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EDITORIAL: How not to manage the retail sale of pot (Sept. 2019)

October 8th, 2019 · No Comments

Just ask Doug Ford. Ford lost $42 million selling pot last year. Then he botched the roll-out of retail licences so badly that it is now under judicial review. Illegal pot is widely available and is in fact necessary to satisfy the market demand that the province has failed to meet.

New figures released about the Ontario Cannabis Store (OCS) show that despite revenues of $104 million from the online sale and distribution of weed, the Ontario government found a way to lose over $40 million. That the loss comes without a brick and mortar investment and when the government essentially held a monopoloy is quite an achievement, really. The province also lost customer data in a cyber-theft that they blamed on Canada Post. Curiously, other provinces did not suffer the same fate. Hmmm…. 

Recall that Ontario’s plan, right from the start, was to hand retail sales to the LCBO which had an existing network with a professional and accountable approach to doing business. Then Doug Ford got elected, threw that Liberal plan out of the window, and started applying his own business prowess to the new industry. 

To be fair, Canada is only the second country, after Uruguay, to legalize marijuana. So there’s no guidebook on how to launch the sale of legal marijuana. There have been challenges, such as a lack of legal cannabis, across the country, but the absence of stores is a Doug Ford made-in-Ontario problem. 

In January, the province held a lottery for the first licences for retail stores, offering up 25 stores for a province with 14 million people. The winners of that lottery did not require any relevant experience. In late August the province announced the results of a second lottery to apply for a retail store licence. Potential store owners were required to set aside $300,000 to be able to apply and 42 applicants were given the green light to proceed to the next level. Innisfil, a bedroom community of Barrie, scored three winners. One winner in our area was 11180673 Canada Incorporated, which proposes to set up shop at 104 Harbord Street, the site of a unlicensed pot dispensary called CAFE which has been raided numerous times by police who ultimately blocked its doors with large concrete barricades.

The rules of the lotteries were supposed to exclude applicants who had been running illegal operations, but not here, apparently. Now they operate on the sidewalk, in full view, causing much hardship for the community according to the residents’ association and their BIA. Highlife is another applicant who submitted bids, some six hundred, apparently for the same 15 addresses in Northern Ontario, despite having contravened the rules. If Highlife had $300,000 set aside for each application, they would have required $180 million in speculative investment. This is not Doug Ford allowing mom-and-pop retailers into the marketplace. This is the myth of Doug Ford supporting the little guy.

Not all successful lottery winners in round two made it through initial scrutiny. The Alcohol Gaming Commission of Ontario (AGCO) emailed each winner telling them they won the lottery and what they needed to do next. Eleven of the winner’s emails bounced back, so the AGCO sent them the same message by registered mail. Those winners tried to comply with the requirements of these letters but were then told that registered mail was meaningless and they were disqualified because their email was not deliverable. The government appears to be making things up as they go along. 

Now the courts have entered the fray, halting the roll-out of the lottery’s second round while it attempts to unravel yet another Ford-spun mess. How sad, and unsurprising.

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