Will Ontario loose money selling weed?

[ZR]

Is it possible that the Ontario government will be the only entity in the history of civilization to actually lose money selling drugs?
Perhaps "only" is an exaggeration. We all knew that dealer in high school who smoked more than he sold, leaving him ultimately in the red. Or that guy whose mom found his stash and confiscated his product, compelling his frustrated customers to shop elsewhere.
But by and large, those who enter the marijuana business — which, for now, is still illegal — do so with the understanding that there is money to be made. Good money. The stuff practically sells itself, in fact.
But when you are a government known for its crippling overspending (https://www.thestar.com/news/queenspark/2015/12/02/ontario-consumers-likely-paying-billions-extra-for-hydro-one-decisions-auditor-general.html) and regular financial boondoggles (http://www.cbc.ca/news/canada/toronto/smart-meters-hydro-bills-ontario-time-of-use-pricing-1.3862462), the notion that one could actually lose money selling marijuana becomes a plausible outcome.
Marijuana monopolyOntario has revealed what could quite possibly be the most complicated, cumbersome, expensive legalization plan conceivable — one that is certain to maintain the black market while at the same time burdening itself with massive overhead and organizational costs.
Instead of pursuing the cheaper, easier option of developing a licensing framework for existing dispensaries and taxing the revenue — sort of like the province does with tobacco sales and, to a lesser extent, The Beer Store — Ontario will create a new government-owned and -controlled enterprise, which will have a monopoly over pot sales in the province. As such, it will be responsible for everything: purchasing, distribution, retail space, training, payroll and so forth, following the existing framework of the province's LCBO liquor stores.


Marijuana users and advocates critical of Ontario's pot selling proposal (http://www.cbc.ca/news/business/ontario-marijuana-reaction-1.4284050)
Ottawa pot shops put 'on notice' after Ontario unveils marijuana plan (http://www.cbc.ca/news/canada/ottawa/ottawa-pot-shops-on-notice-ontario-marijuana-legislation-1.4281319)

The fatal assumption made by the province here is that a government-run marijuana monopoly will function the way its existing government-run alcohol monopoly does. It won't. For starters, it's much easier to produce your own marijuana than it is to distil your own vodka or make whiskey in your bathtub. Any idiot with a grow light and some seeds can do it — and they have been doing it for years.
That's the second point: the last major black market for alcohol in Ontario died with the repeal of the Ontario Temperance Act in 1924. The LCBO works, for better or for worse, because it's the only thing many of us have ever known. The government's new pot monopoly, however, will have to compete with an already robust and flourishing black market.
One could argue that the LCBO, in its early days, had to compete with a robust and flourishing black market also, but that black market didn't have the benefit of one-day shipping on Amazon Prime and private Facebook messaging. Today's market might not be so easily extinguished.
1 store for every 93,000 peopleIn order for this government-run operation to eclipse the black market, its product needs to be at least as accessible and affordable as what is currently available to recreational users. By this scheme, it will be neither.
Ontario proposes opening just 40 retail outlets in the province in 2018, the first year marijuana would be legal (if it becomes legal, but that's a separate discussion). By contrast, the government estimates there are around 70 to 80 dispensaries in Toronto alone, and those dispensaries typically don't close at 6 p.m. on Sundays and on all statutory holidays.

[mavrrrick]

Honestly wouldn't surprise me!!! Or Premier get rich...which ever.

[WTF]

the more I read about their plan....the more truckloads of money I see going up in smoke

in the ad spend category alone...they'll piss through more money on consultants and lawyers than they spend on buying ads....and they'll be spending 10s of millions there.....I would bet a 3 year ad budget of $75 million and double that to $150 million to cover the endless line of leaches lining up at the trough

150 stand-alone stores....OK....so what's the average price for the land and structure of each? $2million???...not in the fucking GTA.....but lets say an avg of $2million......so that's $300 million

union workers for each store....what are we talking here....an average of 5 on duty at $29/hr for 85 hours per week...so that's $641,000 per store per year....so that's $96 million in annual wages

I won't even take a stab at the costs they'll soak us on for purchasing, dist, training etc

so the 3 year budget to get this thing going by my quick math.....is $738,000,000 with almost $446 million in upfront costs

oooohhh...that's getting pretty fucking close to that billion dollar threshold that these bastards seem to like to flush down the toilet endlessly

and that's one store for every 93,000 people.....with prices I'd imagine are gonna be significantly higher than the black market

[RedSN]

Does anybody else think they are overestimating the demand for legal, store bought pot?
Aren't the pot-heads going to continue buying from their "guy"? Or just grow their own?

