Cannabis in the City What’s the ‘Budd’ Buzz?

It was a whirlwind December and first month in office for newly-elected officials across Ontario’s municipalities, no doubt. Following inaugural meetings, Council Members faced urgent business, important decisions, and a burning question… whether to Opt-In or Opt-Out of allowing cannabis retail locations. The Municipal Affairs Team at Sussex Strategy Group hopes to provide a quick update and overview of what we’ve seen so far, as well as what’s to be expected for municipalities into 2019 and beyond as part of this legalization rollout.

Municipalities and local governments have a chance to greatly impact the overall landscape of cannabis markets by choosing whether to Opt-In or Opt-Out of allowing retail stores within their cities, towns, etc., with a looming deadline set by the Provincial government for January 22, 2018. Those who decide to take the Opt-Out route will lose access to promised provincial funding over the next two years to cover costs related to the legalization rollout, but all is not yet lost – there are opportunities for municipalities to Opt-In down the road.

These Council decisions come at the same time we are seeing further colours and details regarding Cannabis Retail Licensing. On December 13, a statement was released by the Provincial governmentthat advised of changes to the licensing process, citing a national shortage in cannabis supply. This announcement came immediately after both Toronto and Ottawa voted to Opt-In. Prospective cannabis retailers submitted applications online to the Alcohol and Gaming Commission of Ontario (AGCO), and the lottery draw for 25-initial licenses took place last week on January 11, 2019. These 25-initial licenses will likely be distributed as follows:

• 5 licenses to the City of Toronto
• 6 licenses to the GTA area (i.e. Peel region, Halton region, York region, Durham region)
• 7 licenses to Western Ontario (i.e. London et al.)
• 2 licenses to Northern Ontario (i.e. Greater Sudbury et al.)
• 5 licenses to Eastern Ontario (i.e. Ottawa et al.)

We are seeing a number of trends emerge, as we keep our finger on the pulse of these decisions.

1. Opt-In and Lead the Way: Toronto and Ottawa are prime examples of this trend, as both Councils took a leading role despite some unknowns surrounding the possibility of any further zoning measures and by-law enforcement strategies. These two Councils also delegated authorities to their Mayors for continued discussions with the Attorney General and AGCO to advocate for greater municipal authority over stores.
   
   
2. Opt-Out and “Wait and See”: Some Council Members are uncomfortable with those unknowns and feel Opting-Out, at least for the interim, is the best approach. Mississauga and Milton are examples of this trend. This “Wait and See” approach allows for more time to consult residents and gather feedback. However, the issue we’re seeing with this route is FOMO – fear of missing out on needed funding from the province for better enforcement measures, as cannabis products are still available to their residents online (via the OCS).
   
   
3. Defer, Defer, Defer: There’s still time. Let’s not rush into it. Halton Hills and Grimsby, for example, have opted to decide the day before the deadline. At the very least, they will know positions of their neighbouring municipalities as they discuss and vote on January 21, 2019.

If there’s one important takeaway message, it’s that January has been an especially busy month for municipalities that still need to take a stance on the cannabis Opt-In or Opt-Out issue. As always, we will continue to regularly monitor all ongoing Council discussions and will continue to see movement right until the deadline, making for an eventful start to the new year and new term of Council across Ontario.

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