Cannabis Retail Overhaul to Save the Day in Ontario?

The Ontario government recently announced its plan to open more retail stores in the province. The OCS (Ontario Cannabis Store) will also allow the private sector to participate in the storage and sale of cannabis. These steps aim to improve the flow of cannabis products and provide a convenient shopping experience for customers.

More retail stores

Canada’s populous province has been going through a supply shortage for a long time. Top companies in the country also reported disappointing results due to the slow rollout of retail shops there. Ontario is one of the biggest cannabis markets, but it has very few retail stores. To improve this situation, the provincial government recently announced its plan to move to a new system next year and open around 750–1,000 retail stores.

Ontario Premier Doug Ford said, “That’s eventually what the goal is — open it up to the market and let the market dictate. It’s like any business: some people will be successful, some won’t. But I guess the previous issues that the whole country saw…we didn’t have enough cannabis to sell but now there’s enough supply and we’re working hand-in-hand with the [licensed producers].”

The current lottery process has received severe criticism from cannabis producers. As the process has resulted in only 24 retail stores, the government is moving to a better process starting next year. It plans to migrate to an open-allocation process. As per analysts’ estimates, the Ontario cannabis market is in need of 750–1,000 retail stores.

Private sector

The crown corporation recently notified licensed producers about its plan to move to a “hybrid” wholesale model. This new model will allow the private sector to store and distribute cannabis products. The OCS planned this as a response to feedback from licensed cannabis providers. Many producers demanded the government allow them more involvement in cannabis distribution. Currently, retail stores are solely controlled by the OCS.

The OCS is working with producers to make various revisions to the current system. The current system was designed to make sure the shipment and storage of cannabis were regulated and monitored by the government.

Licensed producers have grown frustrated due to the OCS’s monopoly. Producers argue that the province’s interference increases the price of cannabis products. Currently, legal cannabis products cost around 30% more than black-market products. Major producers such as Canopy Growth (CGC) (WEED) reported weak revenues on pricing adjustments related to supply-chain problems.

Cannabis stores in Ontario

Ontario is one of the most mature cannabis markets in Canada. The industry previously suffered from supply shortages for months, but right now, many companies are reporting excess supply. To solve the problem of the slow rollout of retail shops this year, the government is planning to open the doors to more retail stores and the private sector’s involvement in 2020.

Applicants will be able to apply online, and applications will undergo a series of background checks. The selected applicants will get licenses to set up brick-and-mortar stores in Ontario. As Cannabis 2.0 products are about to hit the market soon, the announcement has come at the right time.