
Ontario unveils plan for government chain of marijuana stores - fmihaila
https://beta.theglobeandmail.com/news/national/ontario-unveils-plan-for-government-chain-of-cannabis-stores/article36210217/?ref=http://www.theglobeandmail.com&
======
3pt14159
I'm a Toronto native. These are the forces driving this decision:

1\. Provincial government is cash poor. The LCBO is a huge source of cash,
what government would give up another source? This isn't taxes, this is
profit. "Isn't this just another tax?" One might ask, but no it's not. The
reason is that Ontario has fewer alcohol distribution centres than a free
market would provide. Most people just do a bigger alcohol run and drive /
walk / drive further than their American counterparts. There's queuing
occasionally, but usually only before long weekends or holidays.

2\. The current dispensaries are run by criminals. The optics of giving a
windfall to law breakers aren't great. The police keep shutting them down, and
they keep popping up. I'm not bashing them, I think cannabis should have been
legalized a long time ago and I think it's unconscionable that we have
Canadians addicted to heroin because they were given opioids instead of pot,
because pot requires a huge hassle to get approved, and I think dispensaries
alleviate that stress, but some operations are _huuuuge_ and most certainly
are funnelling money into real criminal organizations.

3\. The union at the LCBO is huge and powerful. The jobs, even seasonal ones,
pay well and Ontarians aren't outraged because the staff is generally
competent and friendly and the stores are clean.

4\. Controls over potency are a real problem in the current dispensaries and
because of the sketchiness of the current people involved and their
distribution networks, the government would have to get involved auditing
anyway.

I hope that they keep the stores open every day of the week. Many Canadians
use pot outside the medical system, but for medical reasons and fast access
will mean the black market will finally collapse. I also hope there will be a
system for legitimizing certain strains that gain popularity in the US, like
the LCBO does for wine.

~~~
rbobby
> The union at the LCBO is huge and powerful. The jobs, even seasonal ones,
> pay well [...]

And oddly enough I'm perfectly happy with that. Ontario's strategy with booze
is responsible consumption (or whatever it's called)... essentially price it
sufficiently high that we don't get too many drunks on the street.

Given how badly alcohol abuse can mess up lives (not just the abuser but their
family and friends too, not to mention random folk who they cross paths with)
I think this is a sensible strategy.

As part of that strategy I don't think trying to have to the cheapest labour
costs is that important. It won't change the end price of booze, it will only
ensure that the jobs won't be staffed by long term employees (and hence
knowledgeable employees, and employees that can save for retirement, etc).

~~~
api_or_ipa
> Ontario's strategy with booze is responsible consumption (or whatever it's
> called)... essentially price it sufficiently high that we don't get too many
> drunks on the street.

Sin taxes are actually composed of two distinct effects: the effect of
increasing price and therefore reducing negative externalities like you
mentioned. In addition, a well structured sin tax should use it's gross profit
to fund support services like rehabilitation and health services.

LCBO only does 1 of those things well. LCBO marks up their product by a
percentage, which impacts premium products more than lower priced products[0].
If LCBO was committed to decreasing consumption of alcohol, it would apply a
flat fee to each unit of alcohol, which would maximize utility and minimize
the impact to the rest of the alcohol industry.

0: [http://hellolcbo.com/app/answers/detail/a_id/1251/~/lcbo-
pri...](http://hellolcbo.com/app/answers/detail/a_id/1251/~/lcbo-pricing-
structure%3A-price-markup-example)

~~~
miohtama
In Finland alcohol tax is based on volume (liters) so premium products don't
get more expensive

------
JPKab
I live in Colorado.

I think they are really blowing it by making the stores government owned.

In Colorado, the stores are privately owned but very, very strictly regulated.
Plants are tracked with an RFID all the way to the products derived from them,
with a full chain of custody all the way to purchase.

Only adults 21 and up can enter them, with a strict dual-check of
identification (once to enter, and again when paying the cashier).

The various shops actually end up being very different from each other in
surprising ways. They all adhere to the regulations, but some are much larger
and more corporate feeling, with lower prices, while others are boutique,
specialize in higher quality product, and priced higher.

The pace with which new products can be introduced is much faster due to
potential producers not having to negotiate with a giant bureaucracy to get a
product on the shelves.

