Ontario's largest municipality without any legal cannabis retail stores is reconsidering its prohibition on them, with a city report highlighting that its residents are "disproportionately" served by the illegal market.
Mississauga, Ont., was one of dozens of municipalities to bar retail cannabis stores from their communities when legalization came into effect in 2018. The Alcohol and Gaming Commission of Ontario is responsible for issuing licences, but the government left it up to municipalities to opt in or out of hosting stores.
Now, four and a half years later, with more than 1,700 legal stores across the province and the sector contributing $13.3 billion to Ontario's GDP — per a recent Deloitte analysis cited in a city staff report — there's a push to get Mississauga on board.
Coun. Dipika Damerla put forward a motion to lift the ban on cannabis stores and, after councillors debated the issues raised in the motion and staff report Wednesday, they will vote on it next week.
Mississauga has spent the past several years advocating for more municipal control over the location of stores, but it has become clear that isn't going to happen, Damerla wrote in her motion.
"In the meantime, what I have found is that there has been a proliferation of illegal cannabis stores in Mississauga," Damerla said in an interview.
"So now my choice is not between no stores and legal stores. The choice is illegal stores or legal stores."
The Ontario Cannabis Store, the province's wholesaler for legal retailers, reports that the legal market has been steadily growing since 2018 and eating into illegal business. More than 50 per cent of cannabis sales are now through the legal market, the OCS reports.
"According to the OCS, Mississauga continues to be disproportionately served by the illegal market, compared to communities that have 'opted in,'" the Mississauga staff report says.
In Damerla's ward, police have tried six times to shut down one illegal cannabis store, but the operators just show up the next day, cut the chains off and open as usual, she said.
"So we have a situation where the long arm of the law is unable to stop the illegal guy," she said. "Meanwhile, I am stopping the legal guys — not a tenable situation."
Mayor Bonnie Crombie said she had originally been concerned that municipalities have no real control over where legal cannabis shops can be established, and that several stores would be clustered in one area.
"Open the app Weedmaps on your phone, and you will see the number of (illegal) operations that currently exist in Mississauga," she told fellow councillors Wednesday.
"So we are not addressing the black market whatsoever. In fact, I now have come to believe that we're promoting the black market by not allowing legal shops to open."
About half of the councillors who spoke about the issue at Wednesday's general committee meeting did not support the city opting in, citing both concerns about placement of stores and that residents have not been given enough time to offer input.
The city staff report cites a study by the ºÚÁϳԹÏÍø Research Council of Canada on behalf of the OCS and the Ontario Provincial Police that found "great inconsistency" in the amount of THC in illegal cannabis edibles and "dangerously high levels of pesticides." As well, illegal products often have brightly coloured packaging that would appeal to children, the study found.
Omar Khan, the chief communications and public affairs officer for retailer High Tide Inc., gave a deposition Wednesday and pointed to several examples of illegal products available in Mississauga that are designed to look like popular candy items.
"If council votes ... to allow the legal regulated sector an opportunity to move into Mississauga and set up shop, we know from experience in other municipalities, particularly neighbouring municipalities like Toronto and in Brampton, that will really take a big bite out of the illicit market and their sales in Mississauga," he said in an interview.
"That's important because it's important from the perspective of protecting our kids. It's important from the perspective of protecting public health, but it's also important from the perspective of taking revenue away from criminal activity."
One of Mississauga's concerns in 2018 was around a desire to avoid "clustering," or having several stores in one block, Damerla said. But city staff canvassed neighbouring municipalities with legal cannabis and found that wasn't a huge concern there. Even in Toronto, the OCS reports that there were fewer stores permitted to open in March 2023 than in May 2021.
"I think Mississauga was well served by taking the wait-and-see approach because we sort of bypass the whole clustering of stores and then some of them shutting down," Damerla said.
"We bypassed that because now the market's mature, they're sort of aware of the risks of clustering."
George Smitherman, president and CEO of the Cannabis Council of Canada, which represents licensed producers and processors, said the "gold rush" mentality of the early days of legalization has dissipated.
"Part of the stabilization of the sector, in a certain sense, is more of a stark realism about the realities of the business," he said in an interview.
"I think that this, in a certain sense, will temper the enthusiasms of retail store proponents. That's quite different than the environment of four or five years ago."
This report by ºÚÁϳԹÏÍø was first published April 12, 2023.