Turning this into a monopoly business is a far cry from the original concept of simply decriminalizing it.

[mavrrrick]

I think they should scrap the whole idea!!! Tired of taking it in the a$$ from these fuckers!!!

[ZR]

^ Yes sir.

[RedSN]

I think they should scrap the whole idea!!!
Scrap the retail side of it? Or scrap the entire legislation of legalizing it?

Don't need stores, don't need growers, don't need to re-train the entire police force.
Maybe I'm oversimplifying it, but just need to stop putting people in jail for smoking it, growing it, or selling it.

[5.4MarkVIII]

I found it amusing listening to the radio this morning the host went threw the stories like this

First they talked about the horrendous addiction crisis in Ontario and how the government needs to step in and make it harder to get these drugs and help those suffering from the drug problems because they can't help themselves or the choices they have made

Then they talked about the legalization of pot. How the government needs to make it simpler to get and reduce the amount of work they are pouring into it. Legalization is a good thing and people have the right to choose.

Then they talked about Canadians stranded by the hurricanes and how we should not be wasiting time and money on helping them because they had lots of warning and it was their choice to stay and people need to live with the consequences of their decisions. And the government should not be relied upon to clean up the mess caused by their decisions.

[IanGTCS]

^And that could have been from the same person.

Has prohibition ever worked for any drug, or for that matter activity? I figure decriminalizing everything and providing decent harm reduction and treatment options would be a better use of our resources. Is there anyone out there going "I better not take that bong rip/snort that line/shoot that heroin, that would be illegal"? People are always going to get their hands on whatever they want/need to get high and as a society I think we have to change our approach because our current one certainly hasn't worked very well.

[5.4MarkVIII]

It was all the same guy. That's what was funny about it.

I just don't agree with the idea that "well people are doing it anyway so what's the point enforcing it."

People still rob banks. Even though it's illegal

And the hypocrisy of an all out war on cigarettes but at the same time saying let's legalize pot is hilarious.

And I dislike the fact that it was only really done to buy votes.

But it looks like it will happen and just be one more I told you so when the liberals make an absolute money wasting mess of it. Which they will. They always do. If nothing else they are consistent.

[92redragtop]

It was all the same guy. That's what was funny about it.

I just don't agree with the idea that "well people are doing it anyway so what's the point enforcing it."

People still rob banks. Even though it's illegal

And the hypocrisy of an all out war on cigarettes but at the same time saying let's legalize pot is hilarious.

And I dislike the fact that it was only really done to buy votes.

But it looks like it will happen and just be one more I told you so when the liberals make an absolute money wasting mess of it. Which they will. They always do. If nothing else they are consistent.

I think the market for non-smoking cannabis is larger than for the inhaled product no legalizing cannabis/marijuana has nothing to do with the war on cigarettes. If you agree with banning marijuana then alcohol should be banned as well (and we know that doesn't work)....and at least there are medicinal benefits of THC and other aspects of cannaboids.

The cost of an inmate in Canada is probably over $120,000 per year per prisoner (excluding all the court costs and even legal aid/public defender lawyers...decriminalizing will at least save this cost times X thousand prisoners.

[5.4MarkVIII]

Maybe. But
Not one person I have know my entire life that does or did weed does it in any way other than smoking it the old fashion way. So ill believe that when I see it

The argument that alcohol is bad and it's allowed is a moot point and a week argument. Sorry but "he did it to" has never been an acceptable reason for anything.

Based on what people in this thread are saying most users aren't going to turn to the difficult expensive system the government is putting in place. Instead are going to continue to buy from the same current illegal sources. Which will still be illegal. One would have to assume that there will still be the potential for propel to be arrested for illegally growing selling or obtaining weed from a source other than government dealers. Which would still mean the costs you out line will still be there.

[mavrrrick]

Scrap the retail side of it? Or scrap the entire legislation of legalizing it?

Don't need stores, don't need growers, don't need to re-train the entire police force.
Maybe I'm oversimplifying it, but just need to stop putting people in jail for smoking it, growing it, or selling it.

I think they should take the criminal element out, free up police and courts, thus saving $$$. But open stores and all that shit....just asking for a black eye and we will be (taxpayers) pulling our wallets out for another liberal cluster fuck!!!

