Leave Cannabis Distribution To The Private Market

By Samantha Goodman (AIMS on Campus 2017 Essay Winner)

The cannabis industry has the potential to be a vibrant, entrepreneurial market bursting with creativity and innovation. Look at Amsterdam where the streets are lined with pot candies and stores have a menu with drugs of the day – including specials. Despite the legalization of marijuana in Canada, it is doubtful it will flourish in this way because of the present distribution model that has been proposed.

Each province is making plans for its own distribution model. This past September, the Ontario government announced its plan to eradicate illegal marijuana storefronts and create the cannabis control board in its place. This board will open up to 60 storefronts in the first year while managing the sale and distribution of cannabis in Ontario. The idea is to follow the model of the existing Liquor Control Board of Ontario (LCBO) stores and set a precedent for other provinces to follow suit.

By being in charge of the cannabis market, the government will crush all entrepreneurial and creative spirit of retailers. Consumers will receive the bare minimum instead of the best. There will be no competition between stores to create new products, innovate the current selection, have lower prices, and stay open later.

Retailers with the incentive to keep their businesses open and know the cannabis market are the ones who will be able to provide the best service for consumers. These stores are incentivized to do everything in its power to cater to the public.

The question of public safety tends to crop up in regards to marijuana being provided by private entities. To properly ensure public safety, the government should create a licensing system where every retail store must abide by certain safety conditions such as an age restriction. After that, the government needs to take a hands-off approach in order to allow the marijuana market to thrive.

The Ontario government’s current solution is far from hands-off. The distribution model is based on squeezing out the “underground market” to ensure public safety. There is the perception only criminals sell marijuana and they must be stopped. The proposed solution is the government has to come in and control the entire distribution system. Except, why is there this idea that government control will indefinitely eliminate the underground market?

For one thing, there will be no competition for government stores to innovate and push their business models further. What will happen when there is a gap between what the consumer wants and what the government stores offer?

People will turn to the underground market. As an example, what will consumers do when they want to purchase marijuana after hours? The government stores will not be open late as there is no reason for them to be. There is no competition threatening to be open later and steal business. The underground market will do this and consumers will turn to it to fill their needs.

Aside from failing to quash the underground market, another concern within the public safety debate has to do with minors gaining access to cannabis. People believe the government will make sure this does not happen but it is not always the case.

Currently, the private sector does a better job in ensuring minors do not obtain age-restricted products. This has been proven in a study conducted testing underage secret shoppers. The results were 1 in 4 minors successfully purchased age-restricted products from LCBO compared to 1 in 8 for convenience stores. This study proves the government’s intervention is not the sole proprietor for public safety, the private sector can actually do a better job.

A different approach has been proposed by the province of Manitoba through its “hybrid model.” It includes the Manitoba Liquor and Lotteries Corp. securing the supply of marijuana and tracking it, but allowing private retail stores to be in charge of selling it. This model allows private stores to sell marijuana but controls its supply which can be a problem depending on the demand.

There is no perfect model but history has proven the government does not have the best track record. While models such as the LCBO do work, it does not provide the best experience for Canadian citizens. There is no competition for citizens to have access to the best services possible.

In Canada, there is the opportunity to create a thriving marijuana industry. By leaving it to the private market, the government can allow competition to provide leading products for its consumers while ensuring public safety through regulation.

 

 

 

 

 

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