Latest / Kvetch & Release / 610 CKTB| Cannabis in Canada: Federal Paramountcy & Provincial Restrictiveness Define Our National Regulatory Landscape

Transcript

610 CKTB| Cannabis in Canada: Federal Paramountcy & Provincial Restrictiveness Define Our National Regulatory Landscape · Kvetch & Release

• 0:00
  Speaker 1: A regular Tuesday contributor, John Lidkey is here and among
• 0:03
  Speaker 1: his many hats, he works as a lobbyist in the
• 0:07
  Speaker 1: cannabis industry in the province of Ontario and right across
• 0:10
  Speaker 1: the country. And boy do I have questions for him.
• 0:12
  Speaker 1: Hey John, good morning, How are you man any?
• 0:15
  Speaker 2: Good morning, Geen? I'm great. How about you?
• 0:16
  Speaker 1: I'm great, glad to have you here. Now. You've been
• 0:18
  Speaker 1: working in the cannabis industry, the legal cannabis industry, for
• 0:21
  Speaker 1: a long long time. And when we decided to talk
• 0:24
  Speaker 1: about this, and I think it was predicated on the
• 0:26
  Speaker 1: fact that a couple about a month ago, some facts
• 0:30
  Speaker 1: and figures were released and Ottawa is not making nearly
• 0:34
  Speaker 1: the amount of money it thought they would make by
• 0:37
  Speaker 1: legalizing a cannabis and its related products. So you sent
• 0:41
  Speaker 1: me a great report yesterday. I read it all. Thank
• 0:43
  Speaker 1: you very much, And holy smokes, it is just a
• 0:47
  Speaker 1: patchwork of rules and regulations. And some provinces this, some
• 0:52
  Speaker 1: provinces that way too many stores manufacturing has so many
• 0:57
  Speaker 1: rules and regulations. No wonder they're not making money. No,
• 1:01
  Speaker 1: don't wonder. So many stores are closing down. I mean,
• 1:04
  Speaker 1: you take a look at cannabis shops in the province
• 1:06
  Speaker 1: of Ontario. I mean, there's more of them than Starbucks.
• 1:11
  Speaker 3: It's pretty crazy. We've got a lot of stores. But
• 1:14
  Speaker 3: you know, let me just first correct because I don't
• 1:16
  Speaker 3: want to get yelled at by the government. I am
• 1:17
  Speaker 3: not a formal lobbyist whatsoever. I am an industry advocate.
• 1:22
  Speaker 3: I've been involved in the industry, so I talk about
• 1:25
  Speaker 3: it from a journalistic perspective.
• 1:28
  Speaker 1: Okay, perfect, Is it working?
• 1:31
  Speaker 2: Yeah, I would say it's working.
• 1:33
  Speaker 3: We're watching black market sales have decreased significantly, although they
• 1:36
  Speaker 3: have stabilized in the past little while. Canadian cannabis retail
• 1:40
  Speaker 3: sales are increasing by province and territory, going from about
• 1:45
  Speaker 3: fifty thousand dollars in monthly retail cannabis sales in twenty
• 1:49
  Speaker 3: eighteen at legalization to a peak of five hundred thousand
• 1:52
  Speaker 3: dollars a month today. That's for all of Canada. So
• 1:56
  Speaker 3: there has been an increase. But I think what people
• 1:59
  Speaker 3: were hoping and cannabis was being legalized was that it
• 2:02
  Speaker 3: would be a complete open market, there would be no
• 2:05
  Speaker 3: regulations and it would just be a free for all.
• 2:08
  Speaker 2: But we live in Canada where we have to ask for.
• 2:10
  Speaker 3: A remission to pretty well do absolutely anything from our government.
• 2:14
  Speaker 3: And I just I think that people should have gone
• 2:18
  Speaker 3: into this and maybe for a lack of education, people
• 2:21
  Speaker 3: are misinformed. But this is morkin to alcohol and tobacco sales.
• 2:26
  Speaker 3: Each province gets to determine their local regulations. The federal
• 2:31
  Speaker 3: government gets to write the big national rules criminal law, defense,
• 2:35
  Speaker 3: international trade. So what this is, it's not a bug
• 2:39
  Speaker 3: in the system. It is the key to understanding the
• 2:41
  Speaker 3: entire rules of the game, this patchwork quilt that allows
• 2:45
  Speaker 3: for each province to handle things as they see fit.
• 2:48
  Speaker 1: You know, for years and years and years, I've always
• 2:52
  Speaker 1: thought that the Ontario government should not be in the
• 2:55
  Speaker 1: business of buying and selling liquor. I mean, that's not
• 2:57
  Speaker 1: what governments do. Why why did they extend that into
• 3:02
  Speaker 1: the cannabis industry. I mean, it's not the government's job
• 3:05
  Speaker 1: to be regulating cannabis and selling it at government regulated stores.