~~~
criddell
You're making a lot of assumptions about how they will run the stores.

Other people have already mentioned how the government runs the alcohol stores
and (IMHO) they do a pretty good job of it. I live in Texas now and when I go
back to Ontario to visit my family, it does seem weird that I can't buy beer
in a 7-11 or a grocery store or in a drive through shop (not sure these are a
good idea).

Being the sole seller also means that they can negotiate ruthlessly and drive
prices down to maximize profit for the people of Ontario. I don't know if they
will do that, but it sure helps.

~~~
thinkharder
As someone who lives in a state with state-run liquor, this is the exact
opposite of how it actually plays out. Prices are anywhere from 30-100+% more
than across the border in a state without a state-run liquor policy. Because
the government has a monopoly there is no competition to drive prices lower
and since the government monopoly gets to keep the profit there is no
incentive for them to lower prices. Furthermore, a big part of the reason that
liquor is state-run where it is, with few, scattered stores that close at 7:00
PM and on Sunday and holidays, is to encourage reduced alcohol consumption.
Raising prices is an effective mechanism for that too.

I think if you set up these kind of government-run dispensaries, you have to
mandate that their purpose is ensuring product and supply chain quality (not
just making fat bags of cash), and that revenue above COGS has to be
restricted to what it costs to run the program and maybe a small
emergency/maintenance fund. Otherwise the natural incentive that apply to any
monopoly encourage them to raise prices to the max the market will bear and
rent-seek. It's civically conscientious to think that the government would be
advocating for the people by working to proved the lowest possible prices, but
that isn't how any government-run 'vices' dispensary program I've ever seen
plays out IRL.

~~~
cortesoft
I think costing more and making the government more money are intended
features of this system, not side-effects.

'vice' dispensaries are not meant to provide the best service to their
customers. They are meant to fill a need well enough to prevent black market
competitors, while at the same time making the vice inconvenient enough to
discourage its use as much as possible. At the same time, they want to
maximize revenue for the government.

Whether this is good or bad is up for debate, but it isn't something they are
accidentally doing. When it comes to vices like alcohol or drugs, 'advocating
for the people' is not a simple 'provide people what they want' equation -
people are wanting something that is bad for them, so do we give it to them as
cheaply as possible, satisfying their want, or do we make it more difficult,
to satisfy what society wants as a whole?

~~~
saenns
is taxation not a simpler and more direct way to achieve higher prices without
granting practically irreversible monopoly rights?

~~~
jpetso
Simpler in terms of not handling retail operations directly. More complicated
as now you have to employ an army of regulators to make sure the regulations
aren't being skirted in favor of higher sales numbers.

------
ericzawo
Lifelong Ontarian. I always thought our logic of having a provincially run
liquor store was limited in practice. Like, why aren't LCBO stores open 24
hours? Generally, most are open from 10 am to 9 pm. Making them 24 hours could
nearly double their workforce.

I've been watching closely the way government will carry this out, and its
unfortunate they aren't choosing to franchise dispensary permits out to small
business. But I suppose Ontario's government would botch that, too. Hell,
they're attempting to roll out the opportunity to purchase beer and wine
(woo!) at grocery stores — but so far, only the franchise chains are able.

Finally, Liquor in Ontario is dumb expensive. I expect them to milk the price
of marijuana for all its worth when this finally comes out.

~~~
vidarh
I don't know about Ontario, but in Norway the reason for having limited
opening hours (shorter than the ones you gave), and restricting the number of
outlets, and pricing things high is that the government monopoly on these
products is not there to maximise sales, but to minimise them. They're only
open in the first place because prohibition didn't work and drove sales under
ground.

So they provide a compromise - limited outlets, restrictions on opening hours
etc. - that stave off attempts open up for wider sales and that is "good
enough" to prevent most (but not all) black market sale of alcohol.

I believe that is the motivation for most alcohol related government
monopolies.

------
plantel
Toronto is currently full of dispensaries on every corner. Some are open late
and you're always close to one, independent local businesses with people in
the community making money and spending it locally.

It will be sad to see a government monopoly turn weed distribution into the
LCBO style. Expect prices to go up to $15-20g, cut down the number of
locations and closes at 9pm.

