Picture this: You’ve just finished your tour of a cannabis cultivation facility. After ogling fields of green, leafy goodness and drooling over crystal-like trichomes from a rainbow of strains, you are invited into a sampling room where you can also purchase the wonders you have experienced.
Sounds just like a winery, right? This is how licensed cannabis facilities should be, but many provinces, including Ontario, have opted out of private retail stores in lieu of a government monopoly. This includes banning producer retail sales directly to the consumer.
Purchases made from the source of any product are known as “farm gate sales,” and the concept isn’t new. Anytime a consumer buys a product — a cut of beef or a basket of eggs, for instance — directly from a farm, that’s a farm gate purchase. The same concept applies to wineries, breweries, and distilleries that have tasting rooms.
The reality for Ontario’s licensed producers is that they currently can’t sell directly to consumers the way some farms and alcohol facilities can, though Premier Doug Ford has stated his preference to be introducing a private system. Ontario is the most populous province in the country and has the highest concentration of licensed producers; that is a large amount of potential cannabis consumers and cultivators who can’t do business directly with one another.
Although Liberal Prime Minister Justin Trudeau made the federal legalization of marijuana a campaign promise, and ultimately a reality, most of the policy is implemented at the provincial level. This gives regional governments the power to regulate legal weed as they see fit.
Manitoba will allow privately-owned dispensaries to handle retail, and other provinces are considering doing the same — those areas will have an edge over the rest.
Government retail stores will be sparse, at least for the first couple of years. The 40 stores set to open in Ontario later this year will have to service a population of nearly 14 million people.
Any government that works for greater consumer access to cannabis will dominate economically from the potential tax revenue. Farm gate sales at the production facilities will allow consumers to purchase directly from the cultivator and provide another way for them to access legal cannabis.
More Legal Access Means Less Black Market
Trudeau has stated time and again that one of the most important goals in ending cannabis prohibition is extinguishing Canada’s black market. In 2015, Canadians almost consumed as much marijuana as they did wine — imagine if cannabis was more openly accessible.
The more access Canadians have to legal recreational marijuana, the less they will turn to the black market to fulfill their needs. Allowing farm gate sales will provide more legal access points to compete with illegal dealers who are currently more accessible and cheaper.
Additionally, the Canadian government wants product transparency and cleaner, lab-tested products. Licensed producers, who are required to test their products for contaminants, help the government keep illicit cannabis products out of the hands of consumers.
Marijuana consumers would be able to come directly to the cultivation facility and see firsthand what a healthy cannabis crop and then buy the product directly the from the cultivator.
Lastly, the price point is an important factor in eliminating the black market. The Canadian government expects legal cannabis to be priced at $10 per gram, but the price has been widely criticized considering Canadians are getting far cheaper product from illegal dealers. At exchange rates Thursday, Aug. 9, 2018, 10 Canadian dollars equals $7.67 in US currency. In a private system with farm gate sales, cultivators would have lower overhead and labor costs, allowing them to have more competitive prices.
It Works for Booze
Farm gate retail in the alcohol industry is big business. People can buy inexpensive wine directly at wineries, affordable craft beer at breweries, and liquor at distilleries.
Alcohol is regulated by the government, and yet the industry is allowed to own its own stores and facilities. The minimum ages across the nation for cannabis are the same as liquor in every province and various alcohol beverage control boards are responsible for the wholesale distribution across the country.
Why not allow the cultivators operate the way wineries, breweries, and distilleries do — Sell at their establishments?
Recently, I was offered free samples of wine walking out of the supermarket as I headed to my car. Perhaps handing out free joints in the dairy aisle isn’t the answer, but granting growers farm gate sales is a little gesture that goes a long way to achieving Canada’s legalization goals.