• 3:10
  Speaker 1: Why hasn't it been private industry that's selling cannabis. I mean,
• 3:14
  Speaker 1: finally you can get beer and wine and grocery stores.
• 3:17
  Speaker 1: And guess what nobody's melting down about that.
• 3:20
  Speaker 2: Yeah.
• 3:20
  Speaker 3: So remember in Ontario under Kathleen when it was going
• 3:24
  Speaker 3: to be a fully public model, but then her government
• 3:27
  Speaker 3: fell and doug Ford came in and he opted to
• 3:29
  Speaker 3: move towards private retail stores only with the government handling
• 3:34
  Speaker 3: at the time, and online retail monopoly and full wholesale
• 3:38
  Speaker 3: retail sales to the stores. Why did he do that.
• 3:41
  Speaker 3: He wanted the money, They wanted the tax revenue. This
• 3:44
  Speaker 3: was just a huge golden egg from a golden beef,
• 3:48
  Speaker 3: and they saw the opportunity of adding their budgets with
• 3:52
  Speaker 3: any stream of revenue. We've seen a lot of retail
• 3:55
  Speaker 3: stores open, a lot of them have closed down. The
• 3:58
  Speaker 3: reason for that is just support and demand, or as
• 4:01
  Speaker 3: I like to say from trailer park boys, supply and
• 4:03
  Speaker 3: command the market. But at the end of the day,
• 4:06
  Speaker 3: again like this feature is working as was intended. I
• 4:11
  Speaker 3: think just the vast majority of people didn't expect this
• 4:14
  Speaker 3: to be how it unrolled. I spoke to a sociologist
• 4:17
  Speaker 3: about this who said that one of the provinces problems
• 4:21
  Speaker 3: that we have here is that there is a unequal
• 4:25
  Speaker 3: level of access to cannabis across the country, and specifically
• 4:29
  Speaker 3: he noted the idea of having more access in urban
• 4:33
  Speaker 3: stores versus rural stores but he also said, look, that's
• 4:37
  Speaker 3: just the way things are in the country. If you
• 4:40
  Speaker 3: live further away from urban centers, you have a less access.
• 4:44
  Speaker 3: It might be more expensive. Just go to the north.
• 4:46
  Speaker 3: And we can see this all the time. So at
• 4:49
  Speaker 3: the end of the day, while cannabis is legal and
• 4:52
  Speaker 3: you can still purchase it online and stores can open,
• 4:56
  Speaker 3: if your jurisdiction doesn't have someone who decided they want
• 4:59
  Speaker 3: to do it, you have less access.
• 5:00
  Speaker 1: Yeah, you know the funny thing that I laugh at
• 5:03
  Speaker 1: and just kind of ironic. Let's face it. We all
• 5:07
  Speaker 1: know one guy who sold pot out of his basement
• 5:10
  Speaker 1: or his dorm room in university. And the guy who
• 5:13
  Speaker 1: I know in university, he ended up paying his tuition
• 5:17
  Speaker 1: and he used his money by selling illegal marijuana out
• 5:20
  Speaker 1: of his room to pay for everything, and he graduated
• 5:23
  Speaker 1: with a Bachelor of Arts degree. Then we take a
• 5:25
  Speaker 1: look at the government regulated marijuana industry and in the
• 5:28
  Speaker 1: first year in Ontario they lost thirty four million dollars.
• 5:32
  Speaker 1: So you got a kid selling pot out of his
• 5:34
  Speaker 1: basement making a fortune. The government gets involved and they
• 5:37
  Speaker 1: can't make money. And I look at that and I
• 5:39
  Speaker 1: scratch my head and I say, that's why the government
• 5:42
  Speaker 1: should not be involved.
• 5:44
  Speaker 3: Well, I mean, look, we know that the UFCW has
• 5:49
  Speaker 3: a one thousand and six A which represents workers at
• 5:53
  Speaker 3: multiple cannabis retail stores in Ontario. So that has increased
• 5:58
  Speaker 3: just the cost because of higher wages.
• 6:01
  Speaker 2: But look the province.
• 6:02
  Speaker 3: At the end of the day, they had to go
• 6:04
  Speaker 3: and build the entire distribution network, they had to build
• 6:06
  Speaker 3: out the wholesale network, they had to go and get
• 6:09
  Speaker 3: RFPs quotes and then purchase an online sales platform, and
• 6:13
  Speaker 3: they've got to pay all their employees.
• 6:15
  Speaker 2: That's the biggest one.
• 6:16
  Speaker 3: Right, Your guy in the dorm room wasn't paying anyone
• 6:20
  Speaker 3: other than the money that he's putting into his savings
• 6:22
  Speaker 3: accounts to get the Bachelor of Arts, which probably should
• 6:25
  Speaker 3: have gotten a Bachelor of Commonplay frankly with that level
• 6:27
  Speaker 3: of business fortitude. But also he doesn't have to pay
• 6:32
  Speaker 3: anything else other than the product itself. So there is
• 6:36
  Speaker 3: just a much lower overhead for private illegal entrepreneurs than
• 6:43
  Speaker 3: for the public system.