~~~
ape4
Police warn organized crime, including the Hells Angels, has infiltrated the
medical marijuana market [http://www.cbc.ca/news/canada/ottawa/police-warn-
organized-c...](http://www.cbc.ca/news/canada/ottawa/police-warn-organized-
crime-including-the-hells-angels-has-infiltrated-the-medical-marijuana-
market-1.4067112)

~~~
wolco
Sometimes they release this information to scare and control the population.

This is talking about the hell angels getting a medical supply and selling it
on the black market. Not the same as running a store and none of this changes
by having the lcbo run stores the supplier are licensed by government of
Canada.

------
tekni5
If anyone is interested, there is an interesting documentary about the LCBO.
Developed by homebrewers, so it's not completely impartial but also quite
fair.
[https://www.youtube.com/watch?v=Zn555TyJJw0](https://www.youtube.com/watch?v=Zn555TyJJw0)

Giving government absolute control over distribution of a non-essential
product/service is probably not the best idea, but at least it's better than
having that product/service be completely illegal. Ideally they should allow
private businesses to sell under very strict guidelines.

~~~
mynegation
As an Ontarian and having previously lived in a country where pretty much
anyone can sell alcohol till very late I passionately support LCBO and - as a
voter - will support the proposed provincial government controlled marijuana
distribution. No, it does not completely prevent alcohol in the hands of
minors, late night drinking binges, deaths from methylene, but reduces these
cases greatly for sure.

~~~
kenned3
As an Ontarian and having previously lived in a country where pretty much
anyone can sell alcohol till very late i find your comment odd.

I lived in the states for several years and you can get liquor at grocery
stores, they had private stores which were like 4 times the size and selection
of any LCBO.

What i do recall seeing is Toronto Liquor being sold in Connecticut for a full
50% less (bottled in Toronto)..

I dont recall seeing any "problems", in fact it seems Ontario and Connecticut
have similiar death rates and Canada is among the worlds highest despite
ourarchaic liquor laws from the 1920's which are almost soviet era (wait in
line for a ticket, then wait in line for your item).

[http://nationalpost.com/news/canada/canadas-drunk-driving-
de...](http://nationalpost.com/news/canada/canadas-drunk-driving-death-rate-
worst-among-wealthy-countries-u-s-study-finds)

you can see canada's rates are 5.4 per 100,000 people and you can see
Connecticuts rates here [http://c-hit.org/2016/01/17/drunk-driving-fatalities-
decline...](http://c-hit.org/2016/01/17/drunk-driving-fatalities-decline-but-
state-ranks-high-in-impaired-drivers/)

Perhaps you have a reason why Canada's death rate from impaired driving is
actually higher then the US?

PS. I dont even drink, but find it odd the government is in this business and
gouges their customers. if it is "bad" for you, why sell it? oh.. thats
right.. to stop the bootleggers and fill hte government revenue?

------
microcolonel
This is, of course, probably a bad idea.

There is a preexisting efficient network of high quality marijuana
distribution in Ontario (at least here in Toronto). Even if the province does
as well with marijuana as they do with booze (the LCBO is at least a pleasant
retailer, aside from the rules about minors touching merchandise during
shopping), the black market will be far more attractive to the mid and low
shelf market.

It is considerably easier to grow and cure marijuana than it is to ferment
commercially viable quantities of an attractive alcoholic drink.

The ideal legal weed situation is a legitimate version of the black market
arrangement, which hasn't been a considerable health problem in any way that
could be attributed to poor quality product. Pretending otherwise is just a
typical legal trick pulled by established agribusiness/venture firms. Frankly
it's hilarious at a time when the province is finally reintroducing private
alcohol retailers.

------
iamatworknow
I live on the border of New York and Ontario/Quebec and I can't see how this
won't spur legalization here. The border is already incredibly porous and the
smuggling routes already exist. This will just make it even easier.

