By Eric Vengroff, Financial Analyst, Cannabis Daily
As reported by the Globe and Mail this morning, the Ontario government is putting in place a set of regulations that will have widespread implications for both business owners and consumers. These moves will also be major steps in normalizing and legitimizing cannabis acquisition and consumption, shutting down the criminal activity, and allowing all market participants, past and present to get a foothold in the new cannabis economy.
The first move has to do with retail distribution. During the Wednesday news conference, the finance and justice ministers announced that there will be no preset limit on the number of stores that will be eligible to sell recreational cannabis in Ontario. Simultaneously, they also announced that licensed producers (LP’s) will be limited to essentially a factory outlet store. There may be some wiggle room in this limit depending upon the interpretation.
Needless to say, well-capitalized LP’s with the capability to flood the market with their retail outlets and possibly stifle independent retail competition will not be allowed such anti-competitive moves. As I have written in a previous column, I don’t profess to understand the benefits of vertical integration between the farm and the storefront in the case of cannabis, where the government liquor control apparatus – regardless of the province – is in the middle of the supply chain, serving as the sole customer to the grower and sole supplier to the retailer. This latest development will make this argument even harder to stick, I fear.
As a move to reconcile with the ‘informal’ cannabis distribution channels that have persisted for years, dispensaries will be given a shot at operating under a legitimate framework that will enshrine some competitiveness at the street level -provided they shut down now, effectively and apply under the new regime.
The second move concerns consumption. The ministers also announced that the current restrictions on smoking cannabis will be replaced with a more sensible approach that aligns with the Smoke Free Ontario Act, which permits outdoor consumption of tobacco products, of which cannabis can now be included. The Smoke Free Ontario Act permits smoking outdoors, but not within nine metres of most public buildings or within 20 metres of a children’s play area.
These moves appear to be pro-free market and pro-consumer.
Ontario Conservatives have earned the “Progressive” in their name today.
Photo Credit: DXR [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], from Wikimedia Commons