Ontario's cannabis plan needs a rethink to curb black market, Chamber of Commerce says

Ontario Chamber of Commerce gives its assessment of state of the province's cannabis business plan in time for first 4/20 since legalization six month ago.

Business group says cannabis store licences should be awarded to those with retail experience, not by lottery

Nova Cannabis at 499 Queen St. W is Toronto's third licensed pot shop. It held a soft launch on Thursday, but chose the first 4/20 after recreational cannabis became legal to hold its grand opening. (CBC)

Ontario needs to drastically change its retail cannabis strategy or risk not only losing its competitive advantage, but also failing to lure consumers away from the black market, says the Ontario Chamber of Commerce.

On this first 4/20 since Canada became the first G7 country to legalize recreational cannabis, Toronto has just three physical locations to purchase pot legally, but dozens of illegal dispensaries are still doing brisk business.

"If there's not a competitive legal market in Ontario, people are going to turn to the black market, and that's lost revenue, lost jobs, lost opportunity for business," said Michelle Eaton, vice president of communications and government relations for the OCC.

Eaton said that since this is the first time cannabis has been legal in close to a century, it's understandable that there are some kinks to work out.  

Michelle Eaton, the vice president of communications and government relations for the Ontario Chamber of Commerce, says the province should undertake some major tweaks to its retail cannabis strategy. (CBC)

"It's not going to be perfect at first — there are going to be bumps in the road," she said. "But the more avenues that we're giving consumers to buy recreational cannabis, the more opportunity we have to move them away from the illegal market."

Eaton urges the province to choose the next batch of licences retailers by merit, rather than the lottery system used to decide who could apply for Ontario's first 25 store licences.

About a dozen stores faced escalating penalties for not opening by April 1st. Those fines top out at $50,000 if they don't open by the end of the month.

The third of six stores licensed to operate in the Greater Toronto Area opened Saturday. Nova Cannabis held a soft launch on Thursday, but held its grand opening on 4/20.

The Hunny Pot on Queen St. W. has been busy since it opened earlier this month. So far, only three of the GTA's six licensed shops have opened. (CBC)

"It's really important for the government in their next phase to look at things like merit because right now, with the lottery system, you see that some of the stores didn't open. And it's a missed opportunity to get the cannabis industry and the recreational cannabis industry growth going in Ontario," said Eaton.

Jay Rosenthal is Co-founder and President of Business of Cannabis, which does research and analysis in the emerging economic sector, and wants to see the province act on recommendations like that sooner than later. 

"I think the goal of every level of government is to drive out the black market and I think part of that is really finding more and better retail access for cannabis for consumers," he said. 

Rosenthal says many licence holders in the first batch of 25 stores permitted had a hard time getting up and running by April 1st. He thinks that's because their ability to open a store within just three months notice was never assessed.

Jay Rosenthal, co-founder and president of Business of Cannabis, a research and analysis firm, says the province should take a pause this 4/20 and assess its strategy for selling legal recreational weed.

Rosenthal also supports the OCC recommendation to allow licensed producers to operate retail operations, saying no one is more motivated to sell than producers themselves. 

"Once we see more retailers come online I think we'll really see more people choose the legal market versus the black market and that's really the long term game."

The Ontario Cannabis Store did not return CBC Toronto's request for comment. 


Philip Lee-Shanok

Senior Reporter, CBC National News

From small town Ontario to Washington D.C., Philip has covered stories big and small. An award-winning reporter with three decades of experience in Ontario and Alberta, he's now a Senior Reporter for the National Network based in Toronto. His stories are on CBC Radio's World Report, World This Hour, World at Six and The World This Weekend as well as CBC TV's The National and CBC News Online. Follow him on Twitter @CBCPLS.