What Ford's win might mean for marijuana retailing in Ontario

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Will Doug Ford change the way recreational cannabis is going to be sold in Ontario?

That’s the question on the minds of Canadian marijuana executives after the Progressive Conservatives swept to power in Thursday’s election.

The rules governing marijuana retailing will vary by province, and Kathleen Wynne’s Liberals chose to place both online and in-store sales in the hands of the government, tasking the Liquor Control Board of Ontario (LCBO) with the job.

But there is a sense in the cannabis industry that Mr. Ford, the PC Leader who has made no secret of his disdain for monopolies, could be open to pursuing other retailing models that involve the private sector.

In British Columbia, for example, stores run by the government will compete for sales against company-owned outfits.

“I think that’s probably a good model for premier-designate Ford and his team to look at,” said Will Stewart, spokesman for Hiku Brands Co. Ltd., which operates a small chain of cannabis-themed coffee shops called Tokyo Smoke. The company holds one of four licences to open online and physical cannabis stores in Manitoba.

“I think that provides more customer choice,” he added. “And at the end of the day, a robust, safe, effective retail sector is what’s going to displace the black market.”

Curtailing illicit sales of the drug is one of Prime Minister Justin Trudeau’s most stated reasons for working to lift Canada’s 95-year prohibition on recreational cannabis. On Thursday, he moved one step closer to fulfilling his campaign promise after the Senate approved Bill C-45 – albeit with dozens of amendments that still need to be reviewed by the House.

The LCBO will sell marijuana under the Ontario Cannabis Store (OCS) banner. In the first year, the province plans to open 40 stores, increasing to 80 outlets in 2019 and up to 150 in 2020. It is a similar model to Quebec’s structure, which would sell legal marijuana in just 20 government-run stores in the first year.

Critics say Canada’s two most-populous provinces won’t be able to scale fast enough to take a real bite out of the illegal market.

“The restrictive approach in Ontario and Quebec isn’t going to be successful in achieving the central objective of legalization, in terms of migrating people’s purchases from the black market over to the legal market,” said Cam Battley, the chief corporate officer of Alberta’s Aurora Cannabis Inc. The company owns a quarter of Edmonton’s Alcanna Inc., which is looking to open retail cannabis stores in Western Canada.

He said the cannabis industry should have a role in retailing in Ontario and Quebec because they know the product best.

“The monopoly approach is wrong-headed,” he added. “The ecosystem has got to be more varied in order to have a thriving system with the greatest possible public acceptance and sustainability.”

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