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Why Dispensaries, Not Liquor Stores, Will Kill The Black Market

Ontario is working on regulations for the recreational marijuana market ahead of the federal government's plan to introduce a legalization bill in spring 2017. But one activist thinks the province's regulations could cost taxpayers a tremendous amount of money, while inadvertently keeping the black market for cannabis in business.

On June 18, the Toronto Star reported that Ontario's ministries of finance and health have struck a working group with the province's attorney general to draft a framework for regulations.

"We're guided by [the federal government's] commitment [to legalization], but at the same time we're having an across-ministry working group," Finance Minister Charles Sousa told The Star. "We've got senior officials involved. We've begun some terms of what Ontario's approach should be."

He also said that marijuana dispensaries - illegal storefronts selling cannabis in cities like Toronto - won't likely be part of those regulations. According to the Star, Sousa wants to "send out the signal" that the storefronts' days are numbered. "I, at least, don't see that being the distribution mechanism," he said.

And despite marijuana being a new industry to regulate, he's confident that Ontario will be able to manage it. "We've got a lot of experience already when it comes to regulating alcohol, regulating tobacco, regulating gaming. I have all these agencies reporting up to me right now relative to this. That is helpful as we proceed in this discussion."

He didn't specify where marijuana would be sold, but his reference to regulating alcohol fuels speculation that Ontario Premier Kathleen Wynne will let the LCBO - the province's government-owned chain of liquor stores - monopolize the marijuana industry.

But Abi Roach - founder of the Cannabis Friendly Business Association (CFBA) - says that position is short-sighted, as trying to replace dispensaries will be costly and ineffective at keeping the public safe. Here's why.

1. Liquor and cannabis don't mix

Prime Minister Justin Trudeau has repeatedly said that he wants to legalize marijuana in order to clean up the streets and keep kids away from cannabis. But Roach thinks that Ontario will create a new public safety crisis while trying to fix another by unintentionally encouraging consumers to consume alcohol and marijuana at once.

"Liquor and cannabis do not mix," she told Civilized. But selling them at the same store will likely lead people who don't use cannabis regularly to try combining them. "It sends a message that it's okay to smoke cannabis and consume alcohol at the same time, when I know that that's a puke fest just waiting to happen."

And that, Roach predicts, will add more strain to the province's overburdened hospitals.

"I guarantee you, hospital visits that are due to alcohol poisoning - or people thinking that they have alcohol poisoning because they're puking so much - will definitely go up. Most definitely."

For details on the effects of mixing marijuana and alcohol, check out this fact sheet from the University of Washington.

2. Preparing LCBOs to sell cannabis will be costly

Taxpayers would also have to foot the bill to build the infrastructure necessary for the LCBO to warehouse and distribute marijuana.

"They're going to have to build all new storage facilities. They're going to have to train people from the bottom up. So you're looking at creating a whole new infrastructure."

To her, that seems like a waste considering that there's already an industry in place: the marijuana dispensaries.

"When it comes to the storefronts, people are already trained. They're already employing people. They're already paying rent. They're already paying taxes. All the government really has to do is just create regulations....It makes no sense to wipe out an existing industry to monopolize, and build a new one, and waste more money."

3. Selling marijuana is about more than carding customers

Politicians in favor of letting the LCBO handle marijuana sales often tout the Crown corporation's success at preventing minors from buying alcohol. But Roach thinks those supporters are overstating the importance of checking IDs and underestimating the demands of cannabis consumers.

"They say that the LCBO to card people. Anyone can card people. I've been carding people here [at her head shop and vape lounge] for 16 years….Any monkey can do it."

But offering adequate customer service to cannabis consumers is much trickier.

"There's just so much more to it than, 'Here's some green weed.' " she said, adding that LCBO staff can ring up orders competently, but they rarely offer in-depth knowledge of their products. "Whereas, when you walk into a [cannabis] dispensary, the people behind the counter know everything about the strain, they know everything about the effects of it."

And dissatisfied customers will keep the black market in business, she warns. "Because myself - I don't drink alcohol. I will refuse, absolutely refuse to go to the LCBO to buy my cannabis. Absolutely refuse. I would rather just keep going to my dealer that I've been going to for the last 25 years. And have options and customer service"

4. Ontario has a ready-made industry

Restricting cannabis sales to liquor stores won't eliminate the black market, Roach warns, because those who are invested in growing and selling cannabis illegally won't give up their businesses.

"If you want to take out the black market, you have to give people the opportunity to go from the black market into the white market. So to close it off to regular people, and to open up the market only to unions - and only to government-owned industry - makes absolutely no sense because all you're going to do is keep the black market alive and running, instead of providing jobs to people who have been in the industry forever."

5. People are well-served by the dispensaries

Roach says that the above concerns really amount to one underlying issue with Ontario's approach to regulating marijuana: they're out-of-touch with the wants and needs of the cannabis consumer.

"There's a complete disconnect between the cannabis consumer and the government. And what the cannabis consumer actually wants and needs as opposed to what the government thinks that they want and what they think that they need. And there lies the whole problem with legalization."

She added that the government will face difficulty imposing a tightly regulated system in markets like Toronto where consumers have embraced the dispensary system.

"People now have selection, they have choice, they've tasted freedom and they don't want to give it back. And that's where [politicians] are going to face the biggest upheaval, I think, from the people saying, 'Hey, this is exactly what we wanted, and now you've taken it away.' Any polling that you go to will tell you…this is the preferred model."

h/t Toronto Star.


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