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Time to end Ontario’s legal cannabis monopoly, industry says

close up photo of kush on glass container

Bryan Passifiume | The National Post

With deliveries still not back to normal nearly three weeks since a cyberattack crippled the Ontario Cannabis Store’s sole warehousing and delivery contractor, retailers and industry insiders say the time’s come to end the province’s monopoly on wholesale weed sales

Ontario needs to end its monopoly on its legal cannabis market, said a prominent business organization.

On Monday, the Ontario Chamber of Commerce (OCC) urged Queen’s Park to release its stranglehold on licensed cannabis retailers through requiring them to exclusively purchase their stock via the Ontario Cannabis Store (OCS) — the Crown corporation behind the legal monopoly over online sales and wholesale distribution for Ontario’s recreational cannabis industry.

“From the start, we’ve suggested that we need to have retailers and producers to be able to have a direct relationship with one another,” said Daniel Safayeni, OCC’s vice-president of policy and Chair of the Ontario Cannabis Policy Council (OCPC.)

“We see with the current delivery stoppage issue and the cyber hack vulnerability why it’s important to not hedge the province’s bets on one single government-run entity.”

On Aug. 5, a cyberattack targeting Domain Logistics — the third-party operator of OCS’s logistics network —  brought Ontario’s recreational cannabis industry to its knees.

With workers manually filling orders, retailers still face dwindling inventory and frustrated customers as regular deliveries halted.

Ontario Finance Ministry Spokesperson Scott Blodgett said OCS’s wholesale operations were back to normal by Aug. 18.

“By August 11, deliveries to retailers ramped up, with most stores receiving their deliveries 3-4 days late from their normal delivery schedules,” he said.

Industry insiders and retailers alike lament at hinging their livelihood on a frangible supply chain, and want Ontario to follow suit with other jurisdictions and allow retailers to sidestep OCS and buy stock direct.

Safayeni said this month’s difficulties highlight the dangers in putting all of one’s stash into a single baggie.

“When that bridge breaks, producers can’t get their products into the hands of retailers, retailers can’t stock their shelves, and consumers can’t purchase the products they’re looking for,” he said.

“They may very well turn to the illegal market.”

Illegal storefronts competing directly with licensed producers is a reality in many cities.

In response to OCS’s meltdown, CAFE — the notorious illicit Toronto storefront retailer and gadfly to that city’s police and bylaw officers — sent out emails taking advantage of legal supply shortfalls, promising “uninterrupted service” for customers.

While 2018’s legalization was a long-worn campaign promise by the Trudeau Liberals, the federal government has lost interest in following it through.

A mandatory two-year review mandated by the Cannabis Act was to have commenced last October, but as of this month there’s no indication on when it would begin.

Independent retailers say they’re bearing the biggest brunt of these shortfalls.

Jennawae Cavion, founder and CEO of Kingston, Ont. retailer Calyx+Trichomes, told the National Post they had to shutter one of their two outlets just to stay in business.

“It’s really scary to have your entire livelihood in the hands of people who are pointing fingers at other people,” she said.

She accused OCS of keeping retailers in the dark, and was pointed in her response to the Ontario Finance Ministry’s assertions that wholesale deliveries have been “back to normal” for nearly a week.

“I still haven’t received a full order yet — we received 30 cases last week which are long gone now, and now we’re waiting for our next order, so no things are not ‘back to normal,’ and we’re not going to be back to normal until October, if we’re lucky,” said Cavion, who is also executive director of NORML Canada.

“They’re full of s–t.”

She said retailers are questioning why they’re being forced to compete against their own wholesaler, as OCS is also Ontario’s only legal mail-order cannabis service.

“I’ve been really disappointed by the OCS this year,” she said.

“I can play devil’s advocate and in communities where there’s no access, where people don’t have stores yet, I can appreciate that it would make sense for (OCS’s mail-order retail) to exist to can increase access — that has to be bottom line.”

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