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The Cannabis Retail Issue in Ontario.
Allowing cannabis stores to provide curbside pickup and delivery of retail cannabis in Ontario has helped give consumers safe access to regulated products. Why is our provincial government all right with abandoning it now?
When Premier Doug Ford called a state of emergency due to the novel coronavirus (COVID-19) pandemic, the Alcohol and Gaming Commission of Ontario (AGCO) allowed cannabis stores—52 open at the time—to operate as an “essential service” alongside grocery and convenience stores, the LCBO, and the Beer Store. The catch for cannabis retail, however, included a substantial change to operations. As per the AGCO:
“All cannabis retail stores operating during the period of the emergency order can only offer curbside pickup and delivery services, and must otherwise comply with legislation, the Registrar’s Standards and the emergency order.”
What happened to cannabis retail?
Cannabis stores rose to the challenge, and the availability of cannabis through online purchasing and delivery (or curbside pickup) options resulted in several economic spikes:
- Ontario online cannabis retail purchases made a 600% jump since the beginning of March.
- New business types allowing cannabis retail delivery transactions to occur infiltrated the market.
- Established cannabis delivery services got the opportunity to expand their market reach to Ontario residents as well as their labour force.
- Select cannabis stores launched their systems for free same-day local delivery to Ontario residents and curbside pickup.
- Daniel Safayeni, the Ontario Chamber of Commerce’s director of policy and co-chairman of its Ontario Cannabis Policy Council, acknowledged that curbside pickup and delivery by cannabis stores has allowed the private sector to compete against the illicit market.
Here’s the situation in Ontario now.
With Ontario being home to four in 10 Canadians, the government’s initial decision to licence a minimal amount of cannabis retail stores right off the bat may have cost Ontario hundreds of millions of dollars in lost revenues annually and hundreds of potential jobs. It undoubtedly resulted in Canada’s most populous province (pop: 14.5 million) having the highest overall, yet the second-lowest per capita, sales in year one of legalization. By mid-December 2019, the Government of Ontario amended this by announcing changes to the system for issuing cannabis Retail Store Authorizations (RSA) that would substantially increase the number of cannabis retail licences in Ontario within a short amount of time.
The pandemic has done little to slow down the rate at which cannabis stores open their doors. As of June 23, Ontario reached 100 cannabis stores, and that number will continue rising throughout the year.
Curbside pickup and delivery services are not merely COVID-19 safety measures for Ontario residents. They serve to further wrestle the market from the hands of illicit sellers who, according to Statistics Canada, still own the majority of the market.
Successfully displacing the illicit market requires a fair and competitive legal market whereby recreational cannabis stores get the same privileges any other retailer is entitled to, including e-commerce.
The emergency order expiration will leave the government-operated Ontario Cannabis Store, an online cannabis retail outlet, as the only legal weed source allowed to make deliveries in Canada’s largest province.
We believe that if our cannabis retail stores can’t provide curbside pickup and delivery for Ontario residents, the province’s retail network will struggle to develop to maturity. It will fall behind legal weed retail in other regions and continue to fail to compete with illicit operators.
For more information about this latest initiative, Legal Sender, please contact the Alan Aldous team.