How Is the Local Cannabis Industry Doing in Ontario?

Ontario is Canada’s most populous province and the country’s largest recreational marijuana market. It also has historical significance in the legalization of medicinal marijuana.

The Ontario Court of Appeal declared it unconstitutional to prohibit cannabis use for medical needs in a landmark case heard at the court in 2000. As part of his ruling, the presiding judge gave cannabis regulatory bodies a year to implement the ruling. Fast forward to 2001, and the medicinal use of marijuana became legal countrywide.

Ontario has nurtured its local cannabis industry to date. Below are some of the current trends in its local cannabis market.

1. Growing Number of Licensed Cannabis Dispensaries

After the recreational use of marijuana became legal in 2018, cannabis dispensary license issuance was through a lottery system. Only 25 businesses earned licenses through this system.

Cannabis Ontario’s license rollout system has come a long way since then. In 2018, the illicit weed industry in Ontario dominated Ontario’s cannabis market with an 80% market share. The Alcohol and Gaming Commission of Ontario (AGCO), the cannabis dispensaries licensing body, got criticism for its slow licensing rollout process.

Members of Ontario’s legal cannabis industry felt that AGCO was enabling the illicit industry. In response, AGCO embarked on a rapid rollout system that saw the number of cannabis brick-and-mortar shops climb to 280.

The commission intends to offer licenses to up to 30 new cannabis dispensaries per week. Its goal is to have 1000 licensed and operational cannabis dispensaries by September 2021.

The increase of cannabis dispensaries in Ontario has seen its legal cannabis industry gain a 40% market share against the illicit market. Even with Canada’s stay-at-home order, no cannabis dispensaries in Ontario have closed shop. There is room for both large cannabis retailers and small local shops to compete in the market.

2. Same-day Delivery

Initially, the provincially run Ontario Cannabis Store (OCS) was the only cannabis seller licensed to sell cannabis products online. They delivered cannabis products to customers in Ontario via mail order.

OCS had only two delivery options; express delivery, which took up to 3 days, and expedited delivery, where freight would take up to 5 days. With the latter, they only delivered parcels on Tuesdays and Saturdays.

However, the OCS later teamed up with a third-party private logistics provider to offer same-day delivery to its customers all over Ontario. Delivery time was from 4 pm to 11 pm daily.

During the stay-at-home order, cannabis dispensaries in Ontario were for the first time allowed to offer curbside pickup and doorstep delivery services. However, curbside deliveries were only available to customers who made purchases before coming to the designated pickup area.

Second, only direct employers of cannabis dispensaries and not third-party logistics companies could make doorstep deliveries.

3. Bulk Purchases

Cannabis wholesale distribution in Ontario was the OCS’s sole domain after legalization in 2018. OCS was also the sole online retailer in Ontario. However, in November 2019, Ontario’s provincial government decided to incorporate private players into their wholesale distribution model.

This privatization move aimed to enhance the efficiency of the distribution system to retailers. Enhancing the supply chain would also help lower product prices and allow retailers access to a wider variety of products for their customers.

The transition was timely because one of the emerging cannabis purchasing trends is bulk buying. Multiple licensed cannabis shops offer bulk purchase services in Ontario today.

4. Rise of Craft Cannabis

Another consumer behavior cropping up in Ontario’s cannabis market is an appetite for craft cannabis. To meet the needs of the craft cannabis market niche, the OCS launched a craft cannabis designation in April 2021. All products that meet the criteria would have a craft cannabis badge on the packaging.

Craft cannabis category designation is a welcome move for small-scale cannabis farmers in Ontario whose focus is high quality and breeding specific cannabis strains. The OCS already has 20 brands featured in their craft cannabis category. They hope to grow the number to meet rising customer demands.

5. Grow-Your-Own Cannabis Kits

Cannabis businesses in Ontario are also observing an upsurge in demand for grow-your-own cannabis kits. It is legal to grow up to four cannabis plants per household.

Sales on hydroponic equipment and light-growing mediums have gone up. The OCS is Ontario’s main cannabis seed seller and is facing the demand for seed varieties. Offering an array of cannabis seeds at affordable prices would also help curb Ontario’s illicit weed market.

6. Cannabis Lawyers

Ontario’s cannabis industry growth has motivated the rise of law firms and members of the Ontario Bar to specialize in cannabis law. Cannabis lawyers have a vast knowledge of the laws and regulations governing Ontario’s cannabis industry.

Cannabis lawyers help legal cannabis businesses comply, especially with dynamic lockdown rules, and when applying for licenses. They also advise cannabis businesses on tax laws and incorporation.

Conclusion

Ontario’s legal cannabis market is yet to harness its full potential as Canada’s largest cannabis consumer. However, the future holds endless possibilities for the industry.

Resources

https://mjbizdaily.com/ontario-cannabis-stores-can-still-offer-curbside-pickup-delivery-during-lockdown/

https://www.bnnbloomberg.ca/ontario-to-explore-ending-wholesale-cannabis-business-sources-1.1323153

https://www.thestar.com/news/gta/2011/04/13/pot_laws_ruled_unconstitutional.html