How Not to Legalize Cannabis, Brought to You by Ontario

Leave it to Ontario to show us how not to go about cannabis legalization.

Like some Soviet republic, legalization is not synonymous with liberalization. Even at the discretion of government authorities, entrepreneurs will likely not be welcomed into the industry.

Ontario Finance Minister Charles Sousa does not imagine dispensaries “being the distribution mechanism. It’s going to have to be controlled.”

“But it’s complex,” Sousa says.

He views cannabis as a sinful vice, something akin to alcohol, tobacco, or gambling, but unlike caffeine or television, it needs input from “several ministries.”

Of course, even if cannabis was dangerous it would not require bureaucrats from the Ministry of Finance, Ministry of Health and the Ministry of the Attorney General.

What is this? 1984?

It is the current year and right now outside of a grey area that includes farmers, vendors, and extraction crews — the only way to legally acquire cannabis is through Canada’s licensed producers (LPs).

These newcomers are both protected and punished by the state apparatus. On one hand, regulatory requirements prevent and disincentive a robust cannabis market, on the other hand, regulatory requirements protect a few top LPs from competition.

While some analysts may focus on one or a few groups in the short run, the lesson is in the long-term interests of everyone. The LPs profit at the expense of literally everyone else in Canada.

That is also the lesson with Ontario’s plan for legalization.

The Liquor Control Board of Ontario (LCBO) is a government-monopoly retail outlet that has expressed interest in handling legal cannabis sales.

While the LCBO takes orders from the government, Warren Thomas, president of the labour union representing the LCBO, has spoken up, believing the liquor store to be the most equipped.

“There would not be any need to reinvent the wheel,” Thomas told CBC News in 2015. 

Actually, the LCBO would be reinventing the wheel since the only thing cannabis and alcohol have in common is that they affect the brain. As for every other step — from seed, to farm, to trimmers, to dispensary owners and bud-tenders — the two goods couldn’t be more different.

But Thomas tells us it’s a social responsibility thing — “they do age checks, they do refusals if somebody’s intoxicated.” Like the LPs, the LCBO has a “very secure” warehouse and distribution system.

These are the reasons legalization czar Bill Blair has cited as well.

When it comes to alcohol, Blair said: “You’re going to come up against a government employee who’s got regulations to enforce and is going to ask for identification and if a person’s underage, they’re not going to be able to buy that.”

Adding, “it is far easier for a kid, an underaged youth, to acquire marijuana that it is to acquire alcohol.”

But the Centre for Addiction and Mental Health found under-aged alcohol use higher than cannabis use, with the latter on a downward trend.

If anecdotal evidence has anything to say, or perhaps the Journal of Studies on Alcohol and Drugs, “Most students found alcohol easy to obtain, with the most common access being from parents’ supplies or older friends.”

When it comes to society, private establishments are capable of doing age checks, and refusing intoxicated customers. They have an incentive to enforce these community values since a private owner is personally invested in the capital stock of the operation.

Blair and Thomas imagine LCBO employees will act perfectly and rationally because they are well-paid government employees with “regulations to enforce.”

If that’s true, then it comes at a high expense for Ontario taxpayers and alcohol producers and consumers.

A majority of Ontario residents don’t even want the LCBO involved with cannabis, preferring specialized craft stores or pharmacies.

But does it really matter where or how cannabis is distributed, so long as its price undercuts violent gang markets?

And since prices in a free market system actually mean something when it comes to communicating demand and available supplies, putting a government-monopoly retailer in charge is one of the most destructive things one can do.

That is perhaps why Ontario Premier Kathleen Wynne said it just “makes a lot of sense” to use the LCBO.

Like some Soviet republic, Ontario will likely neglect free exchange and private property, preferring to embrace top-down control by government ministries.

But when has that ever worked?