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Economics behind city's decision to allow cannabis retail stores

Several councillors expressed concern about people heading out of town to shop and were swayed by province's promise of funding; We 'have to come to grips' with this
Cannabis in a jar
Stock photo

In the end, Orillia politicians have decided the grass is greener.

At their committee meeting Monday night, councillors voted in favour of allowing cannabis retail operations within the city. The decision must be ratified next Monday night.

Shawn Crawford, the city’s manager of legislative services, provided a detailed report to councillors in which he laid out the province's plan and timelines in addition to the benefits and potential pitfalls of opting in vs. opting out. He stressed the city has to make its decision prior to the province’s mandated Jan. 22 deadline.

Crawford said according to his research, 123 Ontario municipalities have opted in so far, while 47 have officially opted out. On Monday night, neighbouring municipalities such as Barrie, Collingwood and Midland also voted to opt in.

Crawford said the Alcohol and Gaming Commission of Ontario (AGCO) provides certain safeguards related to cannabis retail operations.

“If council does opt in, any store operated in the city is required to be licensed and regulated by the AGCO,” said Crawford, noting the agency also assesses applicants and will not allow operators who are affiliated with organized crime or who have criminal records.

In addition, there is mandatory training required for all employees and nobody under the age of 19 is allowed to work in or shop in a cannabis store. Purchasers must show proof of age.

The province has also decreed that retail cannabis stores must be stand-alone operations; they cannot be within another store.

There was consensus among city councillors to opt in for several reasons: to capitalize on funding from the province that is tied to opting in, to prevent Orillians from travelling to other municipalities to buy cannabis, to lessen the impact of the black market and to safeguard the quality of cannabis consumed.

Coun. Pat Hehn said municipal politicians “have to come to grips” with this issue. “It’s legal now.”

She said after discussions with Allan Lafontaine, the managing director of the Orillia District Chamber of Commerce, she realized economics are an important part of the equation.

“Most people, if they go to Barrie (to buy cannabis) they won’t go to just one store,” said the Ward 4 councillor. “We’re working so hard to have people shop locally … it seems to me we need to keep people in town.”

Coun Mason Ainsworth agreed. He said he was swayed, in part, by the position of both the chamber and Downtown Orillia Management Board (DOMB), both of which urged the city to opt in.

“To be quite honest, I was shocked (by the response), especially from the DOMB, who suggested we do opt in. I was not expecting that,” he said, adding the chamber provided “some real unique insight” about how people could shop wherever they could legally purchase cannabis.

“I really think Orillia needs to get ahead of the ball,” said Ainsworth, noting opting in would signal that “Orillia is open for business.”

He said such a move would also expand the tax base and bring jobs to the community.  “People are getting marijuana delivered to their house already,” he said.

Coun. David Campbell agreed. He said the debate is not about legalization. “The federal government made that decision,” he said.

Opting in, noted Campbell, would “allow us a piece of the pie” and said the financial benefit was a key reason behind his support of the decision to opt in.

The decision, however, was not unanimous. Coun. Rob Kloostra and Coun. Tim Lauer both voted against the decision.

Kloostra, a member of the Orillia Police Services Board, noted that board was not in favour of opting in. He said the previous government's plan to use LCBO stores to sell cannabis was more appealing.

Lauer said his decision was more about timing.

“It’s going to happen. There’s no doubt about it,” said Lauer. “But I don’t buy the panic.”

He said he doesn’t believe the province “has a handle on what’s going on.” That was evident, he said, when they decided to limit, initially, the number of stores to 25 due to a nation-wide shortage of cannabis.

Locations for the first 25 stores were decided by a lottery and were awarded to cities with a population of 50,000 or more.

“Let others deal with the province to see if it is a warm, fuzzy relationship,” said Lauer. “We can opt in when that comfort level arrives … It’s not sorted out to the point where it makes me comfortable.”

But Crawford noted that opting out now could be costly later. Municipalities were informed that if they opted out, they would not receive financial incentives from the province down the road. That's a tactic Lauer likened to "extortion."

In the end, council supported the opt-in plan. As part of that support, councillors voted to delegate authority to city CAO Gayle Jackson to provide input on behalf of the city to the AGCO when it comes to applications for retail stores. 

That's because the AGCO allows only 15 calendar days for public input related to any applications. That would not provide sufficient time to bring potential applications before city council for scrutiny.

In addition, council agreed to use at least part of the promised funding from the province to hire a part-time bylaw enforcement officer to deal with any issues related to retail cannabis operations and the city’s related decision to ban smoking of tobacco and cannabis on city-owned property. (Watch for a separate story on that issue later today)

Because of the shortage of supply, it could be some time before Orillia is home to a retail cannabis store. The best guess is it could be at least a year down the road. 

But Coun. Jay Fallis believes it’s only a matter of time.

“I think really our entire country has gotten behind this,” said Fallis, noting the debate about legalization is in the rearview mirror. Using cannabis has “become normalized. Opting in seems to me like the answer.”

The decision will be up for ratification at next Monday night's council meeting. Once that decision is finalized, the city will alert the province about the decision.