Canada’s sixth-biggest city to consider lifting ban on cannabis stores

Mississauga – Canada’s sixth-largest city by population – is going to have an opportunity to reconsider its existing ban on legal cannabis stores in early June, MJBizDaily has learned.

The city, which is near Toronto, is among nearly 70 municipalities in Ontario that prohibited regulated cannabis stores from setting up shop after Canada legalized adult-use marijuana in late 2018.

Mississauga has a population (721,599 per the 2016 Census) higher than most provincial capitals, so a move there to bring cannabis sales under the watchful eye of regulators would open the door to significant retail opportunities in the city.

A lifting of the ban would also allow legal merchants to challenge illegal sellers for their market share for the first time.

Mississauga Councilor Karen Ras told MJBizDaily a staff report will be brought to Council on June 9.

She said the report will have “jurisdictional scans looking at areas that have already opted in for marijuana shops, and what their experiences are.”

She said the police chief recently put forward a report about the issues around the legal and illegal cannabis shops in Brampton. 

“That’s a perspective (Council) didn’t have previously,” Ras said. “We know that the illicit market (for cannabis) in Mississauga is alive and well, and many of the storefronts have moved to online delivery services. Our first priority should be public safety when it comes to accessing their legal marijuana. 

“Why should our residents have to go outside of a city of this size to get a legal substance? We don’t have that type of oversight for liquor stores or beer stores, so why are we insisting on having that much more of a prescriptive approach to a legal substance?

“We’ll get a sense that whether or not the city will move forward with opting in or out (on June 9).”

She said it is possible a vote could take place that day.

“It’s just a matter of what procedural form it (a vote) comes in. I think everybody will have a very good sense of what will transpire that day,” she said. 

The last time around, only two councilors voted to opt in.

“I’m hopeful there are more than just the two councilors, myself and Councilor (Sue) McFadden, who supported opting in previously,” she said.

“We have enough information. It’s time to move forward, and I’m hoping that the other councilors will see that as well. I think some may have changed their position. I’m hoping it’s the majority.

“There’s an economic opportunity as well. I only see upside.”

Among cities with a population of more than 50,000, the following opted out of Ontario’s legal cannabis store regulatory regime:

  1. Mississauga (population: 721,599)
  2. Markham (328,966)
  3. Vaughan (306,233)
  4. Richmond Hill (195,022)
  5. Oakville (193,832)
  6. Whitby (128,377)
  7. Newmarket (84,224)
  8. Caledon (66,502)

In 2018 and 2019, Ontario allowed the province’s municipalities to choose whether they wanted to opt into permitting physical cannabis stores or to opt out of the regime.

More than 2 million people in Ontario, or about 15% of the province, live in one of the municipalities that have banned legal stores.

Once a city opts into the province’s regulatory regime, it is not allowed to backtrack on the decision, because by then legal physical stories will already have been established.

Canada marijuana, Canada’s sixth-biggest city to consider lifting ban on cannabis stores

Illicit-market retreat 

Canada’s illicit market has been on the decline since cannabis was legalized in late 2018.

Illicit spending on cannabis is estimated to have peaked in the third quarter of 2018 – the final quarter before legalization – when Statistics Canada estimated illegal sales reached 1.6 billion Canadian dollars ($1.3 billion).

Two years later, illicit sales had fallen to an estimated CA$968 million.

Spending on legal recreational cannabis overtook illegal transactions for the first time in 2020, a sign that legalization in Canada was a success, despite the billions in losses suffered by the country’s largest cannabis producers.

Omar Khan, senior vice president at Calgary-based cannabis retailer High Tide, said communities that have allowed regulated marijuana sales have experienced significant benefits 2½ years after legalization.

“Youth consumption and illicit-market sales are down, while employment in the regulated sector is up,” he said.

“We are encouraged that Canada’s sixth-largest city may soon reverse its earlier decision because such a move will protect kids and public health by ensuring that regulated and responsible retailers can thrive while driving out those who choose to break the law.”

 

Canada marijuana, Canada’s sixth-biggest city to consider lifting ban on cannabis stores

More stores, more sales

Among Canadian cities, Toronto was the clear leader in 2020 with CA$334 million in sales – or 12.7% of all regulated recreational cannabis revenue in the nation.

Toronto’s success in ramping up sales, at the expense of the illicit market, is generally attributed to its store rollout, plus improved product selection and falling prices.

The city started 2020 with only seven stores but ended the year with 87 storefronts. Consequently, monthly sales grew from CA$17 million in January to CA$40 million in December.

Cities with slower store rollouts experienced significantly slower growth in the legal cannabis market.

Vancouver’s timid start to legal cannabis reflects the limited number of provincially regulated stores open in the city throughout the year, which might be a function of the city’s sky-high store fees.

Vancouver ended 2020 with roughly 45 legal stores.

The city’s monthly sales grew from less than CA$6 million in the first month of 2020, ending the year with about CA$12 million in sales.

Vancouver also has the lowest spending per capita on legal cannabis compared to other large Canadian cities.

More information on how illegal cannabis spending was estimated before legalization can be found here.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].