Everything Wrong With A Government-Run Pot Monopoly
Let’s face it, a government-run pot monopoly is only marginally better than prohibition.
On July 1, 2018, weed will be legal across Canada. As the second country in the world to legalize marijuana across the board, this should be cause for celebration, right? Not if the Ontario government has anything to say about it. Ontario has a long history of bad policy decisions and of privatizing public services. Now, the Ontario government will force hundreds of small business owners out of the market to establish a cannabis retail regime. A monopoly is only marginally better than total prohibition. These are the most fundamental problems with a government pot monopoly:
Denying critical access to medical marijuana
According to plans released by Premier Wynne, The Cannabis Control Board Of Ontario plans to open just 40 storefronts in its first year of operations. With a population of 13.6 million, 40 stores will equate to one store per 340,000 people. While this number will go up to 150 stores by 2020, the major issue remains; how will medical marijuana patients get critical access to their medication in the meantime? To put this in perspective there are 75 dispensaries operating illegally in the city of Toronto alone. What this means is that patients will have to travel great distances to access their prescriptions or use website services where they won’t be able to get individualized customer service.
Lack of product selection
Most economists will tell you that monopolies suffocate innovation. When cannabis becomes exclusively available through licensed producers, customers can expect to see lack of strain diversity. Bill C-45, also known as the Cannabis Act won’t even allow edibles or concentrates until a year after legalization next July. It’s safe to assume that the selection of many of the Cannabis products that have risen as a result of “grey market” companies competing for customer attention will bottleneck. Say goodbye to the vast array of oils, shatter, tinctures and THC pills.
The power to make businesses fail
Niche strains will be the first to go in favor of name brand bud. Do you really believe that a government-run store is going to carry strains with a name like Alaskan Thunder Fuck? Much in the way the Liquor Control Board of Ontario treats craft beer, the Cannabis Control Board of Ontario will sideline craft-weed. Licensed producers will either live or die at the whim of the government. The government will bow to the whim of pot-producers with the deepest pockets and loudest lobbyists. If you ever had dreams of artisan products made by mom and pop businesses that care more about craftsmanship than profit margins you should give that dream up now. Customers should get used to the idea of smoking weed made by the Nestle of Weed and customer service from robotic government employees.
The black market will still thrive
When Uruguay legalized cannabis, they priced it at $1.30 per gram to squeeze out the black market which sells weed for $3.00 per gram. In Canada, the Ontario government has publicly stated that they are “considering” selling cannabis for $10 per gram, a figure that equals the black market price. Anyone who has ever bought weed from their friendly neighborhood drug-dealer knows that the larger the quantity you buy, the lower the price per gram. the Cannabis Control Board of Ontario, on the other hand, will not offer a financial incentive for customers to buy larger quantities. In fact, because all the money Ontario stands to make is from taxation, there will be a motivation to move higher priced products. But unlike the Liquor Control Board of Ontario, which is the world’s largest purchaser of alcoholic beverages, the CCBO won’t have the same advantage. Growing cannabis is a lot simpler than making whiskey or vodka. As a result, there will be a significant subset of the population who would rather take the risk to buy illegally or grow their own plants than pay higher prices.