Article by Michael J. Armstrong, Hamilton Spectator
The Ontario Cannabis Retail Corporation grabbed attention recently by identifying its first outlet locations. But it was the accompanying call for product suppliers that caught my eye. That seemingly dull document hinted at OCRC’s future relationships with cannabis growers and consumers.
Toronto’s initial store will be in a retail plaza across from housing. The disclosure initially triggered some not-in-my-backyard anxiety and political foot-stomping. Calmer heads later agreed the site is reasonable given the city’s high density.
OCRC’s supplier call was largely ignored but more informative in several ways. First, it shows Ontario doesn’t have any confirmed cannabis supplies yet. Growers have until May 2 to submit offers. Shipments could begin June 1, optimistically leaving just four weeks to negotiate contracts.
By contrast, Quebec last week signed six supply contracts. Ontario lags in securing product, despite being months ahead in passing legislation.
The lateness could pose problems. Some observers expect cannabis shortages initially. If OCRC doesn’t lock down supplies soon, its shelves may look bare.
Quebec’s news also suggests potential financial challenges. Its largest supplier expects to receive $5.40 per gram wholesale. Meanwhile, Statistics Canada estimates illicit retail prices at $6.96.
That modest retail-wholesale difference indicates OCRC will lose money if it tries competing with black markets. Suppose it charges $6.96 per gram while paying $5.40. After subtracting $1.80 of excise and sales taxes, it’ll lose $0.24 per gram. That’s even before paying operating costs.