Before LPs can sell their products direct to customers in “farm-gate” sales at their production sites, they’ll be forced first to sell the REC to the Ontario Cannabis Store, then buy it back at an increased price. The amount they’ll pay has yet to be announced.
- Producers—whether craft grower or large LP—won’t move their products off-site, but they’ll pay the Ontario Cannabis Store in order to get around the provision of the law requiring all REC sold in Ontario to be purchased from the OCS.
- Lawyer Trina Fraser told Global News, “If they are saying they intend to mark it up the same as if we’d taken physical possession, that I have an issue with. […] We’re obviously struggling to displace the illicit market and match pricing, among other things, and you’re now charging for a service you’re not even providing, which is physical distribution.”
- Nathan Woodworth, CEO of LP James E. Wagner Cultivation, said he understood the surcharge, because it prevents farm-gate sellers from unfair advantage over those who sell through retail stores and pay for OCS wholesale.
Inside the Jar
- Craft breweries with tasting rooms face similar obstacles, as they must pay fees to liquor boards, who manage prices.
Twitter—Aaron W. Andersen
It is uncertain what kind of markup farm-gate products will face. Brock University business professor Michael J. Armstrong compared some estimated REC retail markups: The OCS marks retail products up 77%; Newfoundland has a 90% markup; while Quebec marks products up only 28%. Wholesale markups, meanwhile, are 9% in Manitoba and 6% in Alberta, each of which includes physical distribution.
Twitter—Michael J Armstrong
- That’s to say nothing of the various taxes applied to retail products, broken down here.
Twitter—Aaron W. Anderson
The OCS also moved to expand its same-day delivery pilot project to Hamilton, the third-largest metropolitan area in Ontario.
Twitter—Ontario Cannabis Store