Last Friday was the entry deadline for Ontario’s second cannabis retail license lottery. Applicants won’t know until Tuesday whether they’re among the winners. Unfortunately, there’s much else they and provincial taxpayers don’t know, because the Ontario Cannabis Store (OCS) keeps it all secret.
OCS, also called the Ontario Cannabis Retail Corp., is a provincial crown corporation under the Ministry of Finance. It holds a legal monopoly on online recreational cannabis sales in Ontario. It’s also the sole supplier to privately owned cannabis stores.
But despite its public ownership and public mandate, OCS runs very privately. Since January, it has posted just four announcements on its news web page. And it has said almost nothing about its sales performance since legalization began. Reporters complain it’s a black hole from which no information escapes.
My own experience is similar. I emailed the friendly sounding HelloOCS office to ask when its 2019 annual report might become available. It took three weeks to respond — only to tell me to contact its media office instead. Hello, OCS?!
By contrast, other provinces offer far more transparency. Nova Scotia and P.E.I. issue quarterly sales summaries. Quebec released its annual report back in June. And New Brunswick happily provides extra data for reporters’ stories.
What little we know about OCS performance comes from other sources. Thanks to Statistics Canada, we know OCS retail sales trended downward from October to March. They likely fell even further once private retailers began opening in April. And courtesy of Ontario’s ombudsman, we know OCS received more complaints than any other provincial agency last year.
This OCS secrecy creates several concerns. Consider Ontario’s retail license lotteries. The first one selected 25 applicants in January. The second will pick 42 more this month, including 19 from Toronto and the GTA.
Are those numbers appropriate, or should they be higher? Alberta, for example, has lately been licensing 20 new shops per week. It now has more than 250.
The Ontario government says product shortages limit its licensing ability. That’s likely true. But without knowing OCS shipment and inventory trends, we can’t be sure.
Or consider pricing. When retailing, OCS apparently charges consumers roughly double what it pays producers. That’s comparable to the LCBO and other provinces’ liquor agencies, which generate cash for government treasuries. But is it appropriate for cannabis?
Look at Quebec, which marks-up products only 23 per cent. Its average prices are below $8 per gram, versus above $10 in Ontario. That makes Quebec’s agency less profitable but more competitive with black markets. Should OCS follow suit? Who’s making that decision?
As for wholesaling, OCS claims to offer “transparent” pricing to private stores. But it doesn’t disclose what that means.
That adds risk for would-be cannabis retailers. To enter the license lottery, they must have a store site, a $50,000 letter of credit, and $250,000 to invest. But they can’t learn about OCS’s wholesale prices, and hence do proper business planning, until after they win.
By Michael J. Armstrong