Ontario mulls overhauling pot shop system in 2020 as sales lag

Relief may finally be coming for cannabis producers that have been stymied by the lack of legal retail stores in the country’s most populous province. 

The Ontario government is considering a plan that would abandon the maligned lottery process that has left it with only two-dozen legal pot shops, and instead pivot as early as January to a system that could lay the groundwork for up to a thousand stores in the province, according to a person directly familiar with the matter.

Provincial officials have proposed moving to an "open allocation" system for issuing pot store licences next year, allowing would-be shop owners to simply apply online and pass a series of background checks to sell legal cannabis in a bricks-and-mortar shop in the province, the person said. It would mark a return to the Progressive Conservatives’ original plan to open enough cannabis stores to support what it believes is a mature market, which analysts estimate to be between 750 to 1,000 outlets, the person added.

“That’s eventually what the goal is — open it up to the market and let the market dictate,” Ontario Premier Doug Ford told reporters Thursday morning. “It’s like any business: some people will be successful, some won’t. But I guess the previous issues that the whole country saw … we didn’t have enough cannabis to sell but now there’s enough supply and we’re working hand-in-hand with the [licensed producers].”

The person, who wasn’t authorized to speak publicly on the matter, said that no decisions have been finalized as government officials are still putting proposals forward to Ontario’s cabinet for approval. However, a decision is expected to be announced in the coming weeks, the person said.

“There’s no clear consensus on the cabinet table, but a decision should be made soon,” the person said.

Ontario Finance Minister Rod Phillips told BNN Bloomberg’s Paige Ellis on Thursday that an announcement to start issuing cannabis store licences under an open allocation system will be made “when conditions are right.”

“Our priority is to make sure that we have safe distribution and that we tackle the black market,” he said. “Our government has been clear that private sector delivery and private sector retailers are going to be an important part of that.”

The cabinet-level discussions signal that Ford’s Ontario government acknowledges it needs to ramp up efforts to open additional legal pot stores in the province and stamp out a still-thriving illicit market.

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