Uneven distribution of cannabis shops leaves Waterloo Region without a store

No legal marijuana stores planned yet for Waterloo Region or Hamilton, while London gets three

Yorkregion.com
March 7, 2019
Greg Mercer

Ontario's lottery system to dole out the first wave of cannabis shop licences is producing some unusual results across the province.

Canada's most populated province will allow privately owned retail marijuana sales starting April 1, after the Ford government abandoned a plan for government-run stores last summer.

The first 25 pot shops will have exclusive access to the bricks-and-mortar market until the end of the year, as part of a lottery system that was intended to distribute retail licences fairly across Ontario.

But the reality has been anything but fair as would-be operators are concentrating in a handful of cities.

So far, 18 of the 25 lottery winners have submitted applications to the Alcohol and Gaming Commission of Ontario to open a cannabis store. It's expected very few of them will be ready in time for the April deadline.

Three of those applications are for proposed stores in London, a city with a population of about 385,000 people. Based on applications submitted to this point, that's the same number of legal cannabis shops as Toronto, a city with more than seven times the people.

Kingston, a community with roughly 125,000 residents, has two proposed cannabis shops -- just one less than Ottawa.

There are none planned yet for municipalities such as Waterloo Region, Hamilton, Guelph, Sarnia or Windsor, or anywhere else in the vast 'West Region' that stretches all the way from Manitoulin Island to Lake Erie. Others cities that also approved cannabis shops, such as Barrie, Thunder Bay, Sault Ste. Marie, Belleville and Peterborough, have also been shut out.

More than 17,000 applicants tried to get a cannabis store licence through a lottery system that divided the province into five regions -- north, west, east GTA and Toronto -- in an attempt to distribute stores more evenly.

The other proposed stores in the West Region would be in St. Catharines and Niagara Falls. The remaining cannabis stores in other parts of Ontario are planned for Brampton, Oshawa, Burlington, Ajax and Sudbury.

No other licences will be permitted until after December 2019 because of distribution and supply problems that have plagued the government's system.

For some cannabis advocates, the uneven distribution of stores is proof of a retail system that was not well-designed.

"That's a very good indicator of how badly this rollout appears to be going. And that's squarely on the shoulders of the province," said Peter Thurley, a Kitchener-based board member with Canadians for Fair Access to Medical Marijuana.

"I think this shows the absolute folly of the current government's approach. It's clearly not working ... There's a lot of things with this system that just aren't adding up."

The proposed stores in London would put three cannabis retailers within a 10-minute drive of each other. Cannabis buyers in most other communities in southwestern Ontario, meanwhile, would be left shopping for marijuana online, through the government-run Ontario Cannabis Store.

The disorganized rollout of retail stores has only given more opportunity for the black market to thrive, Thurley said.

"The vast majority of demand is still being met by the illegal market. With the uneven distribution of stores, that is 100 per cent going to continue," he said.

"There's no reason why the province of Ontario shouldn't have been ready for this rollout. Four months after legalization, and there's still not a legal store in the most populous province in the country?"

Rules that prevent stores from doing home delivery, or consumers from ordering directly from licensed growers, also creates a vacuum that the black market is eager to fill, Thurley said.

The Alcohol and Gaming Commission, meanwhile, stresses that it's not responsible for choosing where lottery winners get to open. That's not how the system was designed.

"It is the applicant that chooses the location within an eligible community, not the AGCO," said commission spokesperson Raymond Kahnert.

Cannabis industry insiders, meanwhile, say would-be shop owners are struggling with a regulatory system that's proving to be tremendously complicated. They're prohibited from changing the name of the person on an application or the corporate structure of the company operating the store.

They're also subject to a background check, scrutiny of tax records and financial statements. Each of the 25 lottery winners have to submit a $50,000 letter of credit -- and could be fined $25,000 if they fail to get their stores up and running by the end of April.