~~~
giarc
Smuggling a case of beer across will result in you losing the beer. Smuggling
marijuana will result in a felony and never being allowed to cross the border
again.

It doesn't make sense to illegally transport marijuana across the border just
so you can buy it legally from a store.

~~~
iamatworknow
I'm saying it already happens. I grew up with people who literally smuggle
weed for a living across the northern border. There are some areas where there
is no actual official border[0] where smuggling is happening now. It was
already comparatively easier to access in Canada then smuggle to the US, but
when it's legal in Canada it will just help fuel the supply being brought
over.

[0][https://en.wikipedia.org/wiki/Akwesasne](https://en.wikipedia.org/wiki/Akwesasne)

------
afinlayson
Finally! Let's put the money that made drug dealers rich, and put it back into
things the people actually care about! Like education, health care.

~~~
wolco
Or billion dollar gas plants that get cancelled.

------
mwdalrymple
The LCBO is a good employer for stupid people. Those salaries go right back
into the economy. These unionized jobs also come with a great pension
providing retirement security. I am quite happy with this.

The government privatizing things such as Ontario Hydro has been a huge
disaster. At least they are not stupid enough to give this up.

~~~
stevehiehn
'Stupid People'? Come on, that's a real asshole thing to say. You can't be to
bright yourself if you think a person is stupid for working an honest job.

~~~
ajeet_dhaliwal
Perhaps 'Stupid wages' for unexceptional people is more accurate.

------
giarc
The one thing missing from most comments I see here is price parity and
equality. I've lived in Ontario (government liquor stores) and now live in
Alberta (private liquor stores).

The big perk about Ontario liquor is that it's the same price no matter what
store you walk into. Doesn't matter if you are in a small town of 1000 people
with one liquor store or in Toronto with 500 stores.

In Alberta, if you are in a small town and your only option is Joe's Liquor
Store, you're going to pay $55 for 24 bottles of Canadian that go for $20 less
at the Safeway liquor store in a city. And in actuality, you can pay $55 for
that case in the middle of Calgary if it's a mom and pop shop.

I suspect the same will be true for marijuana. Same prices regardless of what
LCBO you walk into.

~~~
aphextron
>I suspect the same will be true for marijuana. Same prices regardless of what
LCBO you walk into.

You'd be surprised how self regulating the market is for marijuana though.
People always want to make the alcohol analogy, but it's a totally different
thing. Marijuana has a long tradition of home cultivation and use, as well as
a thriving well established black market which will always pick up the slack.
Prices tend to be very stable across the board in California at least. Without
any government run outlets the price is the same across the entire state.

~~~
giarc
Here's the government run liquor store in Moosonee, Ontario [0] Moosonee is a
town of 2000 people in northern Ontario. It is an 8 hour train ride away from
Timmins Ontario (train or plane access only). Timmins is an 8 hour drive away
from Toronto. I can't imagine a situation where the marijuana prices in this
town would be comparable to downtown Toronto given the amount of labour needed
to transport the marijuana to this remote location. And I'm not really
speculating, we see this all the time. Citizens of our northern territories
(YK, NWT, NT) are used to paying $25/L of milk and so on.

Sure this is a bit of hyperbole, but it points to one of the perks of
government run/controlled distribution, namely those in the cities can help to
subsidize the price for those in smaller towns across Ontario. Is this
government controlled model the best? Probably not but let's remember this is
unchartered territory. We can look to the individual states for learnings (ie.
Colorado, Washington) but Ontario is 1 million km^2 and California is half
that with a much greater population density. They are different in many ways.

0 - [https://goo.gl/iFNkaC](https://goo.gl/iFNkaC)

------
gyardley
This entire thread is a great example of how many if not most Canadians will
passionately defend any old goofy policy, as long as it's different from how
the Americans do it.

