Ontario’s Negligence: Cannabis Industry BEGS For New Store Licenses

Ontario’s Negligence: Cannabis Industry BEGS For New Store Licenses
Ontario’s Negligence: Cannabis Industry BEGS For New Store Licenses
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The math is simple. The refusal of Doug Ford’s Conservative government to award even a minimum number of cannabis store licenses is strangling the legal cannabis industry in the province of Ontario.

Alberta: population 4 million people; 324 cannabis retail outlets.
Ontario: population 14 million people, 24 retail cannabis outlets.
Cannabis outlets in Alberta, per capita? 1 per 12,000 people.
Cannabis outlets in Ontario, per capita? 1 per 583,000 people.

This comes with full cannabis legalization now more than one year old. This egregious failure from Ontario’s provincial government has literally reduced the legal cannabis industry to public begging.
Pot producers implore Ontario to open more stores

"Our ability to continue to invest and sustain the jobs that we have created is being severely challenged by the province's current retail cannabis policy framework," states a letter to the premier from the Cannabis Council of Canada. The letter is signed by the CEOs of eight producers. 

"Premier Ford, Ontarians and their families employed in the cannabis sector need your support to create retail points of sale for the products they make."

But why beg? Why not advertise? Get the word out.

Let the people of Ontario know exactly what is going on here. Let them know exactly how badly the Doug Ford government has betrayed the legal cannabis industry, and how this Conservative government has betrayed the public interest of Ontario’s population.

The details here are just as ugly as the Big Picture.
  • Six months after legalization before the first legal cannabis store was opened in Ontario
  • (At least) CAD$325 million in lost revenues for the legal cannabis industry so far
  • Tens of millions of lost tax dollars because of the failure to open more stores
  • Gross incompetence in operating the province’s online cannabis business
  • Gross incompetence throughout the entire process of awarding cannabis store licenses

The first cannabis store opened in Ontario (appropriately) on April 1st – April Fool’s Day – in honour of the province’s CEF, Chief Executive Fool. This was almost six months after cannabis was fully legalized on October 17, 2018.

A straight-line projection indicates that if Ontario had rolled out cannabis stores with similar efficiency as Alberta, its legal cannabis industry would have already generated an additional CAD$325 million in cannabis revenues in Year 1 of legalization.

The Seed Investor has argued that this calculation actually understates losses to Canada’s legal cannabis industry. Ontario’s population of 14+ million is highly concentrated.

In other words, opening a proportionate number of stores would have been likely to generate even greater revenues. Because each individual store-opening would/could generate greater sales.

The legal cannabis industry has lost out on $100’s of millions in additional revenues. Meanwhile, the province of Ontario (and its taxpayers) has lost out on $10’s of millions of additional tax dollars that would have been derived from those sales.

Then there is Doug Ford’s half-hearted effort to sell cannabis online to Ontario residents. Here, taxpayers haven’t just lost out on potential revenues (and additional tax dollars). Ontario’s government has managed to lose taxpayer money – lots of money.
We have the excuse from the Doug Ford government about this enormous loss…
According to Ontario’s provincial cannabis retailer, you have to spend money to make money.

That’s the explanation the Ontario Cannabis Retail Corp. — the provincial Crown corporation that does business as the Ontario Cannabis Store — is giving after reporting a $42-million shortfall for the year ended March 31. [emphasis mine]

…but the truth (as noted above) is that the province of Ontario has already lost out on $100’s of millions of cannabis revenues that were on the table.

So (apparently) the real motto of the Doug Ford government in administering legalized cannabis is:

You have to lose money in order to lose even more money.

Then there is the process in Ontario to award cannabis store licenses. The province’s convoluted “lottery system” has not only been confusing and irrational for the legal cannabis industry. It’s another Doug Ford train-wreck.

Canopy Growth Corp (US:CGC / CAN:WEED), Canada’s largest cannabis company, was virtually shut out of the Ontario cannabis market – the company’s base of operations. Arguably, that cost Bruce Linton (Canopy’s former CEO) his job.

It resulted (as noted above) in only 24 provincial licenses being awarded over the course of an entire year and generated yet more excuses from the Doug Ford government.

The province claimed that “cannabis shortages” were preventing it from opening up more legal cannabis stores.

The problem with that excuse? Cannabis pot inventories in Canada have steadily risen since legalization – while much of the mainstream media claimed that Canada was over-supplied with cannabis. The federal government confirmed there was no truth to another of Ontario’s excuses.

Early in the summer, to take some of the heat off, Ontario’s government announced it would award 50 new cannabis licenses. At the end of August, the province announced 42 “lottery winners” – then immediately disqualified roughly one-third of them for a procedural failure.

Now the Conservative government has gone completely silent as to what is happening with the ~30 “winners” still in the running for new cannabis store licenses. Presumably, this means Doug Ford is hiding yet another screw-up in this process – and getting a script-writer to prepare his excuses.

This now begs the question: at what point do we cease talking about incompetence and simply begin analyzing the negligence of Ontario’s Conservative government?

It’s one thing to try to do something but fail. It’s a completely different story to not even make a serious effort. That’s not incompetence, that’s negligence.

Has Ontario’s government seriously tried to discharge its public duty to the people of Ontario? All of Canada’s governments (federal and provincial) have acknowledged the need to phase-out the cannabis black market. That can only be done by opening up the legal industry quickly and efficiently.

Can anyone make the case that Ontario has been trying to help eradicate the province’s cannabis black market? Put in different terms, can anyone simply be this incompetent?

This leads back to the cannabis industry. Why wouldn’t Canada’s legal cannabis industry want to publicly advertise Ontario’s litany of cannabis failures? Arguably, cannabis companies may not want to openly alienate the government of Canada’s largest province.

However, if Ontario taxpayers were made fully aware of how much Doug Ford’s failures have been costing them, it’s unlikely the legal cannabis industry would need to fear any retribution.

Simply turn the gaze of 10+ million (angry) voters to focus on Ford’s Failures. And then watch the Ontario government suddenly bend like limbo-dancers to accommodate the legal cannabis industry.

There is only one thing that politicians fear more than publicly acknowledging their own mistakes: getting booted out of office and having to go back to the real world.
Cannabis Focus, Cannabis Industry
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