15 months after legalization, 2.8 million Ontarians live in places where cannabis retail is illegal

About a fifth of Ontario’s population — 2.8 million people — live in places where selling cannabis is illegal.

For over a year, almost no Ontario community had cannabis retail whether it wanted any or not and stores opened slowly compared to most other provinces.

But as Ontario seeks to quickly expand its cannabis store network starting this spring, it will start to be a serious obstacle, observers say.

In late 2018 and early 2019, hundreds of Ontario communities had to make a decision, and make it pretty quickly, in response to a provincial deadline.

Would they allow cannabis retail, a decision they weren’t allowed to reverse, with no control over where stores would be sited? Or would they vote to ban it, a decision they could always change, and which had no immediate consequences?

Some of the biggest municipalities in the suburban 905 ring around Toronto voted for bans: Mississauga, Markham, Vaughan, Richmond Hill, Oakville, Whitby, Pickering.

The combined residents of communities that opted out come to more than the entire population of Atlantic Canada, or the combined populations of Manitoba and Saskatchewan.

“Up until recently it’s meant very little, because for the first six or nine months of legalization we had a shortage of product,” says Brock University business professor Michael Armstrong.

“But going forward, once Ontario starts adding significant numbers of stores — maybe some time this summer we’re going to see more stores open — from that point onwards having municipalities with bans will start to matter.”

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Ontario has more cannabis stores in the pipeline: the lottery system has been discarded, regulators expect to start to issue store licences at the rate of about 20 a month starting in April, and the province has said that 1,000 stores is a goal.

However, there are still fewer than 30 actually open, contrasting with Alberta’s 415, which serve about a third of Ontario’s population.

Mississauga, which has more people than New Brunswick, was the biggest city to forbid cannabis stores — a decision that city councillor Karen Ras wants to reverse.

“I think we have an obligation to revisit this issue on a number of fronts,” she says. “We’re seeing the black market thrive in Mississauga. You can download an app that shows you where the black market is thriving.”

“The other thing is that this is an industry that provides good-paying jobs, and we want to make sure that our residents have access to a legal product.”

If it changed its mind, Mississauga would join Milton, which opted out of cannabis sales at first, but reversed its decision last October.

Why did so many cities opt out of cannabis sales?

Many Ontario communities opted out in part because the decision process alienated them, says cannabis lawyer Matt Maurer of Torkin, Manes.

“For the type of political decision that had to be made, it was a tight timeline to begin with,” he says. “When you factor in the election, and the holidays and all those other things, it gets even tighter.” (Local elections happened in October of 2018, reducing the time for debate.)

The hurry and inflexibility of the process annoyed some local councillors across the province, putting the cautious on the same side as more serious opponents of legalization itself, he says.

“The concerns really fell into one of two camps. Either it was ‘We just don’t like this, in general, and we’re not ready to do it, as a council,’ or ‘It’s too fast, we have no control over where the stores go, we don’t know what impact this is going to have, we just need to think about this and take a wait-and-see approach,’” said Maurer.

Despite the rush to make decisions, very few cannabis stores actually opened in the year following, Maurer says.

“In hindsight, you didn’t need to move that quickly,” he argues. “Municipalities might have opted in if they had had more time to evaluate things.”

Councils were also annoyed by having no authority over where cannabis stores were sited, unlike strip clubs and payday loan stores, Maurer says.

Richmond Hill’s council voted unanimously to ban cannabis sales, and mayor Dave Barrow says the issue has had no visibility since. The suburban city north of Toronto has 195,000 residents.

“The citizens of Richmond Hill were not interested in being part of the cannabis retail process,” he says. “We had many, many people at many times and events that were adamant that we should opt out as a city.”

“I’m not interested in seeing it in our city. There’s no reason to have it there. There was a time when there wasn’t a liquor store in Richmond Hill, and you went to the next city.”

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Barrow says that he’s opposed to recreational legalization, but would make allowances for medical use.

He dismisses the argument that legal retail could displace the black market.

“We all know that there are many, many other things you can buy on the street, and that’s one of the things you can buy on the street,” he says. “If you want to buy it on the street, go right ahead, but I don’t think that in a community we should be offering it to our residents.”

Global News asked if there was a place in Canada which he thought had handled the issue well.

“Yes,” he said. “Richmond Hill.”

There’s little sign that Markham (328,000) or Vaughan (306,000) will change course.

“At this point, there are no plans to reverse Markham council’s decision to not allow retail cannabis stores,” spokesperson Lama Nicolas wrote. The decision was made in a 12-1 vote.

Vaughan’s vote to opt out was nearly unanimous.

The lone dissenter, city councillor Alan Shefman, would like to see Vaughan take a fresh look at the issue.

“I have been considering bringing a motion to Council to have staff prepare a report on the current situation relating to the possibility of Vaughan reconsidering its earlier decision,” he wrote in an e-mail.

“While I am not optimistic that my initiative will be successful, I believe that for common-sense purposes the issue should be reviewed in light of the experience in the province for the last year.”

Global News couldn’t find a system elsewhere in the country that’s as inflexible as Ontario’s:

• Manitoba allowed opt-outs, but also gave local governments power to make special zoning rules for cannabis. Municipalities can hold a local referendum on the issue (either to lift a ban or impose one) at any time they choose until New Year’s Day, 2022, or after that date as part of a local election. Only six Manitoba communities have banned cannabis stores, provincial regulators tell Global News; none has a population over 20,000.
• Saskatchewan allows opt-outs, and also lets local governments control the location of cannabis stores and other details of how they operate. Communities can make a decision before a store is proposed, or wait until there’s an application.
• Alberta doesn’t allow opt-outs, but gave local governments wide authority over giving cannabis stores permits
• British Columbia allowed opt-outs, and also gave local governments power over siting, including special zoning.

No other province Global News looked at forced councils into an irreversible decision.

Ras says Mississauga will reconsider the issue in the spring.

“This is real, it affects a lot of people, but we need to do the right thing and opt-in and open it up in Mississauga as Ontario’s third-largest city.”

If 1,000 cannabis stores in Ontario were distributed in proportion to population, Mississauga would have 51 of them.

“Those municipalities are going to be a constant source of sales and revenue for the black market,” Armstrong argues.

“Taking that nationally, that’s another chunk of the market that the legal industry cannot easily reach. That is going to slow down the federal government policy objective of squeezing out the black market. It’s also an extra irritant for the legal industry.”

Global News asked Ontario’s Ministry of the Attorney General whether it was open to giving local governments more power over where cannabis stores are sited.

“Municipalities are essential partners in the effective implementation of cannabis legalization,” spokesperson Jenessa Crognali wrote in an e-mail.

“Ontario will continue to monitor the roll out of cannabis retail store licensing for emerging issues that may affect municipalities, and the (Alcohol and Gaming Commission of Ontario) will continue to work with municipal staff to hear input on local priorities and maintain ongoing communications with municipalities.”

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