Pubdate: Sat, 15 Apr 2017
Source: Toronto Star (CN ON)
Copyright: 2017 The Toronto Star
Author: Francine Kopun
Page: B2


Producers, grocers and retailers all have eyes on selling recreational

Recreational marijuana is about to become legal in Canada. How and
where it will be sold, however, has been left up to provincial and
municipal governments.

In Ontario, the LCBO seems like the most likely conduit, said Kurram
Malik, a financial consultant at Jacob Capital Management Inc.,
pointing out that the provincial agency is already equipped to handle
controlled substances.

"However, the LCBO will likely have to set up new retail outlets - you
won't see cannabis in the liquor aisle," he said, after Justin
Trudeau's Liberal government introduced legislation on Thursday that,
if passed, would allow the sale of marijuana for recreational purposes
beginning July 1, 2018.

Medical marijuana is currently available in Canada with a doctor's
prescription, using mail-order services. The legislation introduced
Thursday fulfils a 2015 election campaign promise made by Trudeau that
is believed to have driven young voters to the polls in support of the
Liberal party.

Selling marijuana to people under the age of 18 will remain

A spokesperson for the LCBO said it will take direction from the
provincial government with regards to any role it may play when it
comes to selling cannabis.

"It is premature to speculate as to what that role may be, but we are
paying close attention to the process as it unfolds," Christine Bujold

What marijuana retailing will look like will really depend on the
province, said Michael Gorenstein, CEO of cannabis firm Cronos Group.
But he would like to see the product opened up for sale by as many
channels as possible - as long as the channels meet security
requirements for safe distribution and sale, keeping it out of the
hands of children.

"The more people that we allow to participate in the industry, the
better it is overall for the economy, but also for the industry in the
long term," Gorenstein said.

He said small, independent dispensaries have appeal. "It retains the
character of cannabis culture," said Gorenstein, adding that in
Colorado, such establishments have become a draw for tourists.

"A lot of what drives cannabis tourism isn't just legal access, it's
the character in the dispensaries they've opened up. It's a unique
retail experience."

Gorenstein said he thinks licensed producers will also be interested
in opening their own storefronts.

A spokesperson for Ontario's independent grocers said they don't want
the sale of recreational marijuana to be handled in the same way
alcohol sales have been handled by the province.

"Any time the government gets involved, retailers get a little
nervous," said Gary Sands, a spokesperson for the Canadian Federation
of Independent Grocers, with 600 members in Ontario.

Last year, the province began allowing the sale of wine in some
grocery stores, with an eye to slowly expanding the number of outlets
permitted to do so over time, but it's been done in a way that is
barely profitable for small players, Sands said.

The system requires retailers to bid, with favour shown to those
willing to take the lowest profit margins, putting small businesses
that do not have the same economies of scale as larger operations at a

"The government has ended up devising a system that is creating
winners and losers," Sands said.

He said his members would like to see a system that allows retailers
to decide for themselves whether or not they want to sell marijuana,
based on what their communities are telling them.

"It's really like opening on a holiday - what does the community want?
That is the independent's view," Sands said. "I have retailers who can
open on Boxing Day but they don't because their community doesn't want
them to."

The Retail Council of Canada said it is consulting with its members
and the federal and provincial governments on the issue.

"The retail channel will be bringing forward concerns and wants to be
seriously considered as the conversation goes forward," said David
Wilkes, RCC senior vice-president, government relations and grocery

Loblaw Companies Limited, which owns Shoppers Drug Mart, recently
announced in an internal staff memo that it will cover medical
marijuana under the employee benefit plan.

Shoppers Drug Mart applied in October to be a licensed producer for
the purposes of distributing medical marijuana.

Loblaw Cos. on Thursday declined to say anything about the status of
that application or answer questions about whether it is interested in
retailing recreational marijuana.

The Canadian Pharmacists Association said that while it is pleased
that the government will maintain the existing market for medical
cannabis, it is disappointed that the new law does not propose changes
to the medical regime to improve patient safety by allowing pharmacist
dispensing. It does not have a position on the sale of recreational
cannabis in pharmacies.
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