Ontario officials unveiled a sweeping set of rules late Wednesday that will govern the retail portion of cannabis sales in Canada’s most populous province.
As MarketWatch reported ahead of the announcement, the province made an official statement Wednesday after the market closed and plans to introduce a bill in the provincial legislature Thursday. The last of Canada’s provinces to put forth a regulatory structure, Ontario is expected to be the biggest customer for recreational marijuana: It accounted for more than 40% of cannabis sales in the country last year, according to StatisticsCanada.
“Canada has a long history of doing things slowly but really well,” Jeremy Potvin, co-founder of Weedbox said. Weedbox is preparing to open retail locations in Ontario that Potvin says will eventually be the LuluLemon of pot. “[Canada] makes decisions for the long term, we make decisions for how is it going to look for Canada in 20 years. I think this going to be a win for consumers. Retail is tough, you better know what you’re doing.”
The new set of regulations, if passed, will include a licensing scheme that will be run by the provincial Alcohol and Gaming Commission. Even though the retail shops will be operated by private companies, they will have to buy cannabis from the provincial government, finance minister Victor Fedeli said at a news conference Wednesday.
Government officials also said that the legislation would not include a cap on the total number of pot shops in the province, but it would limit federally licensed producers such as Aurora Cannabis Inc. ACB, -4.54% ACBFF, -4.39% Canopy Growth Corp. WEED, -0.89% CGC, -1.44% , and Tilray Inc. TLRY, +6.14% to one retail location each. Aurora, which reported earnings Monday and plans 37 retail locations in Alberta, closed down 4% Wednesday, Canopy fell 1.4% and Tilray rose roughly 6%.
“No cap is a win for consumers,” Potvin said. “For retailers there’s going to be kind of a street fight.”
The changes to the regulatory scheme were widely anticipated after the Progressive Conservative party took power earlier this year and announced that the government would no longer oversee bricks-and-mortar retail sales as it does with liquor. Instead, the province will exclusively run online cannabis sales, which will be the only way to purchase marijuana legally in the province until April, when retail stores will be allowed to open.
When asked at a news conference Wednesday, the minister of finance said that the online store would begin selling pot Oct 17, but it will not accept pre-orders ahead of that date.
Municipalities that wish to opt-out of having cannabis shops open within their boundaries will have until Jan. 22, 2019, to do so, Ontario officials said. Those operating illegal cannabis sales operations after Oct. 17 when cannabis becomes legal across Canada will not be eligible to obtain licenses. People in Ontario will not be allowed to smoke cannabis or use vaporizers anywhere where it is currently illegal to smoke cigarettes.
Ontario used C$2.23 billion worth of cannabis in 2017, according to Statistics Canada, more than 40% of the total for the country. The government agency has estimated that Canadians will spend about C$1 billion on pot during the fourth quarter, once the drug is legal for adult use.
