Michael Armstrong, Associate Professor of Operations Research in Brock’s Goodman School of Business, wrote a piece recently published in the Hamilton Spectator about Ontario’s upcoming lottery that will be used to create an additional 50 cannabis shops across the province.
The Ontario government has announced it will allow 50 more cannabis shops to open in October. Eight are allotted to First Nations reserves. The other 42 will be chosen by lottery. Unfortunately, the government has learned only some of the lessons from its previous cannabis lottery experience last January.
The announcement of more stores is good news for the fight against black markets. Ontario has trailed other provinces on that goal because it lacks enough legal retailers.
Statistics Canada’s latest retailing report confirmed the value of physical stores. Ontario’s legal recreational cannabis sales totalled just $7.7 million in March, when only online sales were available. That jumped to $19.7 million in April after the first dozen shops opened.
But while more stores are needed, ongoing product shortages effectively limit their number. Health Canada data suggest legal production of dry cannabis products is improving, but it’s still only enough for one-sixth of national demand.
So, the province is justified in limiting the next store batch to 50. The 42 off-reserve shops, including 11 in western Ontario, will be chosen by lottery.
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