By Andrew Klukas
By David Dougherty
In July 2018, the federal government will legalize the production and distribution of non-medical cannabis. Between now and then, the provinces and territories will have to decide how to adapt to this legislation. Whether or not one agrees with legalization, everyone can agree with the goal of putting an end to the illegal cannabis trade and moving products into a regulated system in which products can be taxed and where quality standards and controls protect citizens. Convenience stores and distribnutors have an important role to play in ensuring this happens.
In just a few short years much of the stigma associated with cannabis products will have disappeared because the era of prohibition will have come to an end. In order to ensure the successful transition from the existing illegal market to a controlled and secure legal market, officials need to craft regulations with a clear view to the future. This will require suitable pricing, clear and responsible product differentiation, and a sufficient distribution network for the sale of legal products.
When consumption is legalized, the channels of distribution must allow sufficient access to the corresponding legal products. The new legal industry must be as inclusive as possible or underground activity will persist and, potentially, thrive. If prohibition is ended for consumers, but the options to legally purchase products are too limited, the conditions for a boom in the supply of illegal products through the underground market will be created. This is precisely what the province of Ontario is inviting through its recent proposal to limit supply to 150 government-owned sites by 2020. That distribution model will be vastly inadequate for Ontario and would ensure that the illegal market thrives as the most convenient option for many consumers.
Today, it’s easy to buy cannabis. If it is hard to buy from legal sellers tomorrow, people will just continue to buy it elsewhere.
Convenience stores are served by a distribution system that supports the legal sale of a variety of controlled goods, such as tobacco, and are ready to adapt to include distribution of cannabis products as well. The stringent controls already in place to secure the collection of provincial and federal taxes on such products can accommodate any new products requiring similar controls — be they provincial or interprovincial.
Convenience stores are well-prepared to handle the variety of quality-controlled products that will soon be entering the legal market. They successfully handle a variety of age-restricted products including alcohol in underserved or remote areas, and Health Canada studies confirm the strength of their commitment to age-testing. They are highly capable of safely handling legal cannabis products subject to the regulations federal and provincial governments put in place to control their sale. Their geographic reach ensures a ready-made and secure distribution channel to ensure taxes are collected and to maximize public safety by ensuring people have access to safe, regulated cannabis as opposed to black market products.
As well, new security technologies, protocols and training can be put in place to support responsible, legal retailing and mitigate other possible risks. The movement toward cannabis legalization in North America has created growing interest in the development of new technologies to aid in the controlled distribution of legal cannabis products. Emerging dispensing technologies can assist in both product selection and provide enhanced age verification. Regulations governing the sale of legal cannabis products must be forward-looking enough to accommodate and thus encourage the further development of such technologies.
Utilizing an already established and proven distribution chain will not only ensure broader access (and therefore the best chance to displace the illegal market) but also allow the government to achieve that goal in the most cost-efficient manner. The alternative of government monopolies for distribution would entail the high capital costs of setting stores which taxpayers would ultimately have to pay for.
The most logical regulatory path to success is one that accommodates enhanced age verification technologies and techniques through the convenience store channel. This will also address any concerns the public may have about socially responsible retailing.
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