Implications of Marijuana Distribution Insurance in Ontario
According to the Ontario government, selling Cannabis in Ontario is going to resemble the former, archaic system of how we used to sell and distribute alcohol.
Kathleen Wynne announced that 150 government-operated stores will open in Ontario pending the official legalization of Cannabis that is expected to happen on July 1st 2018. The cannabis-selling stores will be separate from the LCBO, and the only place that Ontarians will be able to shop for cannabis, besides a Government operated website.
Premier Kathleen Wynne explained that the move to completely control the distribution of cannabis is to ensure the closure of the illegal cannabis retail “dispensaries”, which have been popping up with increasing regularity following the announcement of Bill C-45. The aim is to become a ubiquitous, convenient hub for those looking to purchase marijuana and to discourage those seeking black market alternatives.
Like with the selling of alcohol, Cannabis is going to be restricted to those who are at least 19 years of age and can provide Government-issued ID, and legal consumption will limited to private residences.
There was some speculation that a government monopoly on selling cannabis would cause a significant price spike compared to current illegal purchase prices. However, the Ontario Government assured that store prices would remain relatively inexpensive and competitive with the black market to additionally dissuade those who would continue to purchase cannabis illegally.
While the LCBO will retain control of the 150 stores selling cannabis, it has yet to be determined whether the branding will remain consistent between the two branches.
How Will This Impact Ontario Cannabis Distribution Insurance?
Although still early, drawing parallels from the beer industry makes it easy to assess some of the implications this announcement will have on Ontario Cannabis producers.
At first glance, it seems there will be an obvious simplification in supply chain exposure to many producers. The announcement has narrowed the distribution scope of producers from 1000’s of dispensaries, to one single outlet with 150 locations.
In saying this, the majority of producers are located in very remote areas and the closest locations can sometimes be some distance from their facility meaning lengthy logistic commutes. Furthermore, those smaller operations in more remote locations, or outside the province may have difficulty breaking into the complex environment of the LCBO.