Province announces plans to sell pot

Details

Published on Tuesday, November 21, 2017

Kate Jackman-Atkinson
Neepawa Banner & Press

The sale of recreational cannabis in Manitoba will take place in private businesses, but will be controlled by the provincial government. This hybrid retail and distribution model was announced by Manitoba premier Brian Pallister on Nov. 7.

The federal government has mandated a July 2018 implementation date for the legalization of cannabis for recreational use and across the country, provinces have been developing their own strategies for the distribution and sale of the drug. Under Manitoba’s new model, the Liquor and Gaming Authority (LGA) will regulate the purchase, storage, distribution and retail of cannabis and Manitoba Liquor and Lotteries Corporation (MBLL) will secure and track the supply of cannabis sold in Manitoba, but the private sector will operate the retail locations.

While some Manitobans, including the Manitoba Government and General Employees’ Union, favoured selling cannabis through government retail channels, Pallister said that this move strikes the right balance. “Legalization of cannabis is a major shift in public policy and safety remains our top priority,” he said, adding,  “MBLL oversight of supply and distribution will ensure safety and retail by the private sector will ensure competitiveness and accessibility, which will help achieve our goal of getting gangs out of the cannabis business.” Pallister also said that the decision to use private sector retailers means that there will be no need for public investment in new store fronts. The first retail locations in Manitoba will open July 2, 2018, meeting the federal government’s deadline.

However, recreational cannabis sales won’t be coming to every municipality. Following the announcement, municipalities learned that they will have the ability to decide whether or not cannabis can be sold within their jurisdictions. This would be similar to their ability to govern Sunday shopping hours or alcohol sales and would likely be done through zoning bylaws.

Three objectives

In coming up with a retail strategy, Pallister said they set out the objectives of eliminating the black market, keeping cannabis out of the hands of youth and creating new opportunities in the private market. “The private sector’s role in encouraging competitive pricing supports these goals.  At the same time, provincial oversight will help maintain supply chain integrity and prevent the diversion of product,” said Growth, Enterprise and Trade minister Blaine Pedersen.

Similar to what the province already does with private wine stores, all cannabis sold at retail locations in Manitoba must be purchased from MBLL, which will source product from federally licensed producers. MBLL-owned and operated facilities, or those licensed through the LGA, will handle the storage and shipment of product. The government hopes that economies of scale and bulk purchasing will allow them to both undercut black market pricing and support the retail sector. The province will be issuing a request for proposals from those looking to operate retail locations, with an application deadline of Dec. 22. Successful proponents will be notified by Jan. 31 and agreements will be signed by March 31.

While the announcement said that the request for proposals would be open to businesses looking to operate one or more retail locations, on Nov. 8, Pedersen said that in the first round of approvals, they are only considering businesses that will serve multiple locations. “We’re looking at cross-Manitoba coverage,” he said to the Winnipeg Free Press. “How can you have a single store and serve all of Manitoba? This is a phased-in approach. We need entities that can cover the province. In the future, we can look at one-offs.”

Dougald Lamont, the newly elected leader of the Manitoba Liberal Party, said that the request for proposals suggests that while there may be many retail outlets, only four applicants will be considered to run them, a move that favours large chains at the expense of Manitoba small businesses, including those currently operating medical marijuana dispensaries. “This RFP is a bait and switch from what the government promised the other day and is a gift to ‘Big Weed’ while Manitoba entrepreneurs are shut out,” said Lamont.

Elsewhere in Canada, there has been some concern about the ability of licensed producers to meet the new demand in a relatively short time period. Across Canada, there are currently 69 medical marijuana growers who have been approved by Health Canada, but most of those are new companies; over 30 of them received their initial licensing in 2017.  In Manitoba, there are only two licensed growers. In anticipation of increased demand, Delta 9, the province’s oldest medical marijuana grower and retailer, went public on the TSX Venture stock exchange last week. CEO John Arbuthnot has said the money raised will allow his company to increase production from 1,000 kilos a year to 17,000 kilos.

Then there is the question of legalizing growers currently operating in the “black” or “craft” markets. The B.C. based Cannabis Commerce Association of Canada, which represents about 250 small and medium-sized businesses currently operating in the “craft” cannabis marketplace and wanting to participate in a future legal marketplace, say that provincial government policies must include current growers. They argue this is a way to meet demand, help eliminate black market activities and preserve jobs and industry knowledge already in existence.

Laying the

ground work

When it comes to the legalization of marijuana, safety, especially on roads, has been a major concern for Manitobans. Pallister said that the first step towards legalization began in March, with the introduction of the Cannabis Harm Prevention Act, which targets drug-impaired driving. In September, Manitoba Public Insurance launched a campaign to raise awareness about the dangers and consequences of drug-impaired driving.

The next step took place at the end of July, when the provincial government issued an expression of interest to gauge the interest and capability of the market to provide services for the production, distribution and retail of cannabis.  Pallister said that they received 60 responses, indicating significant private-sector interest in participating in the new cannabis industry.

While the Nov. 7 announcement outlined the framework under which cannabis will be distributed and sold in Manitoba, a few questions remain unanswered, including at what age people will be allowed to purchase the drug, as well as how it will taxed. The federal legislation includes some guidelines, but provinces can go beyond these minimums.  For example, the federal government has set the minimum age of purchase and consumption at 18 years of age, as well as announcing plans to impose a tax of $1 per gram on cannabis costing up to $10 a gram, plus an additional 10 per cent tax on cannabis priced above $10 a gram. This money will be shared equally between the provincial and federal governments.

Further additions to Manitoba’s plan are expected in the coming months.