Saskatchewan’s Pot Plan Could Put Big Biz at Advantage Over Smaller Outfits, Says Economist

Article by CBC News

Sask. pot plan could put big biz at advantage over smaller outfits, says economist 'Most of the economic benefit ... is going to be captured by the very large cannabis producers: George Hartner CBC News. George Hartner says Saskatchewan's regulatory framework for cannabis, released Wednesday, takes a free market approach. (Sean Kilpatrick/The Canadian Press)

Saskatchewan’s plan for the impending legalization of marijuana doesn’t do enough to ensure smaller businesses don’t get shut out and the black market is stymied, according to a University of Regina economics lecturer.

George Hartner says Saskatchewan’s regulatory framework for cannabis, released Wednesday, takes a free market approach that could allow major pot producers to take control of the commercial supply chain all the way down to the retailers. That’s largely because there aren’t restrictions on producers also being retailers, or selling their own product.

Saskatchewan is approaching legalized cannabis with a private wholesale/distribution model (as opposed to the Saskatchewan Liquor and Gaming Authority being the distributor). Those distributors purchase pot from federally licensed producers. Then, they supply retail stores that are selected through a pre-screening process, followed by a lottery system. Retailers will also be able to buy directly from producers.

Hartner said this approach could lead to large cannabis firms — like Aurora, which bought out Saskatoon’s CanniMed  — also owning retail outlets in Saskatchewan. The potential result: large firms with increasing market power.

​”Most of the economic benefit or the potential profit in this market is going to be captured by the very large cannabis producers,” Hartner told CBC Radio’s The Morning Edition on Thursday.

“Producers having a foothold in this market are also going to be highly incentivized to keep out local production, keep out craft producers. They’ll be able to squeeze them out so at the end of the day it’s not going to do a lot to generate small business in Saskatchewan.”

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