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Ontario unveils plan for government chain of marijuana stores

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Re: Ontario unveils plan for government chain of marijuana stores

#41

Post by sgift »

jstanley wrote: post #35
criddell wrote: post #13

Earlier quoted context omitted.

You're making a lot of assumptions about how they will run the stores. Other people have already mentioned how the government runs the alcohol stores and (IMHO) they do a pretty good job of it. I live in Texas now and when I go back to Ontario to visit my family, it does seem weird that I can't buy beer in a 7-11 or a grocery store or in a drive through shop (not sure these are a good idea). Being the sole seller als…

> Being the sole seller also means that they can negotiate ruthlessly and drive prices down to maximize profit for the people of Ontario. Being the sole seller also means they have a monopoly. It's much easier to run a monopoly profitably by charging high prices than by negotiating low prices. Even if they do negotiate low prices, what incentive is there to pass the savings on to the customer?

Governments are beholden to people, not markets. Profit is not their main incentive.

Re: Ontario unveils plan for government chain of marijuana stores

#42

Post by valuearb »

3pt14159 wrote: post #15

I'm a Toronto native. These are the forces driving this decision: 1. Provincial government is cash poor. The LCBO is a huge source of cash, what government would give up another source? This isn't taxes, this is profit. "Isn't this just another tax?" One might ask, but no it's not. The reason is that Ontario has fewer alcohol distribution centres than a free market would provide. Most people just do a bigger alcohol…

This isn't going to produce more net government revenues, it's going to produce more government employees beholden to the current regime. They could net more to spend on other government needs simply by taxing and regulating, with the same set of regulations.

Re: Ontario unveils plan for government chain of marijuana stores

#43

Post by bupku5 »

deskamess wrote: post #19
3pt14159 wrote: post #15

I'm a Toronto native. These are the forces driving this decision: 1. Provincial government is cash poor. The LCBO is a huge source of cash, what government would give up another source? This isn't taxes, this is profit. "Isn't this just another tax?" One might ask, but no it's not. The reason is that Ontario has fewer alcohol distribution centres than a free market would provide. Most people just do a bigger alcohol…

It is important that the LCBO not be the only source. It needs to be opened up from the get-go and not have to follow the mini-step half measures that we have to go through to get alcohol in grocery stores. The sourcing of alcohol is still controlled by the province. It is a govt sponsored racket and monopoly.

And the Beer Store is terrible and offers a non-existent selection.

Re: Ontario unveils plan for government chain of marijuana stores

#44

Post by mwdalrymple »

wolco wrote: post #37
mwdalrymple wrote: post #28

The LCBO is a good employer for stupid people. Those salaries go right back into the economy. These unionized jobs also come with a great pension providing retirement security. I am quite happy with this. The government privatizing things such as Ontario Hydro has been a huge disaster. At least they are not stupid enough to give this up.

Privating hydro is different because it is still a monopoly. The little guy cannot setup a power company. But this is a new industry with small business being wiped out. Imagine we all had to wait in line for our block of cheese once a week.

But are these little businesses on the books contributing tax revenue?

Re: Ontario unveils plan for government chain of marijuana stores

#45

Post by microcolonel »

This is, of course, probably a bad idea.

There is a preexisting efficient network of high quality marijuana distribution in Ontario (at least here in Toronto). Even if the province does as well with marijuana as they do with booze (the LCBO is at least a pleasant retailer, aside from the rules about minors touching merchandise during shopping), the black market will be far more attractive to the mid and low shelf market.

It is considerably easier to grow and cure marijuana than it is to ferment commercially viable quantities of an attractive alcoholic drink.

The ideal legal weed situation is a legitimate version of the black market arrangement, which hasn't been a considerable health problem in any way that could be attributed to poor quality product. Pretending otherwise is just a typical legal trick pulled by established agribusiness/venture firms. Frankly it's hilarious at a time when the province is finally reintroducing private alcohol retailers.

