by Eric Vengroff, Financial Analyst

Yesterday, the municipalities of Mississauga and Markham voted to prohibit the opening private cannabis retail stores. Mississauga city council voted 10-2 against and Markham city council voted 12-1 against.   These votes, strong majorities, representing the apparent broad support from the constituent voters, may be a reaction to the sudden changes to the regulations regarding retail cannabis store operation in the province.  As originally set out by the previous Liberal-run Ontario government, only government-monopoly run Ontario Cannabis Stores, approximately 40 in total,  were supposed to be built.  The post-election loss by the Liberals, and election of the Progressive Conservatives, led by now-premier Doug Ford, saw this plan torched, presumably in the name of cost-saving, and will see the entrance of licensed private retail enterprises, with the stated objective of allowing the small entrepreneur to enter this potentially lucrative space.

Municipalities in Ontario have until mid-January to opt in or out of the new program.  As the city of Toronto votes on the matter today, Mayor John Tory called for the right for municipalities to pile on additional restrictions and regulations to what promises to be an already regulation-heavy, burdensome administrative set of processes, systems and periodic reporting.   Municipalities that may have similar concerns appear to be opting out for similar reasons, bypassing the one-time offer of cash from the province of $40 million for cannabis law enforcement.

The generally-stated and oft-repeated feelgood statements of keeping cannabis off the streets and out of the hands of young people, or even letting them see names of retail outlets where it will be sold appears to be the rationale of the votes.  It is feared by those that voted in favour of retail stores that neither objective will be accomplished.  There are no checkpoints to gain access to these cities and residents will be free to travel to other areas in the GTA, albeit at greater inconvenience, and bring pot, in legal quantities into the area.   The thought process also appears to completely sidestep the issue of illegal cannabis entering the municipality, as it most likely already does, without providing any resources or plan to combat it.

In light of the money on the table and the economic incentives to encourage legal commerce in this area, it appears to the writer that these municipalities are needlessly cutting themselves out of future economic opportunity, and if or when they decide to enter the space, they will do so at greater cost to their residents.  This was covered in a previous piece, Dry Counties.