Allowing municipalities to opt out of pot shops helps black market: experts

Allowing municipalities to opt out of pot shops helps black market: experts

Ontario government said that it will only issue 25 retail licences by April

As municipalities across Ontario weigh whether to allow cannabis retail stores in their neighbourhoods, experts and consumer choice advocates warn that having large swaths of the province opt out of brick-and-mortar pot shops could fuel the black market.

Recreational cannabis can currently only be bought online in Ontario, and municipalities have until Jan. 22 to decide if they want to host private cannabis stores, which are set to open next spring.

Under the rules laid out by the Progressive Conservative government, municipalities that opt out can change their minds down the line, but once they sign on, they can’t back out.

In recent weeks, several municipalities — both rural communities and major urban centres such as Mississauga, west of Toronto — have chosen to reject cannabis retail stores, saying they want more control over the number and location of the shops before they consider opting in. Some have also said they want more time for public consultations.

This, combined with the government’s recent announcement that it will only issue 25 retail licences by April — after initially saying it would not put a cap on the number — could embolden illegal pot sellers and allow them to thrive, experts and consumer groups said.

“Unfortunately, it’s turned out to be just a comedy of errors,” said Anindya Sen, an economics professor at the University of Waterloo who specializes in the cannabis industry. “When you take (those things) together, it’s possible that despite being legalized, Ontario might become one of the biggest black markets in the world.”

While the internet remains an option, Sen said delivery hiccups and limited selection at the province’s online cannabis store also undermine efforts to lure consumers away from illegal avenues.

That sentiment was echoed by David Clement, manager of North American affairs for the Consumer Choice Center.

“Community opt-outs and limited storefronts is a toxic combination which pretty much guarantees that the black market will thrive,” he said. “Capping retail outlets and having entire communities opt out makes the legal market in Ontario far less accessible.”

The Ontario government has said it was capping licences in response to a national cannabis supply shortage, which it said can only be tackled by the federal government.

“Ontario intends to transition to an open allocation system as soon as supply permits,” Jesse Robichaud, a spokesman for Attorney General Caroline Mulroney, said in an email.

Robichaud further said that municipalities that have not opted out will have 15 days to provide written submissions to the Alcohol and Gaming Commission of Ontario, the provincial agency overseeing retail cannabis stores, on any proposed storefront location. He would not say whether the province was open to giving municipalities more control over the site selection.

READ MORE: Cities face tight timelines for ‘opting out’ of hosting legal cannabis shops

The province has pledged $40 million over two years to help local governments with the costs of legalization, with each municipality receiving at least $10,000. A first payment will be issued this year on a per household basis, but a second payment doled out after the January deadline will go only to those that opt in, Robichaud said.

As of Wednesday, roughly 30 of Ontario’s 444 municipalities had formally notified the AGCO of their decision, with at least 10 opting out, according to the agency’s website.

In the Town of Erin, south of Orangeville, councillors voted on Dec. 5 to keep cannabis stores out of their community, largely over the site selection issue, said Mayor Al Alls.

“Basically, we feel there’s just too many unanswered questions at this stage of the game and that we weren’t comfortable with proceeding with allowing it to be retailed in our community,” Alls said.

Alls said he would reconsider if the municipality was given more control over the locations, but stressed council has not discussed that possibility and would need to be on board.

The mayor also suggested a pot shop might not be successful in a small community anyway, noting people might be reluctant to be seen going in and out of a store. “It’s going to take civilization a while to accept the fact that my Joe Blow minister down the street goes in to get a joint every day,” he said.

People are more likely to choose to grow it themselves, “especially in the country,” he said.

Mississauga Mayor Bonnie Crombie wrote a letter to Premier Doug Ford outlining the city’s concerns earlier this month, a day after councillors voted to hold off on hosting pot shops for the time being, but hasn’t heard back.

She said that while the city isn’t opposed in principle, officials felt they did not have enough time to prepare for the shift to an open market model from the government-run system proposed by the previous Liberals regime.

Municipalities should be allowed to increase the setback beyond the 150-metre minimum laid out by the province, and should receive funding even if they opt out because they still bear the costs of public education and enforcement, she said.

Asked whether she feared the black market would flourish in the absence of pot shops, Crombie said every municipality has to do what’s right for its residents.

“Cannabis is available online…so there is availability to residents,” she said. “And certainly there’s always the option of purchasing cannabis at a retail store outside of your own municipality, taking a trip into the city of Toronto.”

At least one other municipality on the outskirts of Toronto has also opted out, prompting Toronto’s mayor to raise concerns about the pressure that will put on the city’s cannabis market.

