Ontario Cannabis Update: Online Sales in October, Private Retail Stores in April

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After weeks of speculation, the new Ontario government has confirmed that cannabis retail will be privatized—a dramatic departure from the previous government’s plan, in which former Premier Kathleen Wynne promised 40 government-run retail cannabis outlets would be open upon legalization, followed by at least a hundred more within two years.

Starting October 17, adult Ontarians will be able to purchase recreational cannabis online from the government-run Ontario Cannabis Store. But private retail stores won’t open until April 1, 2019.

At a news conference in Toronto on Monday, Ontario’s finance minister, Vic Fedeli, announced that when recreational cannabis becomes legal federally in October, Ontarians over the age of 19 will be able to purchase recreational cannabis online, from the government-run Ontario Cannabis Store.

As for physical retail sales, the government is introducing legislation that will allow adults to buy recreational cannabis from private retail outlets starting next April. The province will be responsible for all cannabis distribution in the new system.

“We have to get it right,” Fedeli said in explaining the six-month lag time. He added that the government plans to consult with public health organizations, law enforcement, and indigenous communities before rolling out the retail system. “We’re committed to creating a safe retail model that eliminates the illegal market in Ontario. We’re taking balanced and responsible approach to building a system that works.”

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He added that the government hopes to learn from the private retail model that will be introduced shortly in Alberta, Manitoba and Saskatchewan a few months from now.

Fedeli emphasized the importance of getting municipalities onboard. He said the province is prepared to work closely with municipalities “to protect communities. We are going to listen closely to them and consult with them and empower them to make decisions that work best for them,” he said.

Municipalities within the province would be able to “opt out” and ban the sale of cannabis at retail outlets.

Fedeli said the province would be earmarking $40-million to help municipalities make the transition to the new system. But he added that municipalities would be able to opt out—to ban the sale of cannabis at retail outlets.

Ultimately, he said, safety is the government’s top priority. “We will use every tool at our disposal to combat illegal cannabis market. We will do whatever it takes to ensure our communities, our roads and, most importantly, our kids stay safe.”

The Conservative government’s plan is a big departure from the one laid out by the previous government. Late last year, the then-ruling Liberal Party announced plans to regulate distribution and retail through the Ontario Cannabis Retail Corporation, a subsidiary of the government-owned Liquor Control Board of Ontario.

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Monday’s announcement was well-received by many people in the cannabis sector.

“We applaud Ontario’s decision to implement a private retail system,” said Michael Gorenstein, CEO of Cronos, a licensed producer based in Ontario. “We think this is a very important step towards implementing a responsible distribution framework that provides for wide participation for entrepreneurs and allows consumers to pick the brands and products of the future.” Gorenstein added that his company is looking forward to “welcoming legislation supporting further privatization.”

Afzal Hasan, president and general counsel of CannaRoyalty, agreed. “Based on our experience as an investor and participant in mature cannabis markets, the legalization of cannabis needs to be accompanied with a regulatory framework that encourages open and competitive markets. Otherwise, consumer uptake is slow and black market activity will thrive. Allowing for private cannabis sales is a step in the right direction for Ontario.”

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Peter Horvath, CEO at Green Growth Brands, a consumer products company operating in the cannabis domain, said he was encouraged by the announcement and added that “consumers in Ontario will be the ultimate beneficiaries of this decision. This will have a positive effect on availability, quality, convenience, and price since only the best retailers who master these elements at a high standard will earn customer loyalty.”

Lisa Campbell, chair of Ontario Cannabis Consumer and Retail Alliance, was more measured in her response, citing concerns about Fedeli’s insistence that dispensaries now operating are illegal and will continue to be after recreational cannabis is legalized federally in October.

“It’s wonderful that the Ontario government is now open to private cannabis retail,” said Campbell, but she cited concerns with the “zero tolerance approach to existing cannabis retailers, contrary to BC which is explicitly allowing existing dispensaries to [make the] transition.”

“Many questions still remain about vertical integration,” she said, adding that she’s pleased there will be “consultations with municipalities and key stakeholders leading up to April.”