Pubdate: Wed, 29 Nov 2017
Source: Chronicle Herald (CN NS)
Copyright: 2017 The Halifax Herald Limited
Author: Jordi Morgan


Allowing private sector to take point on distribution a sensible

Newfoundland and Labrador made a common-sense decision last week on
the distribution of cannabis in that province. They've opted for a
private-sector distribution model, breaking away from the
ill-considered public-sector monopolies being set up in Ontario and
New Brunswick.

As part of the Newfoundland and Labrador plan, the government says it
will allow the sale of cannabis by private retailers, while the
regulation, distribution and online sales will initially be carried
out by the Newfoundland Liquor Corporation. On this issue, the
government listened to the Canadian Federation of Independent Business.

The government of Newfoundland and Labrador wisely chose to allow for
private-sector operators to invest and build retail outlets without
unnecessary tax dollars being spent establishing publicly owned
stores, with staffing and operations costs. At a time when government
must be looking at restraining unnecessary spending, it flies in the
face of reason to take on such a major bricks-and-mortar expense when
private capital is waiting eagerly in the wings.

Small business must be given an opportunity to benefit in this
emerging market. The private sector has proven itself capable of
managing and delivering controlled substances through convenience
stores (tobacco), prescription drugs (pharmacies) and, more recently,
agency stores and private-sector alcohol distributors.

Government must also articulate how it will be creating appropriate
guidelines for distribution of recreational versus medicinal cannabis
to ensure there is a clear distinction. This is new territory with
profound implications, and again, the private sector can play an
important role.

The Liberal government in Nova Scotia has committed to providing
regulatory excellence. Here is also an opportunity to develop a
completely new regulatory regimen using some common-sense principles
and practices to encourage economic growth. Partnering with the
private sector to build out a major new industry of this nature will
allow government to test new practices and allow for greater market

One of the stated objectives of legalization of cannabis is the
erosion of the black market. Public-sector monopolies historically run
at a higher cost, which will invariably raise the cost of products.
While there will be a temptation for governments to look at this as a
tax windfall, the pricing and taxation balance must be done carefully
to ensure the underground market is not able to operate more
efficiently as competition. Estimates are that close to a third of
tobacco sales are underground, often with links to organized crime.
This is clear evidence showing that getting the tax mix right is important.

While many questions remain unanswered, July 2018 is approaching
quickly. Let's hope the government of Nova Scotia remains open to
options that will advance both public safety and economic opportunity.

- ----------------------------------------------------------------

Jordi Morgan is vice-president, Atlantic, of the Canadian Federation of 
Independent Business.
- ---
MAP posted-by: Matt