Re: Ontario unveils plan for government chain of marijuana stores

#46

Post by thinkharder »

criddell wrote: post #13
JPKab wrote: post #7

I live in Colorado. I think they are really blowing it by making the stores government owned. In Colorado, the stores are privately owned but very, very strictly regulated. Plants are tracked with an RFID all the way to the products derived from them, with a full chain of custody all the way to purchase. Only adults 21 and up can enter them, with a strict dual-check of identification (once to enter, and again when pa…

You're making a lot of assumptions about how they will run the stores. Other people have already mentioned how the government runs the alcohol stores and (IMHO) they do a pretty good job of it. I live in Texas now and when I go back to Ontario to visit my family, it does seem weird that I can't buy beer in a 7-11 or a grocery store or in a drive through shop (not sure these are a good idea). Being the sole seller als…

As someone who lives in a state with state-run liquor, this is the exact opposite of how it actually plays out. Prices are anywhere from 30-100+% more than across the border in a state without a state-run liquor policy. Because the government has a monopoly there is no competition to drive prices lower and since the government monopoly gets to keep the profit there is no incentive for them to lower prices. Furthermore, a big part of the reason that liquor is state-run where it is, with few, scattered stores that close at 7:00 PM and on Sunday and holidays, is to encourage reduced alcohol consumption. Raising prices is an effective mechanism for that too.

I think if you set up these kind of government-run dispensaries, you have to mandate that their purpose is ensuring product and supply chain quality (not just making fat bags of cash), and that revenue above COGS has to be restricted to what it costs to run the program and maybe a small emergency/maintenance fund. Otherwise the natural incentive that apply to any monopoly encourage them to raise prices to the max the market will bear and rent-seek. It's civically conscientious to think that the government would be advocating for the people by working to proved the lowest possible prices, but that isn't how any government-run 'vices' dispensary program I've ever seen plays out IRL.

Re: Ontario unveils plan for government chain of marijuana stores

#47

Post by rbobby »

3pt14159 wrote: post #15

I'm a Toronto native. These are the forces driving this decision: 1. Provincial government is cash poor. The LCBO is a huge source of cash, what government would give up another source? This isn't taxes, this is profit. "Isn't this just another tax?" One might ask, but no it's not. The reason is that Ontario has fewer alcohol distribution centres than a free market would provide. Most people just do a bigger alcohol…

> The union at the LCBO is huge and powerful. The jobs, even seasonal ones, pay well [...]

And oddly enough I'm perfectly happy with that. Ontario's strategy with booze is responsible consumption (or whatever it's called)... essentially price it sufficiently high that we don't get too many drunks on the street.

Given how badly alcohol abuse can mess up lives (not just the abuser but their family and friends too, not to mention random folk who they cross paths with) I think this is a sensible strategy.

As part of that strategy I don't think trying to have to the cheapest labour costs is that important. It won't change the end price of booze, it will only ensure that the jobs won't be staffed by long term employees (and hence knowledgeable employees, and employees that can save for retirement, etc).

Re: Ontario unveils plan for government chain of marijuana stores

#49

Post by vanjoe »

iamatworknow wrote: post #5

I live on the border of New York and Ontario/Quebec and I can't see how this won't spur legalization here. The border is already incredibly porous and the smuggling routes already exist. This will just make it even easier.

Personally I wouldn't try smuggling from across, taking beer and smokes across without declaration is significantly less of a risc than taking banned substances. I say this as a Canadian a few minutes from the Washington border.

Re: Ontario unveils plan for government chain of marijuana stores

#50

Post by deskamess »

ontarioborn wrote: post #40
Para2016 wrote: post #18

Earlier quoted context omitted.

Being the sole seller and negotiating "ruthlessly" leaves a lot of room for black market.

Not anymore. Beer, cider, and wine are available in some supermarkets since 2016. see https://www.ontario.ca/page/beer-wine-cider-sales-grocery-st... . But it's not like the USA, where cigarettes and beer are the first things one sees when walking into a 7-11.

Who supplies them with beer?

The LCBO (and the rules to prop them and The Beer Store) cannot be the basis for alcohol distribution and retail laws.

LCBO gross margins are very high (49.8) compared to private outfits in Alberta (25%). Their employees also take a nice share in terms of benefits.

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