Canada legalized recreational use of marijuana in June, with retail sales slated to launch in October, but there’s a new conservative provincial government in Ontario that’s hoping to slow things down with a 6-month delay.
On Monday, the provincial government on Ontario said that retail sales in the province would be delayed until April 1, 2019, and that the government—as previously planned—wouldn’t be running its own, brick-and-mortar weed stores.
So, when October comes around, it won’t be a retail free-for-all: The only wait to buy cannabis for recreational use then will be from the government, online. Private retailers can’t jump on board until next April.
Recreational marijuana use become legal on October 17, with residents of the province who are 19 and older allowed to buy weed from the Ontario Cannabis Store website.
The newly elected conservative government’s Liberal predecessors were planning 150 brick-and-mortar cannabis stores by 2020. The stores were meant to pave the way for the private retail system to work itself out.
But Ontario Premier Doug Ford has other plans, even though his province has enjoyed the monopoly on weed. But in the bigger Canadian pot picture, Ontario is the big prize: It’s the wholesale distributor for private retailers.
“We have to get this right and we will not be rushed. We will use this time to consult with businesses, consumer groups, public health organizations, municipalities, law enforcement and indigenous communities,” Ford told reporters.
“The government of Ontario will not be in the business of running physical cannabis stores,” Finance Minister Vic Fedeli told a news conference Monday. Related: Investors Flee Emerging Markets Amid Lira Crisis
“Instead, we will work with private sector businesses to build a safe, reliable retail system that will divert sales away from the illegal market.”
Attorney General Caroline Mulroney said private stores will be “tightly regulated.”
That said, each municipality in the province has the choice to opt-out of physical cannabis stores, and the provincial government will be doling out $40 million to help local governments deal with the costs of legalization.
Ontario’s new plans will disappoint prospective retailers who have been flocking to the province ahead of legalization, trying to shore up a market position before the floodgates are opened. But the disappointment will be short-lived. The delay may hold private retailers back six months, but when April hits, the fact that there won’t be any physical government stores means more opportunity for the private sector.
In other words, the government of Ontario has just relinquished the throne here and is giving up its monopoly on weed to the private sector. Investor radar should be pinging, and six months gives everyone time to secure market share now that the rules of the game have been revealed.
In the meantime, darling Canopy Growth (CGC) was down over 7 percent today, ahead of earnings results expected at the close of the market.
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By David Craggen for Safehaven.com
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