
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