Federal ‘Bungling’ on Pot Is Stifling Ontario Shops, Fedeli Says

(Bloomberg) -- Ontario could allow several hundred cannabis stores to open but is being stymied by the federal government’s “bungling” of supply, according to the provincial finance minister.

More than six months after Prime Minister Justin Trudeau’s government legalized recreational pot in Canada, supply still “doesn’t line up,” Ontario’s Victor Fedeli said. That’s why Ontario has set a limit of 25 bricks and mortar stores, and outlets across the country are struggling to fill their shelves, he said.

Federal ‘Bungling’ on Pot Is Stifling Ontario Shops, Fedeli Says

“It’s all dependent on the federal government unleashing supply,” Fedeli said in an interview Tuesday at Bloomberg’s headquarters in New York. “Health Canada appears to be the area that is ill-prepared to license the producers.”

Suppliers require Health Canada licenses to cultivate and process cannabis. There were more than 400 license applications under review at the end of last year.

Canada became the first Group of Seven country to legalize recreational marijuana in October but stores didn’t open in Ontario until April 1. Premier Doug Ford scrapped the former Liberal government’s plan to open government-run pot shops, replacing it with a private retail model.

When it comes to alcohol, the province is forging ahead with its plan to expand sales in corner, grocery and big-box stores, Fedeli said. He pointed out Quebec has about 8,000 liquor outlets while Ontario has only 3,000. Some 218 convenience stores are already selling alcohol outside of Toronto without any issues, he said.

‘Symbolic Transformation’

“The time has come for us to treat adults like adults,” the minister said, adding the government will probably take a phase-in approach to the wider alcohol roll-out. It has no plans to privatize the Liquor Control Board of Ontario, one of the world’s largest buyers and retailers of alcohol, he said.

Fedeli was in New York with Ford wooing Wall Street investors with his plan to ease the cost of business while gradually eliminating the budget deficit by fiscal 2023-24. The province is projecting a C$10.3 billion ($7.7 billion) deficit this year, after an estimated shortfall of C$11.7 billion in the fiscal year that ended March 31.

Part of the program is streamlining government and eliminating waste, including a plan to sell about 486 properties. That’s projected to raise C$105 million to C$135 million over four years, according to a government news release on April 29.

Fedeli cited the example in his home town of North Bay where a new provincial police station was opened but the old one sat empty for years, racking up heating and maintenance costs. He said he drove the ‘for sale’ sign into the ground himself and the property was sold.

“This is absolutely symbolic of the transformation happening in government,” Fedeli said.

©2019 Bloomberg L.P.