Ontario government shuts down dispensaries to open its own

The province could be the world’s largest cannabis retailer.

Jan 22, 2018
Ontario

Photo by Hector Vivas /Getty Images

If you live in Ontario, Canada you’ve probably heard by now that the government wants to be your drug dealer—your only drug dealer. In the Summer of 2018, Ontario will launch its very own cannabis corporation. This monopoly on marijuana sales will be called the Ontario Cannabis Retail Corporation (OCRC) and run by the province’s current Liquor Control Board (LCBO). With 150 stores set to be built by 2020 and an online mail order option, the OCRC could become the world’s largest cannabis retailer.

In November, the Ontario parliament passed Bill 174 becoming the first province to solidify its regulations in order to meet the July 1st deadline for legalization in Canada. The new law will allow those over the age of 19 to grow up to four personal-use plants at home while retail options will be limited to the government-run OCRC stores.

The government of Ontario says that whatever revenue is brought in from sales will be used to buffer law enforcement and education initiatives aimed at limiting access to children. For cannabusiness owners in the province, however, it’s amounted to a hostile takeover.

“Seeing the government of Ontario announce their bill was scary. It sounded like a declaration of war,” prominent cannabis activist Jodie Emery told Herb. Just weeks later, she and her husband, “Canada’s Prince of Pot,” Marc Emery, were convicted of operating the same kind of business the government will open this summer.

GettyImages 535848764 Snoop Dogg takes us to church with a weed infused Gospel album
Jodie Emery, a prominent cannabis activist in Canada. (Photo by Carlos Osorio/Getty Images)

The charges laid were for trafficking and distribution and carried a $150,000 fine each and a $45,000 “victim surcharge” with two years’ probation. It’s hard to ignore the hypocrisy.

Ontario’s government has taken a rather aggressive stance toward dispensaries, in some cases ripping doors from their hinges and resorting to a show of force when retail staff was being cooperative. It’s also threatened $1 million fines for business owners and their landlords with additional fines between $10,000 to $500,000 for each day a business stays open after its initial citation.

In recent years, the Ontario dispensary scene, including the province’s capital Toronto, has grown so much that lawmakers could have just legalized retail sales by legitimizing private businesses like British Columbia intends to do. Those Ontario shops, which existed within a legal gray-area as a result of legal medical marijuana, were largely ignored by police. But more recently they’ve been the target of high profile raids. One month after Prime Minister Trudeau announced that marijuana would be legal in 2018, police raided 43 Toronto dispensaries as part of a larger operation called Project Claudia.

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Under Trudeau’s plan to legalize, each province would get to decide what the market for cannabis will look like within its borders. In the case of Ontario, the government has taken the same paternalistic stance it has with alcohol, issuing stern warnings about the serious dangers of a product it plans to sell.

“The hypocrisy is astounding,” writes Jan Wong of Toronto Life in a critical editorial of the province’s current liquor monopoly. “The [Liquor Control Board] goes further than most stores in trying to persuade you to buy its product for every social occasion short of a toddler’s birthday party.”

The kicker for most consumers is the exorbitant pricing. Under the Liquor Control Board (LCBO), alcohol prices in Ontario are considerably higher than in bordering American states and even some Canadian provinces like Quebec where private sales are permitted. The current system for alcohol allows the LCBO to set a price it considers reasonable and directs wholesalers to adjust their prices accordingly.

That government-run system in Ontario has made the LCBO one of the largest alcohol retailers in the world, even rivaling Costco in sales despite the fact that its business is limited to just one province in Canada. For wine, in particular, the government retailer has become such an influential purchaser that it’s been used to intimidate the European Union in trade disputes.

But it’s not likely that the LCBO’s cannabis retailers will have the same freedom to choose its own arbitrary prices. The Ontario government has stated that its goal is to eliminate its black-market competition and that will mean keeping the price below $10 a gram. For the OCRC, the major criticism has been that it’s unnecessarily considering new locations that have to be built from the ground up and staff that has to be trained; both of which already have been established by private dispensaries. What’s more, supply is expected to be a major issue as a province of nearly 14 million people will only have access to 40 stores in the first year.

Jan 22, 2018