Ontario’s legal cannabis market is poised to grow significantly larger, with the province’s largest city that had banned retail pot stores voting Wednesday to opt in.
Mississauga, Ont., was one of dozens of municipalities to bar retail cannabis stores from their communities when legalization came into effect in 2018. But, four and a half years later, a city report highlighted that Mississauga residents are “disproportionately” served by the illegal market in the absence of legal stores.
City council voted Wednesday 8-4 to opt in.
Mayor Bonnie Crombie also spoke in favour, saying she had supported opting out in 2018, hoping the province would give municipalities greater control over location of stores. The Alcohol and Gaming Commission of Ontario is responsible for issuing licences and in municipalities that have opted in, one of the only restrictions on location is that stores must be at least 150 metres away from a school.
Now after five years, it’s clear the province will not be granting any additional oversight powers to municipalities, Crombie said.
“I’ve watched and observed the experience in other municipalities and it does seem to sort itself out,” she said.
“There hasn’t been the clustering that we have been concerned about … All I have observed over the past five years is the proliferation of illegal stores and I don’t want that here. We can’t close them down. We don’t have the ability to close them down and if we’re going to have a product for offer in Mississauga, let’s make it a safe product for goodness sakes.”
The city staff report cites a study by the National Research Council of Canada on behalf of the Ontario Cannabis Store and the Ontario Provincial Police that found “dangerously high levels of pesticides” in illegal cannabis and that illegal products often have brightly coloured packaging that would appeal to children.
Coun. Dipika Damerla put forward the motion, saying that opting out of the legal framework has allowed illegal stores to flourish in the city, including one in her ward that police have unsuccessfully tried six times to shut down.
“So the goal today here is not a choice between no stores and legal stores,” she said. “The choice today is illegal stores, the profits of which are going to create more illegal activity, or legal stores.”
There are more than 1,700 legal stores across the province and the sector contributes $13.3 billion to Ontario’s GDP, per a recent Deloitte analysis cited in a Mississauga city staff report.
The Ontario Cannabis Store, the province’s wholesaler for legal retailers, reports that the legal market has been steadily growing since 2018 and eating into illegal business. More than 50 per cent of cannabis sales are now through the legal market, the OCS reports.
“According to the OCS, Mississauga continues to be disproportionately served by the illegal market, compared to communities that have ‘opted in,'” the Mississauga staff report says.
Damerla said she believes allowing legal stores will start to chip away at the illegal market in Mississauga.
“It’s going to take time for the legal stores to get set up … but I’m quite certain that in the next few years we’ll see the illegal stores start to feel the pressure,” she said in an interview.
“I’m certain that we’ll not have as many illegal stores as we have today. Will it be zero? Probably not.”
The city now has to send a letter to the Alcohol and Gaming Commission of Ontario saying council has voted to opt in, then that body takes over the process, Damerla said.
Cannabis retailer High Tide Inc., said it has already started identifying potential locations in the city.
“Being Ontario’s third largest city, the Mississauga market presents us with a lucrative revenue and growth opportunity for both High Tide and our Canna Cabana brand,” president and CEO Raj Grover said in a statement.
Councillors who voted against opting in expressed concerns about having no municipal control over the location of stores in retail areas, including whether they would be “clustered” or too close to daycares.
City staff canvassed neighbouring municipalities with legal cannabis and found “clustering” wasn’t a huge concern in those communities. Even in Toronto, the OCS reports that there were fewer stores permitted to open in March 2023 than in May 2021.