[bluetoy]

This thread has too much discussion for the simple question. Simple answer. Yes. Liberals will lose money selling marijuana.

[mavrrrick]

Yes. WE WILL LOSE $$$


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[92redragtop]

Maybe. But
Not one person I have know my entire life that does or did weed does it in any way other than smoking it the old fashion way. So ill believe that when I see it

The argument that alcohol is bad and it's allowed is a moot point and a week argument. Sorry but "he did it to" has never been an acceptable reason for anything.

Based on what people in this thread are saying most users aren't going to turn to the difficult expensive system the government is putting in place. Instead are going to continue to buy from the same current illegal sources. Which will still be illegal. One would have to assume that there will still be the potential for propel to be arrested for illegally growing selling or obtaining weed from a source other than government dealers. Which would still mean the costs you out line will still be there.

I'm not sure if "most users aren't going to turn to the" legal system is a scientific or statistical study/poll or just people' opinion based on their "feelings" about the subject. Are you saying that markets that have decriminalized and standardized the production have failed? I agree that the Ontario government plan is not a smart one but I don't think they will stick with that long term - if they black market continues then it may force their hand to allow expanded distribution.

I think there is a decent probability that regular people may choose to do the legal thing and purchase from channels versus risking getting in any form of trouble. We don't make our own moonshine because we have a way to get it without getting in trouble or robbed (except by the government).

I assume you know there are hundreds of companies globally (some publicly traded) making non-inhaled cannabis products (edibles, nutraceuticals, etc)...this ain't your dad's weed.

My point about alcohol is that it's effects are potentially worse than cannabis so the argument that it's bad/unsafe, etc is false or "week" if you continue to allow the more dangerous product to be distributed.

[RedSN]

I think there is a decent probability that regular people may choose to do the legal thing and purchase from channels versus risking getting in any form of trouble. We don't make our own moonshine because we have a way to get it without getting in trouble or robbed (except by the government).
I'll admit my opinions are based on strictly personal thought process, not backed up by any studies or numbers.
But I 'think' that current illegal users will continue to purchase illegal black market product. New 'regular people' users will likely purchase government product. It's my feeling tho that the size of this new clientele will be small. I could be totally wrong.

[hsousa88]

Smoke weed everyday


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[baddbullitt]

I've been buying stock in weed for the last few months... So far the stock has been climbing... Hope in 10 years it pays off!! :)

[5.4MarkVIII]

I'll admit my opinions are based on strictly personal thought process, not backed up by any studies or numbers.
But I 'think' that current illegal users will continue to purchase illegal black market product. New 'regular people' users will likely purchase government product. It's my feeling tho that the size of this new clientele will be small. I could be totally wrong.

This is how I see it as well. Current sellers will be able to undercut the prices of government stores vary easily. (No tax or high operating costs.)
Add to that not having set hours or anything like that.
So the majority of people who currently use will no be using the stores. Therefore still smoking
I think it's safe to assume that a lot would potentially smoke more since the no longer need to worry about hiding it or carrying it on them.

New users or ones who only used with friends that do will be more likely to use the government stores but let's be honest. If other sellers are selling at hugely cheaper prices how many people can you realistically expect to keep paying a premium for the privilege of buying from the government?

[mavrrrick]

http://www.msn.com/en-ca/money/topstories/ontario-liberals-pot-monopoly-is-designed-to-fail/ar-AArVxlV?li=AAggNb9

[hsousa88]

But who's worried about carrying weed in Canada? You get caught with 1oz and get a slap on the wrist. Cops around here could care less.


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[92redragtop]

I'll admit my opinions are based on strictly personal thought process, not backed up by any studies or numbers.
But I 'think' that current illegal users will continue to purchase illegal black market product. New 'regular people' users will likely purchase government product. It's my feeling tho that the size of this new clientele will be small. I could be totally wrong.

I think it depends on consequences if any. Would middle class users buy/use a no risk product or continue to try to source/buy product that comes with some risk from criminal sources. This all depends on what decriminalizing means/entails and enforcement. Plus, how many SKUs are sold in the LCBO today versus decades ago when everyone probably drank beer, a few hard liquors, and the odd liqueur/aperitif versus the thousands of SKUs today (so inhalation product as one SKU in the past to the hundreds of ingestible products today to the thousands in the future. That said, I don't think the government's plan is sustainable or feasible long term but it comes from Wynne's braintrust so......