Ontario Announces Delays to Retail Cannabis Sales
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The Ontario General Election back in June 2018 signaled the beginning of a huge amount of change for the province. The incumbent Premier, Kathleen Wynne, of the Ontario Liberal Party, saw her party slide from controlling 55 seats in the Legislative Assembly, down to just seven. This dramatic result handed outright majority control of the Legislative Assembly to the Progressive Conservative Party of Ontario, led by Doug Ford, as they secured 76 of the possible 124 seats being contested.
As part of the transition between the different styles of leadership, the Progressive Conservatives announced in a press conference last week that the launch of legal private cannabis sales in stores has been delayed until April 2019.
The liberal party’s proposed retail system
The previous Liberal government had planned to launch the Ontario Cannabis Stores (OCS) on July 1st, to coincide with Canada Day. Before the general election, the plan was for the OCS to operate approximately 150 standalone cannabis stores across Ontario that would be organized in a similar way to the government-run liquor stores already in existence across the province. The OCS stores would sell recreational cannabis, as well as consumption accessories like bongs or dab rigs.
In late June, the federal government made the decision to push back the date of recreational cannabis legalization to October 17th in order to give provinces more time to prepare, as issues such as the legal consumption age are decided by each individual province. As a result, the Liberal party delayed their plans for the OCS to launch on October 17th.
The effect of the election on retail cannabis
The Progressive Conservatives did not agree with the sort of government-run model that the Liberals wanted to bring into place. As such the delay on standalone cannabis stores announced by Ford is meant to give the Ontario legislature time to introduce an alternative model.
Before the general election Ford had been very vocal about his opposition to the Liberals’ public-sector cannabis sale model. Shortly after his internal party election to the role of Progressive Conservative party leader, he commented on CBC Radio that “I don't believe in the government sticking their hands in our lives all the time,” when asked about his planned hands-off approach to the cannabis industry. “I believe in letting the market dictate.”
Last week’s announcement also included a brief overview of Ford’s alternative model for Ontario now that he is in power. Online legal cannabis sales will be managed and distributed by Ontario’s government from October 17th, so the residents of Ontario will still be able to access legal recreational cannabis from the date of legalization. However, there will be no government-run retail stores.
Instead, Ford wants to create a framework that will regulate independently-run retail outlets. The time created by delaying the debut of retail cannabis stores will be used to run consultations between legislators and businesses, consumer groups, law enforcement, and other provinces such as Alberta, Saskatchewan, and Manitoba who have also created private retail models.
Other changes to cannabis policy under the Progressive Conservatives
Under Canadian federal law, provinces can choose different levels of excise tax to apply to cannabis products sold in their region. Under the system proposed by the old Liberal government, they would follow the basic rate recommended by the federal government of a 10% excise duty, roughly equal to $1 CAD per gram of cannabis product. There is currently no indication that the Progressive Conservative government means to make dramatic changes to this. Given that the Progressive Conservatives ran on a manifesto of lowering taxes, it would be highly unlikely for the party to decide to raise cannabis tax in excess of the federal recommendations.
The Ontario Finance Minister, Vic Fedeli, was present at the press conference. He was not questioned about any proposed changes to the taxation system, but he did use the conference to vocalize his support for the changes to retail cannabis policy and subsequent delay in enabling in-person legal cannabis purchases.
“The system we [Progressive Conservatives] are proposing marks a significant departure from the approach of the previous government,” he said, “implementing this new approach will take time.”
At the press conference, both Fideli and the Ontario Attorney General declined to clarify how many retail licenses may be issued when the new retail system is launched, explaining that the number would likely be tied to the responses gathered during the consultation phase of the legislation development. Similarly, it remains unknown whether any of the currently illegal cannabis dispensaries that are operating in the province will be able to apply for one of the retail licenses once the new system is in place.
Fideli also hinted at the new government’s intention to introduce a zero-tolerance policy for licensed cannabis retailers that are found to be selling cannabis to underage users.
“If a private retailer is caught selling cannabis to any underage buyer even once, their license is done.”