A single provincial supplier creates an expensive, ineffective system
Last week the government of Ontario made an announcement that the province will establish a series of stores similar in structure to the Liquor Control Board of Ontario (LCBO) to sell legalized marijuana next year.
This is all well and good, but the objectives of legalizing marijuana may not be reached and government mandated stores may hurt Ontario, instead of helping.
If you believe that legalization marijuana and creating government stores will put illicit drug dealers out of business, think again. Government stores will likely raise the cost of marijuana, forcing customers to find cheaper sources of the drug. In fact, expensive government marijuana may become an incentive for drug dealers to expand their businesses now that their competition is a state monopoly with limited selection and fixated prices.
If you want a store with employees to serve as a source of knowledge to help expand the market for both recreational and medicinal marijuana in Ontario it won’t happen either. Workers in new government stores will require time to become as knowledgeable on the subject as those currently working in dispensaries, which will give consumers a poorer shopping experience, which is especially important for new drug users.
But problems don’t end here. The establishment and enforcement of these regulations will cost up to $274 million, adding more to the existing deficits. This doesn’t mean that we shouldn’t have regulations around the legal sale of marijuana, but Ontario has to be careful with how much we’re willing to spend for these regulations to be enforced.
Freeing up the market and allowing more stores to sell legalized marijuana will require less government spending to maintain the system. It may even increase tax revenue for the government, as people who are able to purchase the drug at lower prices will do so more often.
Marijuana legalization is coming, and we should be prepared for it. Being prepared requires a careful look at what services we expect to receive and the cost of what it will take to achieve that. Can Ontario really afford the cost of this government monopoly?