Ontario ‘freezes’ Cannabis Store leasing ahead of possible shift, sources say

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Efforts to sign leases for Ontario Cannabis Store outlets have been put on hold as the new government weighs how legal marijuana will be sold to consumers in the province, multiple industry sources have told Marijuana Business Daily.

Executives privately expressed optimism, as the delay potentially signals a pivot to private distribution in Canada’s largest market.

Rod Elliot, senior vice president for Global Public Affairs and head of their cannabis practice, said the move would not be surprising given that the new government is reviewing all spending initiatives.

“It would seem that the Ontario Cannabis Store (OCS) is currently in a holding pattern and is awaiting political direction from the new Ford administration on how to proceed with the rollout,” he said, referring to Ontario’s new premier, Doug Ford.

The previous Ontario government committed to opening 40 government-owned retail storefronts in the first year of legalization, which is set to begin Oct. 17.

The OCS has not made any location announcements since April, when it unveiled the only four locations to date. It’s unclear if the province intends to proceed with those locations as announced.

“Ontario will be ready with a system in place that meets the objectives of protecting youth and eliminating the illegal market,” said Clint Thomas, communications director for Ontario’s finance minister.

Shift to private model? 

Ford previously promised consultations on the retail model but did not provide details.

If those consultations result in a shift away from a government monopoly, that could open the door for potentially hundreds of privately owned cannabis outlets.

“Intuitively, the new government would likely support a private-sector retail solution for cannabis if it saves the government money,” Elliot said.

Experts and academics have urged the newly elected Progressive Conservative government to carve out space for entrepreneurs to put the legal industry on a more competitive footing with the black market.

However, with the clock counting down to legalization, another source, who spoke with MJBizDaily on the condition of anonymity, said it is possible Canada’s largest market may start with only online sales.

The president of the OCS was recently reassigned, leaving the monopoly retailer without permanent leadership.

Chris Damas, editor of Barrie, Ontario-based BCMI Cannabis Report, said Ford’s previous rhetoric hints he is amenable to private-sector retailing of recreational cannabis in conjunction with government stores.

“The current plan to have 40 stores open by year end and 150 by 2020 is woefully inadequate in usurping the black market for cannabis, and everyone knows it,” Damas said.

The OCS is set to announce supply arrangements with licensed producers in the coming weeks, but it’s unclear where exactly the cannabis products will be sold.

This story will be updated as information becomes available.

Matt Lamers can be reached at mattl@mjbizdaily.com

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