The recreational cannabis system in Ontario has been riddled with issues since the beginning and a solution isn’t anywhere in sight. Let’s take a deeper look into what caused the system to be in this spot in the first place.
If someone bothered to ask me what’s wrong with the recreational cannabis system in Ontario, I honestly wouldn’t know where to start. Everything? Most of it?
There are so many issues pertaining to the way legalization was handled that the mere fact there won’t be any stores open 7 months into legalization is an explanation in itself.
Initially, the government of Canada set out to legalize recreational cannabis under the pretense of fighting against the rampant black market. The legalization combined with thorough educational programs was supposed to wipe out the black market. However, Ontario is nowhere near that point.
In fact, the battle against the black market isn’t really happening. The black market only got empowered with the legalization of cannabis. The lack of retail stores and private online shops in Ontario has made weed dealers a fortune in these last 5 months.
According to Vice, 72% of Canada’s recreational cannabis sales this year have been made in the black market, rather than in the legal sector. Seeing how Ontario’s market was valued at $1.6 to $2.3 billion dollars yearly, we can safely assume that the street dealers are still swimming in cash.
A bad start
How do you mess up a system more than half of the nation was looking forward to? Well, easy — just ask the politicians in Ontario.
You start by announcing it two years ahead, and in those two years, you basically do nothing significant until it’s time to legalize. “Why”, you may ask?
Oh well, that’s an even simpler explanation.
The way the recreational cannabis system in Canada is set up, the federal government sets laws that provinces get to work around, in the sense of how they want the system to be managed.
Then, the provinces decide if they want to have a private, somewhat private, or a fully government-run system in place.
The Liberals, who were in power in Ontario at the time, knew that elections were coming in mid-2018, and they didn’t really bother with the legalization effort as they had other laws to make while they were still in office.
Basically, Ontario Liberals knew they were most likely going to be voted out, and did everything in their power to affect the laws already in effect. Sure, at the time the PM of Ontario Kathleen Wynne put out a plan which would handle legalization.
But, nobody liked the plan. Here’s what it looked like. Prime Minister Wynne promised to:
- Open 40 stores by legalization date
- Have LCBO run the cannabis market in Ontario
- Open another 150 stores by 2020
- Have government-run online sales
So, it’s safe to say that the foundation of the legalization effort in Ontario was crooked, to say the least. And you know what they say about houses built on crooked foundations…
This isn’t me hating on Liberals, as I’m pretty liberal myself. I’m not dragging them through the mud, as the Progressive Conservative Party didn’t do any better itself as we’ll see a bit down the line. I’m just pointing out the mistakes they made in the first steps.
An even worse finish
In the summer of 2018, just months before cannabis was to be legalized, the elections happened in Ontario and brought about a change in the political scene.
With that change, the PC party got its hands onto the power to manage the way the cannabis system was to be implemented after October 17th, 2018.
At one point in time, the PC’s talked about shifting the system towards a more privatized model, but that never happened. In fact, they doubled down on the government-run system.
This is what was rumored to be the conservatives plan, but turned out to be a total lie:
- No cap on the number of brick-and-mortar stores
- Have a heavily privatized system instead of government-run
- Private online stores
As I said before, Doug Ford and the Progressive Conservatives doubled down on the initial plan, and simply said no to all the “nonsense”.
Once the PC’s were in the government, they created the Ontario Cannabis Store, something that was also in Wynne’s plan.
Then, they said “screw it” to retail stores, and decided nobody gets to open a store until April because it would create disarray in the system(?!?) in the sense of unexpected shortages or gluts in the market.
The PC’s then decided to dig an even deeper hole and proudly announced that the first 25 retail store licenses will be given out via a lottery so that everyone would have the same fair chance to participate in the cannabis industry. What!?!
That is so unprofessional, and from obvious reasons very ignorant as well.
You’re gonna give one of the first licenses to some no-name dude in the GTA? Guess what’s gonna happen – one or of the 25 amateurs you picked is going to fail at his job and not open a store by April.
That already happened, but luckily for us, the AGCO picked suitable replacements, which now have less time to open the store.
This could have been completely avoided if the government first gave out these licenses to established retailers and cannabis producers with the capability to open a store in no-time.
Or, better yet, give everyone access to these licenses in order to successfully battle the black market, which was the initial idea of this legalization.
That didn’t happen and now we’re waiting on the stores to open doors to their customers on April 1st.
The monopoly issue
What is a monopoly? According to Google, a monopoly is: “the exclusive possession or control of the supply of or trade in a commodity or service”.
By establishing a government-run monopoly in the cannabis business the government will surely get some profits in the budget, but it won’t solve any of the problems that were plaguing Ontario for the last couple of decades.
By making OCS the only source of legal cannabis in the province, Ontario politicians established a clear monopoly over the cannabis market. However, the legal market doesn’t take into account illegal dealers.
According to a poll conducted in November more than a third of Canadian cannabis users said they were still buying from their regular dealers and hadn’t even tried the legal system.
The authorities in Ontario tried to close “all illegal stores”, but that wasn’t really plausible as the shop owners just kept opening their doors to customers.
The government then flat out told these retailers if they don’t close their shops that they will never get licensed for the legal market, and the situation calmed down a bit. They were quick to say that stores cant offer same-day delivery services, but the rules aren’t the same if you’re the OCS which will definitely have same-day delivery.
Next, the government made it clear that online ordering for store pickup (click and collect) will also not be allowed. Not only that, but the retailers will have to buy their supplies from OCS as it will be the only licensed distributor for the province.
March will be the 6th month as of the legalization, and things aren’t looking anything like we thought they would. People still buying from MOMs (Mail Order Marijuana stores) because it still makes sense to take part in the black market.
People will keep buying weed from the black market as long as it’s cheaper, better, and more available than the weed being sold in the legal market. It is crucial that all 3 of those conditions are fulfilled. Otherwise, this happens:
1. Cannabis becomes cheaper and readily available in the legal market, but it’s of garbage quality. Most of the users don’t transition because they want quality bud.
2. Cannabis becomes readily available, and it’s high quality, but it’s 2-4 times more expensive than average quality black market weed. Most of the users don’t transition because they can’t afford it.
3. Cannabis becomes cheaper and of high quality, but there are severe supply issues. Most of the users don’t transition because there’s no weed in stores to buy.
You see, there isn’t any negotiating with the black market. You have to destroy it, and once you do, keep up the level of the legal system long enough so that black market dealers fall out of favor with the users.
The Progressive Conservatives should offer a course in the “How to create a government monopoly 101” class because they really seem to know what they’re doing. Basically, just say no to every idea that sounds remotely good from the user perspective.
In Vietnam, soldiers fighting in the war had an abbreviation that perfectly described just how messed up everything was – FUBAR. That’s exactly what I’d say for Ontario’s cannabis system at the moment and in the foreseeable future.