Opinion Editorial
Eric Vengroff, Financial Analyst, Cannabis Daily

About 20 years ago I was in real estate development, living and working in Texas.  On one trip to Dallas for another meeting, I was out for lunch with some associates. It was July, so it was about 105°F by noon, or ‘hotter’n a two-dicked dog’, to borrow a Texas colloquialism and I fancied a beer.  No luck – we had made the unwise travel decision to stop for lunch in a ‘dry’ part of the county.

Being new to this part of the United States, and coming from a country where, with few exceptions, alcoholic beverages were freely available, I asked naively, “Wait, didn’t prohibition end like, sixty years ago?”   “Not in Tarrant county”.  At least in this part anyway.  We were advised that there were other restaurants, where for $1, you can join the local ‘social club’ and be served alcohol, but this place didn’t bother.  No beer.

Texas isn’t alone in having dry counties.  In fact, prohibitions of one kind or another exist in all the counties highlighted on the map below:

I was reminded of this obscure occurrence in my past as I read the Ontario government’s plan for cannabis legalization, particularly as it pertains to the community opt-out provision, allowing communities to ban retail sales of cannabis in their municipalities.  As eloquently pointed out by David Clement in his recent editorial in the Globe and Mail last week, by giving municipal government the independence to decide, the Ford government is “giving cities and towns permission to recreate prohibition at the local level”.  The backward-facing steps decisions by both Markham and Richmond Hill, who both exercised their option on the negative side, will do nothing to reduce consumption amongst their local populations now or in the future – that horse has already left the barn.  What it will do is force their citizens to burn more gas getting to retail outlets in other locales or forcing both licit and illicit delivery from other areas into their city limits.  What it may also do is cut their communities off from the potential growth in businesses in retail, entertainment, restaurants, and hospitality that is sure to follow in coming years.   If I were a proprietor, business owner or landlord operating in these areas, I might be tempted to assemble and take up arms against this, figuratively, but as the saying goes, “you can’t fight city hall.”  Even if you can, the fight will almost certainly be lengthy and costly.  The map shows various examples of these stalwarts of social conservatism for a product legally obtainable in the U.S. since Dec. 5, 1933.

The Ontario government’s additional move to restrict consumption of cannabis to private residential property eliminates the possibility of an Amsterdam-type environment in the immediate term, where cannabis purchase and consumption can occur. This tragic lack of vision may create another underground movement that lacks the education, oversight and commercial regulation that keeps consumers protected.   The coffeeshop model, as advocated by Andre Picard a couple of days ago, where people of consenting age can interact with and consume cannabis, as well as seek advice from true cannabis connoisseurs, makes a lot of sense to me.  Although not without its problems, it shows that after years of battle testing in that city, local cannabis consumers and tourists can peaceably coexist with the community at large without endangering families and young people.

The late reversal in provincial policy with regard to consumer sales – away from a retail monopoly, as partially implemented the former Wynne Liberals to independently-operated storefront retail, is generally seen by experts to be a wise decision, however; having no retail apparatus in place other than online sales seems a needless wasted opportunity, when alternatives could exist.   For instance, as Bruce Linton, CEO of Canopy Growth mentioned in his interview at the MJBizCon Int’l expo last week in Toronto, he thought that the Nova Scotia Liquor Commission may be setting the example for provinces by having both liquor and cannabis sales in the same location.   In this way, the NSLC will be able to measure the substitution effect between alcohol and cannabis sales, by demographic and along other dimensions, no doubt.   Although I agree with his view, it’s also somewhat self-serving from his standpoint, as he expects to play the cannabis beverages card shortly with an additional $4 billion of Constellation Brands’ cash in the Canopy Growth treasury.

As has been illustrated by minds greater than mine, Ontario still has a window of time to make some positive changes in cannabis policy before the legalization date.

The information and opinions presented here are that of the author and do not represent the thoughts and opinions of this website.  The analyst does not own or represent any of the companies listed in this article and receives no compensation from any party mentioned in this article. Readers are urged to do their own research and due diligence and should seek advice from an independent financial advisor before making any financial investment.

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