I've lived in a variety of American states as well as Ontario and I really
can't believe what I'm reading - anyone defending the selection, knowledge of
the staff, price, hours, pretty much anything relating to the LCBO vs. a
privatized but regulated market is a few Timbits short of a Snack Pack. I
suspect the very same will be true with The Weed Store once it rolls out - way
better than prohibition, but much worse than Colorado or Oregon or Washington.

~~~
NovaS1X
If it counts for anything I'm a Canadian and I vehemently oppose any policy
like this.

The selection and knowledge of my dispensary in Vancouver in invaluable. They
even take notes based on experiences of every strain I buy from them so that
they can tailor their suggestions to me based on my history and the
composition of the strain. I can't just smoke anything, my body only responds
well to certain strains, and I trust nobody less than some ignorant, unionized
liquor store staff to personalize my experience based on my needs.

The quote by Ms. Roach saying " … The person who smokes high-end cannabis,
they don't want shwaggy, mass-produced stuff. They don't want Labatt Blue,
they want craft." is completely true.

edit: spelling/grammar

------
tvaughan
Seems relevant: [https://www.nakedcapitalism.com/2017/09/global-banks-
sabotag...](https://www.nakedcapitalism.com/2017/09/global-banks-sabotage-
uruguays-efforts-legalize-marijuana.html)

------
mfoy_
A step in the right direction, I guess. Ontario can be surprisingly
conservative about these things... they only recently started allowing alcohol
to be sold in grocery stores. Seems the initial round of legislation will
legalize it, but with heavy restrictions.

~~~
nasalgoat
I really wish they'd step back and let the free market handle it, instead of
once again heavily restricting distribution and sales to another bloated
government monopoly.

Plus, the number of stores at launch is way too low - people will simply
continue to purchase higher quality weed for less money from private sellers.
It's a bad move all around.

~~~
kogepathic
_> instead of once again heavily restricting distribution and sales to another
bloated government monopoly._

Yes, yes, yes. Why can't they regulate it like cigarettes?

The argument about keeping it out of the hands of minors is bullshit. It's
already illegal to sell tobacco products to people under age in Ontario.

LCBO and the Beer Store are stupid ideas from a bygone era that need to end.
Legal monopolies of provincial owned entities should not be permitted.

I'm not saying full privatization is the right answer, because I don't believe
the free market solution is always best, but at least allow private
competition to a crown corp. LCBO has no motivation to innovate because there
is little/no competition.

------
stevehiehn
Its interesting that Ontario just introduced the privatization of booze and
then turn around and create a monopoly on pot. Well, either way i'm pretty
happy that good normal people will no longer be at risk of criminal offenses.

------
PoachedSausage
Meanwhile, over here in the UK we're still in the "drugs are bad, mmmKay."
dark ages.

I really hope a major political party runs with a cannabis decriminalisation
policy at the next election.

~~~
vidarh
The Lib Dems do [1] have a reasonably enlightened drug policy. Labour is
lagging, but I think there's hope of that changing - Corbyn has in the past
sponsored a bill for decriminalisation of weed (in 2000) and stated he wanted
to decriminalise medicinal use (in 2016).But Labour spans very social liberal
and quite socially conservative groups so can't afford to go as far as the Lib
Dems on that subject.

[1] [http://www.independent.co.uk/news/uk/politics/all-drugs-
shou...](http://www.independent.co.uk/news/uk/politics/all-drugs-should-be-
decriminalised-say-the-liberal-democrats-10338244.html)

------
VeronicaJJ123
Wait a minute. After telling us that marijuana is bad of use now government
wants to get into that business ? This in my opinion is worse sort of
corruption.

The people who run marijuana businesses should be marijuana enthusiasts who
care about themselves and their customers not some government pen pusher.

Soon they will treat it as Tobacco and will tax it to death and not to mention
kill all innovation in this space.

------
MrBlue
LCBO pricing? Get ready for $65 grams! The black market will continue to
thrive.

------
matart
Will they sell it at duty free like alcohol is?

~~~
devrandomguy
Screw duty free, the airline should offer cannabis cookies as a snack option.
What airline wouldn't like a plane full of chilled out passengers, who are
contented to watch reruns of old Disney movies? And I'll take an extra pizza
pocket, plz & thx.

