Do you see what happens? Do you see what happens when you put all your cannabis eggs in one basket? You get a government monopoly called the Ontario Cannabis Store (OCS), which experiences a cyberattack which leads to product shortages.
The cyberattack has reinforced the belief among many that Ontario doesn’t need a central government planner. That, licensed producers of cannabis should be able to deliver direct to retailers without going through a central distribution system.
OCS Cyberattack Leads to Product Shortages
Vivianne Wilson, the founder of GreenPort, a cannabis retailer in Toronto, said, “I lost thousands of dollars. That’s the reality.”
“Right now they have a complete monopoly on the industry. They don’t work with retailers as partners and that’s a huge failing,” she said. “Instead of building a system that can support the entire province, they’ve built a very tiny monopolized process that’s clearly inefficient.”
The province has only one distribution centre, located in Guelph, Ontario.
That means cannabis producers in, say, Thunder Bay, for example, must send their cannabis to Guelph before it can get shipped back to Thunder Bay to be sold at a local retailer.
That’s an almost 3,000-kilometre (or a nineteen hundred mile) round-trip. And for what reason? So-called “public health and safety.”
Wilson says this system is not “financially responsible or environmentally responsible.”
Wilson, like other retailers, says after this experience, the OCS monopoly needs to rebuild their trust.
Elisa Keay of K’s Pot Shop in Toronto said: “When you’re my only wholesaler, and you’ve got a firm grasp on who can get delivery and when we can get delivery, it leaves us zero options. We’re totally at their mercy.”
“I don’t like to order massive quantities of any one thing because I rotate a lot of things through, so when I get disrupted, it means that the shelves are going to be bare,” she said.
“It means that some customers are going to come in, shake their head, upset they’re not getting what they want and they’re going to go somewhere else because they don’t want to hear that it’s not my fault.”
OCS Monopoly Favours Big Business
The OCS monopoly is favouring big business over smaller retailers. Whether intentional or not, that is the direct consequence of having a single monopoly distributor.
Larger retailers have been able to move their supply from slower-volume stores in smaller communities to higher-volume ones in the city.
Small businesses cannot do that. They are at a competitive disadvantage but not due to poor business decisions on their part. They’re losing thousands because of a cyberattack on the government distributor.
It’s similar to the Chinese-style authoritarian lockdowns Western leaders imposed on the populace in 2020 and 2021. The intent may have been “public health,” but the result was small businesses shutting their doors forever. At the same time, large companies like Amazon made record profits.
As economist Thomas Sowell wrote, “Much of the social history of the Western world over the past three decades has involved replacing what worked with what sounded good.”
What works is private enterprise. What works is entrepreneurs competing with each other for customers. And with private property rights. The ability to conduct your business without some government bureaucrat breathing down your neck.
But when it comes to cannabis, Ontario went with what they thought sounded good. Government regulation, government distribution and government health and safety.
Or, to quote Sowell again, “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”
The OCS will pay no price for this cyberattack. No one is losing their job. If anything, they’ll receive more taxpayer money to fend off future cyberattacks.
Solutions to the OCS Monopoly
Nima Derak of Leafythings calls the latest OCS cyberattack “disastrous.”
“Local Canadian cannabis growers and farmers have made up the independent supply chain for 40+ years,” she said. “They are members of the public, they are Canadians, and they have been neglected and removed from the current process. Canada is to marijuana cultivation as Belgium is to chocolate. Over-regulation and financial barriers coupled with monopolization of the cannabis supply chain in Ontario is causing major distress to independent Canadian growers and retailers and is locking them out from operating successfully.”
Adding, “The role of government should be held to regulating cannabis, not creating an unnecessary role as the distribution middle man.”
“It is not in the benefit of the Canadian taxpayer to take an industry that already existed, ignore it, and put a new system in place that ignores the other 50% of consumers. Let’s call it as it is: the OCS as the sole monopoly distributor and online store has acted only as another broken and redundant arm of the government.”
Nima Derak said she’d like to see a system where companies order directly from independent manufacturers. She says a system resembling how grocers get their food should be the goal. Some food goods come from the manufacturer. Others come from various, multiple, and competitive food centres.
“There is no way to put this in a politically correct fashion,” Derak says. “Cannabis is proven to be safer than many non-regulated household goods and medications, and it is time we start acknowledging this.”
OCS has not responded to CLN’s requests as of this publication.
However, OCS CEO David Lobo did release a statement:
“Our focus is now on working our way through the backlog of wholesale orders and getting trucks on the road delivering to Ontario‘s authorized retailers who count on us.”
“We are working urgently around the clock to get products on the shelves of as many retailers as quickly as possible. We again apologize to our retail customers for this disruption and are taking every measure to fulfil and ship orders promptly.”
In other words: we’re sorry you feel that way.
That’s not a genuine apology. And unless Mr. Lobo is visiting Premier Doug Ford with plans to dismantle the OCS monopoly, many cannabis small-business retailers don’t want to hear it.
The OCS monopoly has lived out its usefulness. If it was ever useful, to begin with.