While you cannot legally sell recreational cannabis in Canada just yet, our provincial and territorial governments are busy getting ready for the passage of the Cannabis Act. Though the exact timing remains uncertain, all eyes are on the Senate to see how long it spends providing sober second thought on Bills C-45 and C-46.
Regardless of timing, the Act enables provinces and territories to create their own system for the wholesale distribution and retail of cannabis, which is well underway. The systems are similar to the role provinces play in liquor distribution and retail, and just like liquor, there is a patchwork of private, public, and mixed models developing (see table).
Models Mirror Liquor Systems
While the provincial models may differ from one another, many are mirroring their own liquor distribution and retail systems, including Ontario, BC, and Alberta.
Ontario’s strictly public model is viewed as overly restrictive, with a limited number of stores (40 to start) and slow growth planned over time. Ontario is planning for 150 cannabis stores by 2020. As a comparison, there are currently 660 LCBOs and 212 agency stores in the province. Premier Kathleen Wynne was challenged on this access aspect of legalization at a recent town hall she hosted and said 40 stores is just the beginning, however, very few individuals expect this model to curb demand or meet the federal government’s objective of eliminating the black market.
While BC is sticking to their liquor retail model of mixed public and private stores, there is one important difference: there will be no provincially-set limit on the number of stores, at least for the time being. Instead, municipalities will have the ability to limit the number of stores through separation criteria, zoning, caps on licences, or by outright banning stores within their communities.
Over in Alberta, even an NDP government did not put the government back into the storefront business.
Premier Rachel Notley’s government has opted for fully private retail. However, Alberta finds itself aligned with the majority of other jurisdictions in opting for online sales run by the government; something many believe will prove challenging for provinces not yet in the online retail business. Only Saskatchewan and Manitoba have allowed for privately-run cannabis e-commerce right from the start.
The Political Landscape
Politics is also serving to shape these retail and wholesale models. While Ontario’s system is not expected to come close to meeting the perceived demand, there is a provincial election scheduled for June 7. Current Premier Kathleen Wynne is in the fight of her life, making it unsurprising that her government stuck to a restrictive system of government retail. Many expect that if she wins the election, Ontario will accelerate the pace of store openings, while new Ontario Progressive Conservative leader Doug Ford is on the record saying he would open up the cannabis retail market to private business.
Though Quebec is largely following Ontario’s lead, the province’s enabling legislation for legalization permits a pilot project for private retail with up to five private retail locations being considered.
In New Brunswick, Premier Brian Gallant’s Liberal government sees legal recreational cannabis as an economic development opportunity, providing numerous incentives for licensed producers to set up shop in the province. The province’s economic development arm, Opportunities New Brunswick (ONB), is out promoting New Brunswick as the best place in the country for cannabis companies. ONB and the government see this as an opportunity to create high-skilled and high-paid jobs in the province and as a way to grow Atlantic exports around the world.
Politics in BC means that the province is behind many others in creating a retail system, given that Premier John Horgan’s minority government gained power through an agreement with the BC Green Party almost two months after election day. Legislation is expected later this spring, but Horgan’s government is already showing a more open approach than the previous government had. For example, the BC government has not prohibited current illegal dispensaries from receiving a legal licence. Existing stores will not be given priority, owners will be subject to robust background checks, and locations will require local government approval, which the vast majority do not currently have.
The BC government has not prohibited current illegal dispensaries from receiving a legal licence.
Arrangements with Licensed Producers
Manitoba plus Newfoundland and Labrador have each entered into arrangements with licensed producers for the creation of retail stores. In BC, tied houses are not permitted. In layman’s terms, this means that producers can own retail stores but not sell their own products; something frustrating to many LPs that were hoping to enter the private retail market in the home of BC Bud. Once again circling back to liquor retail, BC only recently removed the tied house restrictions from licensed liquor premises.
Be Ready for Change
As folks in the liquor industry know well, this is only the beginning–the retail rules will change over time. Change in regulations, tinkering with the system and the debate about whether or not government should be involved in the retail business will naturally extend to cannabis.
Think of the provincial system as a patchwork. There remains much to learn, and the role of municipalities in zoning, business licensing, and law and bylaw enforcement has yet to be extensively discussed. What is known is that the first year of legalization will not run as smoothly as some politicians might promise. Expect plenty of discourse surrounding access and demand, and try to remember that it usually takes a bit of time for governments to get things right.
|Province or Territory||British Columbia||Alberta||Saskatchewan|
|Number of Stores||Limited only by municipal zoning||No limit but no one entity can hold more than 15% of total licences||51 retail permits available spread across 32 communities|
|Licensing Body||Liquor Control and Licensing Branch||Alberta Gaming, Liquor & Cannabis||Saskatchewan Liquor and Gaming Authority|
|Retail licence applications open (as of publication deadline)||Not open yet||Open, no deadline to submit.||Open until April 10|
|Distributor||BC Liquor Distribution Branch||Alberta Gaming and Liquor Commission||Saskatchewan Liquor and Gaming Authority|
|Province or Territory||Manitoba||Ontario||Quebec|
|Number of Stores||Number of stores TBD. 4 entities granted approval to operate locations||40 stores in Year 1, 80 by July 2019, and 150 by 2020||15 locations at the outset|
|Licensing Body||Manitoba Liquor, Gaming and Cannabis Authority||Ontario Cannabis Retail Corporation||Société québécoise du cannabis|
|Retail licence applications open (as of publication deadline)||Closed||N/A||N/A|
|Distributor||Manitoba Liquor and Lotteries Corporation||Ontario Cannabis Retail Corporation||Société québécoise du cannabis|
Province or Territory
Newfoundland & Labrador
|Retail Model||Private, public where there is no private retailer||Government||Government|
|Number of Stores||41 stores expected in Year 1||31 locations expected in Year 1||9 locations expected in Year 1|
|Licensing Body||Newfoundland and Labrador Liquor Commission||CannabisNB||Nova Scotia Liquor Corporation|
|Retail licence applications open (as of publication deadline)||Applications close March 29||N/A||N/A|
|Distributor||Newfoundland and Labrador Liquor Commission||Cannabis Management Corporation||Nova Scotia Liquor Corporation|
|Online Sales||Government-run at the outset||Government||Government|
Province or Territory
Prince Edward Island
|Retail Model||Government||Government-run to start then private||Government-run, only where there is no physical store|
|Number of Stores||4 locations in Year 1||1 physical location in Whitehorse in Year 1||Initially within existing liquor stores|
|Licensing Body||PEI Liquor Control Commission||Government of Yukon||NWT Liquor Commission|
|Retail licence applications open (as of publication deadline)||N/A||Not open yet||N/A|
|Distributor||PEI Liquor Control Commission||Government of Yukon||NWT Liquor Commission|
|Online Sales||Government||Government||Government-run, only where no physical store|
Province or Territory
|Number of Stores||No physical stores in Year 1|
|Licensing Body||Nunavut Liquor Commission|
|Retail licence applications open (as of publication deadline)||Not open yet|
|Distributor||Nunavut Liquor Commission|
CannabisCONNECT, Global Public Affairs