This article was originally published in the Toronto Sun on November 18th, 2020. 

Ontario’s new budget shows historic spending, but the government must tighten its belt in other areas to reduce the debt burden being passed on to the next generation.

One way to do this would be to strip the Ontario Cannabis Store’s (OCS) role down to that of a regulator and get the government out of the business of selling pot entirely. There’s no reason taxpayers should be paying for government bureaucrats to sell cannabis, and the government should not be competing against non-government licenced retailers.

Ontario Premier Doug Ford said he wanted a free market approach to the province’s retail cannabis industry before he was elected in 2018. “I don't believe in the government sticking their hands in our lives all the time. I believe in letting the market dictate.”

But since winning the election, his government inserted itself into the cannabis retail business, increasing prices for and competing with legal retailers which has allowed the illegal sellers to maintain dominant market share. In its first quarter report for this year, the OCS calculated that the illegal market still makes up 75 per cent of pot sales in Ontario.

Part of the problem is that illegal cannabis remains much cheaper than the legal stuff. Statistics Canada found that legal cannabis was 70 per cent more expensive than illegal cannabis in Ontario in 2019. The average price of legal cannabis was $10.53 per gram while the average price for illegal cannabis was $6.21.      

The government-run OCS drives up the price of legal cannabis by acting as a middleman between licenced producers and retailers. In Ontario, licenced producers aren’t allowed to negotiate with or sell directly to licenced retailers. The product must first go through the only wholesale supplier in the province, the OCS, which adds a markup.

The Ontario government has also allowed the illicit market to thrive by forbidding licenced non-government retailers from selling online. The OCS was granted a monopoly as the only retailer currently allowed to sell legal cannabis online in Ontario. The government temporarily allowed curb-side pickup and delivery of legal cannabis purchased from licenced retailers online and over the phone during the pandemic in April of this year but did not extend that measure past July.

The Ontario Chamber of Commerce has rightfully called on the government of Ontario to amend the Cannabis Licence Act to allow for delivery and curbside pick-up for licenced retailers. “Successfully displacing the illegal market will require a fair and competitive legal market whereby private cannabis stores are granted the tools to compete against illegal operators.”

The OCS’s online retail monopoly is especially problematic in Ontario’s municipalities which have banned legal brick-and-mortar cannabis stores, such as Mississauga. Even though legal dispensaries aren’t allowed to open there, the OCS can still sell and deliver its products to residents.

For a government that criticized the Beer Store’s retail monopoly, calling it, “anti-competitive,” it’s disappointing that it would grant the OCS a retail monopoly over online sales and delivery of cannabis.

Some might argue that the OCS should continuing selling cannabis because it has finally started turning a profit - and that money could come in handy right now. But that argument could be made for any product. Should the government have a monopoly over the sale of shoes or bananas because the profit could be used to reduce the provincial deficit? Of course not. Further, OCS’ monopoly has driven up the price of legal cannabis, which has enabled the illicit market to maintain dominant market share.

There’s no reason taxes should pay the salaries of the many OCS employees who perform roles that licenced non-government retailers could handle. Ontario’s sunshine list contained the names of 36 employees at the Ontario Cannabis Retail Corporation in 2019, the year after the province lost $42 million selling pot.

With double-digit deficits projected for years to come, the Ontario government must do everything in its power to reduce unnecessary spending. Getting the government out of the business of cannabis retail would save taxpayers money and allow the legal non-government cannabis market to grow and displace the illicit market.