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OCS Wholesale Cannabis Monopoly Coming to an End

Cannabis
Cannabis

Government Agency Introduces Hybrid Model It Will Still Be Part of – LPC

OCS wholesale cannabis monopoly coming to an end.The OCS wholesale cannabis monopoly is coming to an end. The Ontario Cannabis Store (OCS) announced that it is creating a hybrid distribution model. Under the new model, the private sector will be able to buy directly from licensed producers (LPs) as well as store and distribute cannabis. The news came on November 19, 2019 via email to LPs.

This didn’t come as a surprise to many industry analysts. The story was first leaked in September 2019, though the rumour then was that the Ontario Cannabis Store was closing.

Feedback showed producers wanted more control over the distribution of cannabis. The OCS wholesale cannabis monopoly was initially planned by the previous Kathleen Wynne Liberal government. That was to strictly monitor cannabis storage and distribution. Reports are the OCS consulted with LPs over the past month over various changes to the system.

Those consultations found that the OCS wholesale cannabis monopoly system introduced too many inefficiencies.

“The OCS is moving ahead with expanding its privately-operated third-party centralized distribution network,” the email read. This will “introduce flow-through capabilities to the network over time to maximize choice for consumers.”

OSC Wholesale Cannabis Monopoly Isn’t the Problem for LPs – LPC

It is unclear what, if any, effect eliminating the OCS wholesale cannabis monopoly will have on the markets. Or on LPs’ bottom line, for that matter. The Ford government was directly or indirectly blamed for disappointing cannabis sales by several companies including Canopy Growth and Aurora Cannabis. Cannabis investor optimism is hitting an all-time low. Aurora dumped $20 million of cannabis due to oversupply and halted construction of facilities in Medicine Hat and Denmark.

The major issue in Ontario isn’t the OSC wholesale cannabis monopoly. It’s the fact that there are only 24 cannabis retail stores open. In comparison, Alberta has 300 cannabis retailers in a province that has about a third of the population. The Ontario Cannabis Policy Council called for an opening up of the retail market. (Saskatchewan recently announced it will move to an open market cannabis model more in line with the Alberta model.)

Ontario would have to open its retail market too, to make any difference in sales. Dismantling the OCS wholesale cannabis monopoly won’t solve anything if consumers still can’t purchase product at retail stores.

This editorial content from the LPC News Team provides analysis, insight, and perspective on current news articles. To read the source article this commentary is based upon, please click on the link below.

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