Ontario to Allow Private Sector to Handle Legal Cannabis Distribution

Article by David George-Cosh, BNN Bloomberg

Ontario plans to allow the private sector to handle distributing cannabis from producers to retailers, a sign that the provincial government is beginning to reduce its legal pot exposure.

According to an email sent by an Ontario Cannabis Store (OCS) executive to Canadian licensed producers late Tuesday that was obtained by BNN Bloomberg, the new measure to allow for a “third-party centralized distribution” system comes following feedback the government-run agency solicited last month after it engaged with the industry to determine whether it should get out of its wholesale cannabis business. It is unclear when the OCS plans to let a privately-run company handle product distribution.

“It is expected that these activities will continue to drive cost efficiencies for the industry and result in ongoing expansion of product assortment and service levels, thereby supporting future product development and innovation by producers,” according to the email sent by Denny Palarchio, vice-president of supply chain and customer excellence at the OCS.

A spokesperson for the OCS wasn’t immediately available for comment.

The email also stated that the OCS is seeking further consultation with industry participants interested in “direct-delivery” services where cannabis can be shipped directly from a cannabis producer to a retailer, sidestepping a wholesale operator entirely. Those discussions will take place over the next week and the OCS will “share specific terms, conditions and capabilities by which any producer interested in direct-delivery would be required to adhere to,” the email stated.

The OCS’s move comes two months after BNN Bloomberg first reported that the government-run agency was exploring the possibility of no longer running the province’s wholesale cannabis distribution business.The Ontario Cannabis Retail Corporation, a crown corporation that operates the Ontario Cannabis Store’s online retail business and sells wholesale cannabis to the province’s private retail stores, lost $42 million in the last fiscal year.

Read the full article here.

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