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Ontario Government Delays Retail Cannabis Sales

Ontario’s Conservative government announced that recreational marijuana sales would begin this October as scheduled. However, residents will only be able to purchase cannabis products via a government-run online platform provided by the Ontario Cannabis Store (OCS). Officials say privately run brick and mortar retail stores won’t begin operating until April 1, 2019. There was no mention of the number of private retail licenses to be issued.

Previously, the Liberal government planned to open nearly 40 stores during the first year of legal cannabis sales, with the goal of having around 150 by 2020.

The OCS website will reportedly offer a selection of dried cannabis, cannabis oil-based products, cannabis seeds, and accessories. Buyers will be limited to 30 grams per federal possession limits and must be at least 19 years of age.

 

A Privately-Run Cannabis Economy

The change is no surprise. Before his election in June, Ontario’s new Conservative Premier Doug Ford showed signs that his administration would prefer a private retail model. Ford told CBC Radio in March that he did not believe in “the government sticking their hands in our lives all the time.”

That being said, under the new framework, the provincial government will still be the sole supplier of cannabis products to retailers.

[Read More: Cannabis Reform A Hot-Button Issue In Nevada Senate Race]

In another policy change, Ontario municipalities will have the option of prohibiting cannabis stores within their boundaries.

Municipalities will be given CAD$40 million ($30 million) over two years to help cover costs related to legalization such as law enforcement. Finance Minister Vic Fedeli noted that implementing this new approach will take time. “We have to get this right, and we will not be rushed,” he said.  

Ontario Attorney General Caroline Mulroney said officials would begin consultations next week with businesses, consumer groups, municipalities and law enforcement to examine potential retail models planned by Alberta, Saskatchewan, and Manitoba. The government’s intention is to develop a regulatory framework aimed at preventing underage sales as well as to assure the safety of the public at large. This will include a zero tolerance policy for underage sales. Violators will have their licenses revoked.

The World’s Second Largest Cannabis Market

According to a report published by U.S. cannabis research firms ArcView Market Research and BDS Analytics, legal sales in Canada are expected to reach $4.9 billion by 2022. Ontario is expected to become the second largest private market for legal marijuana sales after California.

Making good on their pledge from the 2015 general election, Prime Minister Justin Trudeau and the Liberal party behind him, the Canadian Senate approved Bill C-45, the nation’s cannabis legalization measure, voting 52 to 29 in favor.

[Read More: Cannabis Legalization Efforts Spread Across The Globe]

The legislation officially received Royal Assent on June 22 of this year. The move is widely considered to be one of the most historic events in the history of cannabis culture. Canada is the first Group of Seven nation to legalize recreational marijuana.

When Bill C-45 passed in June, a sister Bill, known as Bill C-46 also passed which implemented a massive overhaul of Canada’s impaired driving laws. Canada’s Justice Department recently gave its blessing to the Dräger DrugTest 5000 roadside saliva test. The device, which is produced by a company based in Germany, is already being used in the United Kingdom and Germany. Many believe that test results will be contested as it cannot accurately determine impairment levels.

The Industry Prepares For Cannabis Sales

At the time, Canopy Growth Corp. (TSX:WEED) (NYSE:CGC) issued a statement saying, “There are no words to describe and acknowledge this historic moment in Canada.” Canopy also applauded Canadian legislators who have “built a complex regulatory landscape with thoughtfulness and professionalism.”

Emerald Health Therapeutics, Inc. (TSXV:EMH) (OTCQX:EMHTF) also praised the Canadian government’s passage of Bill C-45 saying, “The passage will provide a new legal framework and establish Canada as a globally recognized leader of cannabis legalization. We are the first G7 country to legalize cannabis for medicinal and recreational use federally. Moving forward, the world will look to Canada when developing their own rules and regulations.”

And cannabis giant Aphria Inc. (TSX:APH) (US OTC:APHQF) also weighed in saying, “With annualized production of 255,000 kg, Aphria is well-prepared to meet the demand of the new adult-use market and our medical cannabis patients.”

[Read More: Philly District Attorney To End Marijuana Prosecutions]

Only days ago, Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) and Constellation Brands (NYSE:STZ) announced the expansion of their strategic partnership. Constellation Brands purchase of an additional 104.5 million shares at a price north of $36 per share, increased their holdings in Canada’s largest cannabis company by an estimated 38 percent. The total worth of the deal is around $4 billion.

“Through this investment, we are selecting Canopy Growth as our exclusive global cannabis partner,” said Rob Sands, Chief Executive Officer, Constellation Brands in a statement. “Over the past year, we’ve come to better understand the cannabis market, the tremendous growth opportunity it presents, and Canopy’s market-leading capabilities in this space. We look forward to supporting Canopy as they extend their recognized global leadership position in the medical and recreational cannabis space.”

According to a Statistics Canada report, Canadians spend almost as much on cannabis as they do on wine. Conservative estimates put 2015 marijuana sales at C$6.2 billion in 2015. By comparison, Canadians spent C$7 billion on wine in 2015.

In other Canadian provinces, Alberta is approving privately run stores. And Quebec plans to sell through its government-run alcohol agency.

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