Ontario's cannabis plan needs a rethink to curb black market, Chamber of Commerce says

Ontario needs to drastically change its retail cannabis strategy or risk not only losing its competitive advantage, but also failing to lure consumers away from the black market, says the Ontario Chamber of Commerce.

On this first 4/20 since Canada became the first G7 country to legalize recreational cannabis, Toronto has just three physical locations to purchase pot legally, but dozens of illegal dispensaries are still doing brisk business.

"If there's not a competitive legal market in Ontario, people are going to turn to the black market, and that's lost revenue, lost jobs, lost opportunity for business," said Michelle Eaton, vice president of communications and government relations for the OCC.

Eaton said that since this is the first time cannabis has been legal in close to a century, it's understandable that there are some kinks to work out.  

"It's not going to be perfect at first — there are going to be bumps in the road," she said. "But the more avenues that we're giving consumers to buy recreational cannabis, the more opportunity we have to move them away from the illegal market."

Eaton urges the province to choose the next batch of licences retailers by merit, rather than the lottery system used to decide who could apply for Ontario's first 25 store licences.

• City pushing for closure of 21 illegal cannabis shops but still faces uphill battle

About a dozen stores faced escalating penalties for not opening by April 1st. Those fines top out at $50,000 if they don't open by the end of the month.

The third of six stores licensed to operate in the Greater Toronto Area opened Saturday. Nova Cannabis held a soft launch on Thursday, but held its grand opening on 4/20.

"It's really important for the government in their next phase to look at things like merit because right now, with the lottery system, you see that some of the stores didn't open. And it's a missed opportunity to get the cannabis industry and the recreational cannabis industry growth going in Ontario," said Eaton.

Jay Rosenthal is Co-founder and President of Business of Cannabis, which does research and analysis in the emerging economic sector, and wants to see the province act on recommendations like that sooner than later. 

"I think the goal of every level of government is to drive out the black market and I think part of that is really finding more and better retail access for cannabis for consumers," he said. 

Rosenthal says many licence holders in the first batch of 25 stores permitted had a hard time getting up and running by April 1st. He thinks that's because their ability to open a store within just three months notice was never assessed.

Rosenthal also supports the OCC recommendation to allow licensed producers to operate retail operations, saying no one is more motivated to sell than producers themselves. 

"Once we see more retailers come online I think we'll really see more people choose the legal market versus the black market and that's really the long term game."

The Ontario Cannabis Store did not return CBC Toronto's request for comment.