Cannabis CEOs Demand More Stores in Ontario

Leaders of the regulated cannabis industry in Canada are pleading for the Ontario provincial government to open the market for more retail stores.

In an open letter issued on October 28 to the office of Ontario Premier Doug Ford, chief executives from leading public cannabis firms asked the province to take a closer look at changing its current policy.

“Compared to other provinces, Ontario is lagging far behind,” the letter from the CEOs states.

The Cannabis Council of Canada is an association created to protect the interests of licensed producers (LPs) in Canada. The entire list of executives who signed this letter is as follows:

• Alison Gordon – 48North (TSXV:NRTH)
• Irwin D. Simon – Aphria (NYSE:APHA,TSX:APHA)
• Terry Booth – Aurora Cannabis (NYSE:ACB,TSX:ACB)
• Mark Zekulin – Canopy Growth (NYSE:CGC,TSX:WEED)
• Mike Gorenstein – Cronos Group (NASDAQ:CRON,TSX:CRON)
• Sebastien St. Louis – HEXO (NYSE:HEXO,TSX:HEXO)
• Greg Engel – Organigram Holdings (NASDAQ:OGI,TSXV:OGI)
• Torsten Kuenzlen – Sundial Growers (NASDAQ:SNDL)
• Navdeep Dhaliwal – The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF)
• Brendan Kennedy – Tilray (NASDAQ:TLRY)

The CEOs are asking Ford to make every effort possible to ensure the number of stores in the province “significantly” increases since this move would support LPs.

The province has long had general issues with supply; a bottleneck of cannabis products was the main reason Ontario elected to take a slower approach for the rollout of retail shops.

“There is ample supply of cannabis for the adult recreational market — there simply is no longer a shortage,” the letter from the cannabis leaders reads.

The slow rollout isn’t affecting just producers of cannabis — it has also impacted companies dedicated to managing retail networks in Canada.

During an interview with the Investing News Network (INN), Darren Bondar, CEO of Inner Spirit Holdings (CSE:ISH), said Ontario could hold easily 1,000 stores “without looking like the pot capital of the world.”

Instead of opening a free market for private parties to apply and set up shops across the province, the Ontario government elected to create a lottery system and issue a set number of licenses, which still require validation after the lottery.

A side effect of the lottery system was the immediate deal-making point of view created for lottery winners, who, rather than go through the process of setting up a store, elected to allow the participation of other established firms, including LPs.

The lottery process has been heavily criticized for its restrictive nature and for the limited number of licenses actually issued.

In a previous interview with INN, a former executive director of the council, Allan Rewak, said it was set up to discuss the issues currently affecting LPs.

These leagues and team ups for cannabis companies and executives are not rare. Earlier this year, the Canadian Chamber of Commerce officially launched a new banding of cannabis companies with the creation of the National Cannabis Working Group.

A spokesperson for the government of Ontario did not reply to a request for comment regarding the letter from the council.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.