Ontario unveiled plans on Friday to sell recreational marijuana through government-run stores and online, choosing a monopoly model it hopes will stamp out a proliferation of illegal stores and the broader black market.
Canada’s most populous province is the first to respond to the federal government’s move to legalize use by the middle of next year, saying it would create a cannabis control board to manage all aspects of the retail trade.
GOVERNMENT ONLY
The province plans to open 40 stores by July 1, growing to 80 in 2019 and 150 by the end of 2020, and to control all legal online sales via a government-run Web site.
The stores, which are to be similar to but separate from those that sell liquor in the province, will be located mostly in areas where illegal pot dispensaries have sprouted since Ottawa said it would legalize the drug.
The Canadian black market is estimated to be worth between C$7 billion and C$10 billion (US$5.77 billion and US$8.22 billion) a year, with rates of youth use among the highest in the world.
ILLICIT TRADE
Analysts expect it will take time for legal trade to push aside unsanctioned competition.
“I don’t think 40 stores will replace that demand,” PI Financial Corp analyst Jason Zandberg said.
The Canadian Federation of Independent Businesses said the rules “shutting out the private sector will only allow the illicit trade to flourish.”
Decisions on pricing and taxation will be made once the federal government provides further details.
Ontario Minister of Finance Charles Sousa said he expects revenue from marijuana to be modest initially and grow over time.
Eight Capital Inc analyst Daniel Pearlstein said direct legal consumption in Canada could be worth about C$9 billion to C$10 billion within five or six years, but that the absence of rules on edible products would create interim black market opportunities.
PRIVATE CONSUMPTION
Consumption is to be allowed only on private property, but the province left open the possibility of licensing establishments where cannabis could be consumed in future.
The minimum age for recreational marijuana use, purchase and possession in Ontario is to be 19.
The federal government had proposed a minimum age of 18 in its planned legislation earlier this year, but said provinces would be able to alter that.
The federal government’s plans, which are to be reviewed by lawmakers when they return to parliament later this month, would make Canada the first G7 country to legalize recreational marijuana use nationally, and second in the world after Uruguay.
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