TROY LAWRENCE/THE VARSITY

Ontario’s dispensaries were given an ultimatum of sorts when the provincial government announced cannabis legalization. The provincial government announced that its policy measures regarding private selling and distribution of cannabis would allow private businesses to operate legally beginning on April 1 — on the condition that they shut down all operations by the October 17 legalization date.

Vic Fedeli, Ontario’s Finance Minister, has reiterated a zero-tolerance policy regarding dispensaries that continue to operate illegally past the legalization date. Many dispensaries and shops familiar to Toronto residents face the existential question of shutting down and losing almost six months of business, or continuing to operate illegally — presumably under increased police scrutiny — and jeopardizing their future earnings and prospects as legal entities. 

Sea of Green and High Society, two notable Toronto dispensaries, have opted for the former, with the objective of reopening legally in April. While they may lament lost business — some dispensaries make almost $40,000 a day in sales — many dispensary owners are wary of continuing to operate illegally. The legalization transition has been a long-awaited process and legal privatization has many businesses taking the path of least resistance and accepting all of the impending policy changes. 

The more burning question that has come in light of the recent closure of dispensaries is how these changes will affect the market and culture. Will the growing supply saturate earnings? Will its ubiquity rob stoner culture of its exclusivity and stigma? 

From a policy perspective, the closure of dispensaries seems to be a move to gauge demand by funnelling sales to the government’s Ontario Cannabis Store, which will be the only legal source of recreational cannabis until April. 

While there is optimism in the stock of large marijuana producers, such as Canopy Growth Corporation (TSE:WEED) and Aurora Cannabis (TSE:ACB), uncertainty is still evident in price fluctuations. As eager as investors are to bet big on cannabis, small setbacks have seen stocks tumble more than 30 per cent, as was the case with Aurora in August, only to recover and supersede previous peaks in a matter of days. Perhaps the provincial government will use the consolidated demand it generates from its online retailer to project the cannabis market’s cap and the tax earnings they can expect to collect from this newly created legal market.

From a cultural perspective, the largest shift seems to be the transformation of cannabis from drug to commodity. While this may just be a government catching up to a culture that has long been normalized in Toronto, privatization on a larger provincial scale has serious implications for communities. Anticipating this shift, the provincial government has given cities until January the right to opt out of allowing private retailers from operating.  

The shift from drug to commodity has also seen a shift in the language being used to frame the issue. Some note that cannabis is being viewed increasingly in monetary terms and as a potential entrepreneurial venture. April is set to be hectic, as existing and new dispensaries begin capitalizing on the new market, but some insiders believe that they will overcorrect and stabilize soon after. 

That’s not to say we shouldn’t anticipate exciting developments. A larger market opens the door for innovation in the alternative consumption sphere. Dispensaries such as CAFÉ already distribute edibles, such as cannabis-infused chocolates and gummies. Constellation Brands (NYSE:STZ), an international beer, wine, and spirits producer, recently invested in Canopy Growth and Second Cup (TSE:SCU) has shown interest in pursuing a distribution licence. Cannabis-infused beverages, pastries, or even cosmetics represent merely the tip of the iceberg.

In any case, it remains to be seen whether privatization will result in a suitable structure for adequate distribution. The Ontario government has bought itself time and drawn a line in the sand for dispensaries wishing to operate legally. 

Stay up to date. Sign up for our weekly newsletter, sent straight to your inbox:

* indicates required

Tags: , , , ,