Ontario's private sector retail cannabis plan draws pot industry approval

Several cannabis companies and business groups are applauding the Ontario government's new plan to add private retailers to its plans for the sale of recreational pot in the province.

Public sector union wants to make government's plan an issue in upcoming municipal elections

The Ontario government new plan for the sale of recreational cannabis will see the province launch online sales on October 17, but sales at 'bricks and mortar' stores won't begin until April 1, 2019. (Associated Press)

Several cannabis companies and business groups are applauding the Ontario government's new plan to add private retailers to its plans for the sale of recreational pot in the province.

The new plan — which will see the province launch online cannabis sales on  October 17 — means sales at 'bricks and mortar' stores won't begin until April 1, 2019. The recently elected Progressive Conservative dumped the Liberals' plan for the province to keep on a monopoly on cannabis sales that would have seen the government operate 150 brick-and-mortar stores by 2020.

Aurora Cannabis Inc., one of the major players in Canada's pot industry, and Alcanna Inc., which runs 229 private liquor outlets in Alberta, B.C. and Alaska, offered kudos to the province for change in how cannabis will be sold.

The two companies say they have already scouted out over 100 potential retail locations in the province. The businesses said they have a licensing deal that will allow Alcanna to open retail cannabis stores under the Aurora name once regulations permit.

"Allowing a private retail channel in Ontario for recreational cannabis is good news for industry, consumers, and taxpayers, and will go a long way to making a meaningful impact on the grey market," Aurora CEO Terry Booth said in a statement.

Jay Wilgar, the CEO of Newstrike Brands and its subsidiary, Up Cannabis, expressed similar sentiments.

"We look forward to engaging the Ontario government on potential retail locations," he said. "Our first priority, however, will always be to ensure we provide adult-use consumers with a safe and reliable product."

The Cannabis Council of Canada, which represents licensed producers of medical cannabis, said shifting retail pot sales to the private sector will save taxpayers money.

"By heavily regulating and overseeing the private sector, the provincial government will create a truly competitive and inclusive landscape that will allow for law-abiding companies to more quickly replace the bad apples in the cannabis space," said Dr. Avtar Dhillon, the chair of the board of the Cannabis Council of Canada.

The provincial government's private sector model will be designed in consultation with stakeholders, including municipal governments, Indigenous communities, law enforcement, public health advocates, business and consumer groups.

Municipal elections coming in the fall also play a role in the timing of the launch of physical cannabis stores, as newly elected councils will be offered a one-time chance to opt out of having retail stores in their area.

Ryan Mallough, a senior policy analyst for the Canadian Federation of Independent Business, did express some disappointment that in-store cannabis sales won't begin until next spring.

"However, in the long run, an above-ground, regulated private sector is better suited to meet customer demand and guard against an underground industry," he said.

"We ask the government to consider setting aside licences for small, independent businesses, so they are allowed a fair chance at participating in the cannabis retail sector."

One group not in favour of the government's new play is the Ontario Public Service Employees Union.

"We must make the public sale of cannabis a top municipal election issue. Fight for a sensible safe plan for cannabis sales and just say no to [Ontario Premier Doug Ford's]," OPSEU president Warren Thomas said in a release.

Investors apparently didn't see much to cheer in the provincial government announcement. Shares of several large players in the pot sector slipped on Tuesday, with Canopy Growth down more than eight per cent to $32.15, Aurora Cannabis down by almost 10 per cent to $5.34 and Aphria off by 9.5 per cent to $8.72 on the Toronto Stock Exchange.