At least 65 municipalities across Ontario say no to cannabis retail

TheStar.com
Jan 23, 2019
Joseph Hall

Dozens of Ontario cities, towns and villages have hung keep-out signs on their borders, opting out of hosting pot shops.

It was not clear late in the afternoon on Tuesday--deadline day--precisely how many had chosen to bar the brick-and-mortar establishments, 25 of which are supposed to open April 1 across the province.

Stouffville council vote in favour of allowing cannabis shops on Jan 15, 2019.

But at least 65 municipalities had decided to prohibit the shops. These included large centres like Mississauga, Markham, Oakville, Pickering, Richmond Hill and Vaughan in the 905 regions surrounding Toronto. Toronto itself voted yes to the shops and is scheduled to see five open April Fool’s Day.

Municipalities that have chosen to opt out can reconsider and welcome the stores anytime. But a decision to allow them is irrevocable.

Communities that refused the stores, however, have forsaken their full stake in a $40-million implementation fund the province is providing to help defray any increased policing, education or public health costs the shops may bring to welcoming municipalities.

The Alcohol and Gaming Commission of Ontario will release a full list on Wednesday morning showing how all 314 communities granted the opt-out right by the province voted, spokesperson Ray Kahnert said in an email.

Rod Elliot, a senior vice-president and cannabis expert at the consulting firm Global Public Affairs, says the decision to opt out was largely made by older, more conservative councils that still saw a shady haze around cannabis.

“Most local governments rely on the advice of staff reports and I don’t think I came across one city staff report that recommended opting out,” Elliot says. “So the decision by some councils to opt out I think was purely political.”

He saw two main factors. First, the stodginess of older, more socially conservative councils and communities, who frowned on the concept of legal cannabis. Second, “I think the big shocker was Mississauga opting out early and I think that got a lot of people’s attention,” he says.

On Dec. 12, the decision to bar the stores in Mississauga (population 722,000) shocked many--and gave other GTA communities cover to do the same, Elliot says. As well, he says, many opt-out communities resented the lack of control granted them by the province to decide where stores could be located within their precincts.

Even Toronto, which opted in Dec. 13, did so with an attached provision that the city be given greater control over shop placements.

Nick Pateras, vice-president of strategy at the cannabis resource and information company Lift & Co., says large store-free stretches of territory anywhere could draw black-market operations.

“If there’s a whole territory of municipalities that opt out there is a risk that you have a secondary market that would be illegal,” he says.

And aside from traditional dealers, these areas could also invite ordinary people from opted-in communities to stockpile products and sell them to acquaintances or friends in dry districts. While online sales are available to shopless districts, many pot connoisseurs prefer to buy products they can see and smell, Pateras says.

Brampton, the 905’s second largest community, voted overwhelmingly this week to accept the stores, giving cities to the west of Toronto easier access.

A large majority of the communities that said yes, however, will not see stores opening there anytime soon. The first 25 licences--for which a lottery earlier this month gave winners a chance to apply--can only be used in communities with populations greater than 50,000.

But many in the industry expect pot production shortages that badly disrupted recreational rollouts--both online and in physical operations following legalization Oct. 17--will be remedied by year’s end.

And the rush of store openings that should follow will see the free-for all market anticipated earlier become a reality. Reticent communities may find it harder to deny the stores as retailers open shops along their borders, some experts says.

In the meantime, Pateras says the Ontario map has been sufficiently covered by opt-in communities that a healthy retail cannabis market could emerge across the province in coming years.

“After today’s deadline, the ball is now in the court of the retailers to open welcoming storefronts with well-trained employees who will guide informed consumer purchase decisions,” said Lift’s CEO, Matei Olaru. “Anything less will bolster the black market and discourage other municipalities from opting in later with a greater degree of comfort.

“In general, I’m seeing municipalities opting in who have a stake in capitalizing on the economic benefits of retail. Border cities like Windsor and Niagara Falls stand to benefit from cannabis tourism from the U.S., and Barrie has the potential to capture cottage country. There is also an opportunity for well-placed retail in cities like Hamilton, Brampton and Oshawa, who can draw traffic from the string of GTA cities surrounding Toronto who have opted out.”