John Tory has also asked the province to give the city more control over where the stores are placed, saying he doesn’t want to see a cluster of them near the highway just to accommodate consumers from neighbouring communities without pot shops.

“I think it is reasonable for us, given that there may be more pressure on the Toronto market, for us to say that we should have a hand in determining that there aren’t clusters of pot shops all together in one place or that they aren’t located near schools or community centres,” he said this week.

“I’m more concerned with that at the moment than the absolute number but there’s no question that the number of pot shops will affect the continued existence or not of a black market we’re trying to eradicate.”

Though she acknowledges there are many outstanding questions on how the retail model will roll out, Pauline Rochefort, the mayor of East Ferris in northeastern Ontario, said councillors wanted to get in on the ground floor.

The community near North Bay chose to opt in, in part to ensure its own residents — which have a high rate of entrepreneurship — have the chance to participate in the cannabis market, she said.

Rochefort said there has been no public outcry over the prospect of retail cannabis stores, but it’s unclear whether the community of roughly 5,000 can keep an outlet in business.

“While we did not have…all the information, we felt comfortable that things were in good hands,” she said.

Paola Loriggio, The Canadian Press

Like us on Facebook and follow us on Twitter.

cannabis

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Environment Canada has issued a wind warning for Greater Victoria, with winds expected to get up to 70 km/h Friday morning. (Don Denton/Black Press Media)
Wind warning promises blustery Friday for Greater Victoria

Winds up to 70 km/h expected Friday morning

Passengers in rows 13 to 19 on Air Canada Jazz flight 8069 from Vancouver to Victoria Feb. 28 were exposed to a case of COVID-19. (THE CANADIAN PRESS/Nathan Denette)
COVID-19 exposure found on flight from Vancouver to Victoria

Passengers in rows 13 to 19 on Air Canada Jazz flight 8069 Feb. 28 affected

Crews deal with a rock slide on the Malahat section of Highway 1 in 2017. (Black Press Media file photo)
Rock work closes Highway 1 in Langford for spurts

Friday closures could delay drivers up to 20 minutes

Low interest rates have acted as a catalyst for the pandemic real estate market. (THE CANADIAN PRESS/Graeme Roy)
Real estate sales surging across Greater Victoria but risks lie ahead

Single family home prices jump nine per cent over past year while condo values remain stable

Protestors against old growth logging gather in front of the courthouse in Victoria on Thursday morning. (Don Denton/Black Press Media)
Fairy Creek protesters gather at Victoria courthouse

Logging company seeks injunction to remove blockades near its Port Renfrew operation

B.C. Health Minister Adrian Dix and provincial health officer Dr. Bonnie Henry head for the B.C. legislature press theatre to give a daily update on the COVID-19 pandemic, April 6, 2020. (B.C. government)
B.C. nears 300,000 COVID-19 vaccinations, essential workers next

564 new cases, four deaths, no new outbreaks Thursday

(Black Press Media file photo)
POLL: How’s your butter?

Recent reports have some Canadians giving a second look to one of… Continue reading

Anyone with information on any of these individuals is asked to call 1-800-222-TIPS (8477) or visit the website victoriacrimestoppers.ca for more information.
Greater Victoria Crime Stoppers wanted list for the week of March 2

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

The intersection of Melrose Street and Third Avenue. (ELENA RARDON / ALBERNI VALLEY NEWS)
Suspect in custody after two pedestrians struck in Port Alberni hit and run

RCMP asking for video footage, credit witnesses for quick arrest

(National Emergency Management Agency)
No tsunami risk to B.C. from powerful New Zealand earthquake: officials

An 8.1 magnitude earthquake shook the north of New Zealand Thursday morning

Comox Valley RCMP had access to 20 Street blocked off between Cousins and Choquette avenues as they conducted a raid of a house on the block. Photo by Terry Farrell
Comox Valley RCMP raid Courtenay problem house, several arrests made

Comox Valley RCMP conducted a raid of a problem house on 20th… Continue reading

(AP Photo/Richard Vogel, File)
Pandemic stress, isolation key factors as to why Canadians turned to cannabis, alcohol

Study found that isolation played key role in Canadians’ substance use

Grand Forks’ Gary Smith stands in front of his Church of the Flying Spaghetti Monster float. Photo: Submitted
Grand Forks’ Flying Spaghetti Monster leader still boiling over driver’s licence photo

Gary Smith, head of the Church of the Flying Spaghetti Monster of B.C., said he has since spoken to lawyers

A Cowichan Valley mom is wondering why masks haven’t been mandated for elementary schools. (Metro Creative photo)
B.C. mom frustrated by lack of mask mandate for elementary students

“Do we want to wait until we end up like Fraser Health?”

Most Read