Cannabis producers in Ontario have received a major boost after the provincial government permitted them to launch farm gate retail stores and sell direct to consumers.
Ontario has just delivered its fall economic statement and it includes significant amendments to its existing cannabis retail regulations. The aim is to improve consumer choice, cut waiting times, and allow the legal cannabis trade to become more competitive with the thriving black market.
Cultivators will be permitted to launch their own retail stores at their facilities under the new regulations. This should help boost cannabis tourism and it could open up a key revenue stream for producers, following in the footsteps of cellar door stores at wineries.
Retailers might be disappointed at the prospect of being cut out of the supply chain, but they also received a key boost in the fall economic statement. They will now be permitted to sell products online via a click and collect system, ending the online monopoly that the province-owned Ontario Cannabis Store previously enjoyed.
Consumers will now be able to go online, browse multiple sites, find the products they want and order delivery to a store of their choice.
The legal cannabis industry was full of praise for the fall economic statement. The Cannabis Council of Canada said it sends a strong signal to the legal cannabis industry in Ontario, improving the situation for consumers and better equipping the industry to replace the illicit market.
Leading producer Organigram Holdings Inc. (NASDAQ: OGI; TSX: OGI) called it “a strong step forward for the province”.
“The Ontario government has demonstrated that it is listening to the legal cannabis sector and that it values the contribution this industry makes to the Ontario economy,” said chief executive Greg Engel.
He added that the timing of the announcement is crucial as Canada gears up for the impending launch of next-generation derivative products.
The Progressive Conservative government recently lifted a cap it previously imposed on the number of cannabis stores in Ontario in the wake of a supply shortage. The number of cannabis stores in the province is expected to increase from 25 to 75 this fall following the second retail lottery.
However, there are already more than three times as many stores in Alberta, which has a smaller population.
The Cannabis Council of Canada urged the Ontario government to immediately announce a timeline for retail expansion in the province. It said this is imperative for job creation and the sustainability of the province’s cannabis sector.