Contracting out Ontario’s pot warehouse should be secret, LCBO argued

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The Liquor Control Board of Ontario didn’t have time for an open competition to choose the company that would run the province’s cannabis warehouse, an internal document argued.

Its anonymous author opposed a public request for proposals on the basis that the decision to contract out the warehouse operations would be publicly known.

“Timelines do not allow the time necessary to run an open competition process,” states the unsigned, undated document obtained by Global News from the Ontario Cannabis Retail Corporation under access-to-information laws.

“The LCBO’s participation in the retailing of cannabis is confidential, particularly the outsourcing of logistics, thus preventing an open competition through public posting of a solicitation document.”

The document, which appears to have been written in mid-2017 under the previous Liberal government, lists three companies shortlisted for the contract, the names of which are censored. It says the companies “have proven track records on past projects from (the) Canadian retail and health care sector.”

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It does not make a case for contracting out the warehouse, as opposed to running it directly, but refers to this as if it is a decision that has already been made.

Global News asked the OCRC about the exact date, title and other context of the document and didn’t get a response.

The current PC government has said almost nothing about the cannabis warehouse operation and the company that operates it.

In November, Ontario’s NDP opposition asked about the warehouse several times in Question Period but received little information.

“These are contracts awarded using public money,” opposition leader Andrea Horwath said in a typical exchange. “Will the minister disclose who has won the lucrative contract?”

Ontario Finance Minister Vic Fedeli wouldn’t say.

When it comes to the warehouse, it was competitively tendered and negotiated by the previous government,” he answered. 

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Earlier, Fedeli said the government was “satisfied that the private operation of the warehouse is in good hands.

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A careful look at the document tends to support Fedeli’s assertion that the Liberals signed the contract.

The language implies it was written before the Liberals’ September 2017 announcement that the public sector would run marijuana retail in Ontario. (After the PCs took power in the June provincial election, they changed the model to one in which the government would control online and wholesale stores, and the private sector would control physical retail.)

The document refers in the future tense to the LCBO having to be ready for cannabis sales by July 2018, which places it before Ottawa’s announcement in late June that legalization would be delayed until Oct. 17.

It also refers to the LCBO selling cannabis directly; the separate OCRC, established in the fall of 2017, is never mentioned. (The OCRC operates the Ontario Cannabis Store, the customer-facing cannabis retailer. The LCBO handled the initial setup of the OCRC.)

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Charles Sousa, finance minister at the time, declined an interview request, as did acting Ontario Liberal leader John Fraser.

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A mid-2017 date places it at roughly the same time as the LCBO’s contract negotiations with the Ontario Public Service Employees Union. In the contract, signed that June, the LCBO agreed that cannabis jobs would fall under the union.

“That’s horses**t,” says OPSEU president Warren (Smokey) Thomas. “There’s no reason for that outsourcing to be confidential, other than that we would have found out and gone after them to assert our contract rights.”

“They backed out of that contract. We were supposed to be bargaining to represent the workers. We had an agreement.”

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Global News sent a number of questions to Fedeli’s office related to the identity of the company and how it got the contract. The minister’s office refused to answer, referring our questions to the OCRC, which didn’t respond to them.

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The government has refused to identify the company that operates the facility or say anything about how it got the contract.

“I have no idea why they’re being so secretive,” says deputy opposition leader Sara Singh.

“We’ve only been given runaround answers. We’re not sure who’s running the warehouse. It’s not transparent — we’re not seeing accountability from the government .”

The OCS warehouse is a 70,000-square-foot facility in the western Greater Toronto Area. All recreational cannabis legally sold in Ontario passes through its doors. It will also have to serve as the wholesale warehouse for bricks-and-mortar stores, starting in April.

The logistics company’s president did not respond to multiple interview requests.

B.C. Cannabis Stores has been open about the location of its distribution centre, in Richmond. The agency has also revealed the number of people who work there (130) and recruits for employees openly.

The secrecy around the cannabis distribution centre is unlike the LCBO’s approach to its alcohol warehouses — distribution centres in Toronto, Mississauga, Whitby, Ottawa and London all operate openly.

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