• 6:44
  Speaker 1: Well, and that's why I'm saying when they legalized it,
• 6:47
  Speaker 1: they should have said, hey, all you great big companies
• 6:50
  Speaker 1: out there, who wants to bid on handling the distribution
• 6:54
  Speaker 1: and then the problems would never have had to pay
• 6:56
  Speaker 1: up any for that, and they could still collect money
• 6:59
  Speaker 1: off the tax right.
• 7:00
  Speaker 2: Oh yeah, hey, listen, I'm with you on that.
• 7:02
  Speaker 3: I'm a free market at enterprise kind of guy, and
• 7:05
  Speaker 3: I don't think the government should be involved other than
• 7:07
  Speaker 3: just the high level fifty thousand foot regulations that are
• 7:11
  Speaker 3: necessary to ensure public safety, public health, and the following
• 7:15
  Speaker 3: of criminal law. Outside of that, I think I mentioned
• 7:17
  Speaker 3: to you one time before, I still think that I
• 7:20
  Speaker 3: should be able to open up a top shelf whiskey
• 7:22
  Speaker 3: store in downtown Toronto, charge one thousand dollars to walk
• 7:26
  Speaker 3: into it, charge way over price for really fancy bottles
• 7:29
  Speaker 3: of whiskey, and if the market doesn't want to buy.
• 7:32
  Speaker 2: It, well then so be it. And it's now a
• 7:35
  Speaker 2: failure on my part as a business. But I should
• 7:37
  Speaker 2: have that right to do it.
• 7:38
  Speaker 3: The government should not be putting up walls blocking people
• 7:41
  Speaker 3: from engaging in what are already regulated industries.
• 7:44
  Speaker 1: Yeah, kel, surprise. So what do you see the future
• 7:48
  Speaker 1: of the cannabis industry. It's not making the money that
• 7:50
  Speaker 1: they thought, but we're stuck with the system that is
• 7:53
  Speaker 1: in place right now. Will they continue to barely you know,
• 7:56
  Speaker 1: get buy or will they have to close more and
• 7:59
  Speaker 1: more store to make the real profit that they want.
• 8:02
  Speaker 3: Well, we're going to continue to see fromsolidation of the
• 8:05
  Speaker 3: retail industry as more people still decide to get into it.
• 8:09
  Speaker 3: Let's be honest, it's still a sexy industry for the
• 8:11
  Speaker 3: most part. So there is a greater level of interest
• 8:14
  Speaker 3: in opening up a cannabis store than maybe it's importance
• 8:16
  Speaker 3: for example, which is why we saw that petera. But
• 8:19
  Speaker 3: as the system balances itself out, we're just going to
• 8:22
  Speaker 3: get to a point where it's just another product that
• 8:25
  Speaker 3: you purchase. It shouldn't be looked at any different other
• 8:28
  Speaker 3: than ensuring the public health considerations. And I just see
• 8:32
  Speaker 3: a market that will continue to evolve, look to best
• 8:35
  Speaker 3: practices at provincial levels, and provinces will copy them and
• 8:40
  Speaker 3: eventually we're going to see something better than what we have.
• 8:42
  Speaker 3: But we're never going to have a perfectly harmonized system.
• 8:45
  Speaker 1: Yeah, well, there certainly is a market for the product.
• 8:47
  Speaker 1: It's been proven and it is legal.
• 8:50
  Speaker 3: Yeah, absolutely, and we shouldn't be surprised that it's happening
• 8:53
  Speaker 3: the way that it is because quite frankly, look at
• 8:55
  Speaker 3: the alcohol industry and gosh, I'm sure producers would still
• 8:58
  Speaker 3: like to be able to sell easier cross provincial lines,
• 9:01
  Speaker 3: but it's been over one hundred years since prohibition ended
• 9:03
  Speaker 3: and we're still at this point.
• 9:05
  Speaker 1: Yeah, it's well, we had the owner of a vinyardn here.
• 9:08
  Speaker 1: You know, they relax some of the inter provincial trade
• 9:11
  Speaker 1: rules just three weeks ago, but they didn't include beer
• 9:14
  Speaker 1: and wine and alcohol.
• 9:16
  Speaker 3: Were you were thinking, Yeah, you know, it's just we
• 9:19
  Speaker 3: need to grow up as a country, and I think
• 9:21
  Speaker 3: that's probably the best place.
• 9:22
  Speaker 2: For me to lease this.
• 9:24
  Speaker 1: I agree, John, Thanks so much for this. I appreciate it.
• 9:26
  Speaker 1: This morning, Thank you, Gene had a great thing. Okay,
• 9:29
  Speaker 1: there goes John Litke. He's been working in the illegal
• 9:31
  Speaker 1: cannabis industry for a long long time. Oh so much government,
• 9:35
  Speaker 1: so many regulations. Yikes,