OCS CEO Heads Out for Lunch – Cannabis | weed | marijuana

The Ontario Cannabis Store (OCS) CEO is out for lunch.

It’s been a common theme in Canada lately. A new poll shows a large majority of Canadians are concerned about China’s interference in our elections.

What was the government doing at the time? They hire a family friend – former Governor General David Johnston – with ties to China and the Trudeau Foundation. He “investigated” the error and found nothing.

Parliament was evidently unhappy with this outcome, no doubt due to Johnston’s conflict of interest. As a result, the House of Commons voted by a clear majority for Johnston to resign as “Special Rapporteur” and launch a public inquiry.

But Johnston refuses to resign. He says his mandate comes from “the government” and not from parliament. In other words, he’s out for lunch. Parliament is the government. Canada is based on the Westminster system, which recognizes the supremacy of Parliament.

“The Government” is not the ruling party. You’d think a former governor general would know that.

Likewise, the only person who can end Trudeau’s Chinese tyranny is the leader of the NDP, who holds the balance of power. He said Johnston was “deaf” because he had not listened to Parliament. But this Rolex-wearing, BMV-driving, working-class “hero” is also out for lunch.

I only mention this because it helps to contextualize what the OCS CEO told an audience at the Lift conference in Toronto last week. The whole country is out for lunch.

OCS CEO at lunch

On the surface, Ontario Cannabis Store President and CEO (OCS CEO) David Lobo said nothing controversial.

He said there is a “race to the bottom” in cannabis prices that could hurt the future of the cannabis industry.

“Once you condition consumers to certain prices, it can take a generation for perceptions and price tolerances to change,” he said. “In an economy where inflation has affected every other consumer product, we cannot push any lower.”

Of course, this “race to the bottom” didn’t start at the baseline. Investors poured in with millions in anticipation of cannabis legalization. Companies like Aurora have seen their stocks expand and rise above fundamentals.

Many of us saw this coming. A correction was inevitable. Only those who believed this hyped market was real experience the shock.

We have previously reported on the cannabis bubble triggered by Covid-19. With people no longer under house arrest and bombarded with “doomsday” propaganda every second, the incidence of cannabis use has slowed.

But what the OCS CEO is aiming for is something more fundamental. “We are no longer at the beginning of legalization. The damp new car smell of legal cannabis is gone,” he said.

But there are other factors to consider here as well.

Take cell phones with you. The first were the size of bricks and came at a high price. Over time, as competition increased, manufacturing processes became more efficient, technology improved, and prices fell.

Mobile phone (or other electronic device) prices seem to have been in a “race to the bottom” over the last forty years. But in reality, this is how markets are supposed to work.

A race to the bottom?

The OCS CEO firmly believes they are doing their part to fight this “race to the bottom.”

But the OCS has a monopoly on cannabis distribution. The producers do not work directly with the stores. You must first go through the government’s OCS bureaucracy.

Doesn’t the OCS CEO see the connection?

The OCS has the power to manipulate prices and drive competition out of the market. The OCS concedes that offering lower margins to manufacturers will allow these companies to pass savings on to consumers, thereby lowering prices.

Regardless of price competition, the OCS also sets its margins arbitrarily. Are they putting people out of business or discouraging new products? How much did they manipulate the market?

Fortunately, we can compare Ontario to Saskatchewan.

Cannabis retailers in Saskatchewan buy their inventory directly from producers. The Saskatchewan Liquor and Gaming Authority (SLGA) acts as the regulator of cannabis in the province. However, it is not a monopoly distribution.

Saskatchewan’s official reason for this is:

• protecting public health and safety, including keeping children and young people away from cannabis;
• elimination of the illegal market;
• minimizing taxpayer exposure to risk; And
• Incorporating regulatory best practices and building on experiences from other jurisdictions.

The Saskatchewan government listened to the feedback and concluded that the above goals “can best be achieved through a competitive private model for wholesale/distribution and retail sales of non-medical cannabis in Saskatchewan.”

In addition, “this model minimizes upfront costs for the taxpayer.”

Meanwhile, Saskatchewan boasts some of the lowest cannabis use rates in the country. But the other provincial governments tell us that without a monopoly distributor there would be chaos and predatory pricing.

But the reality is the opposite. Strikes, shortages and hacks are all too common.

As Ringo Starr said, “Anything the government touches becomes crap.” And that includes cannabis distribution.

Factors other than the actions of monopolistic, tax-financed distributors are also contributing to this perceived “race to the bottom” that worries the OCS CEO.

OCS CEO at lunch

Initially high prices after legalization have led to market chaos alongside regulatory costs, high taxes, zero tolerance in advertising and marketing and monopoly distribution.

The botched legalization is the result of government intervention and not an inherent aspect of the free market. The cannabis market in Canada was freer before Justin Trudeau got involved.

But the OCS CEO is not interested in such an analysis. He told the Lift audience, “We don’t yet know just how fragile Canadian consumer confidence and social liberties really are.”

He asks, “What happens if there is a major recall that adversely affects the health of many Canadians because of adverse product reactions?” As if that hasn’t already happened.

The OCS CEO says the cannabis industry could be hit by a “misjudgment” by a few people.

“What impact can a few unfortunate events have on the moral superiority we have in positioning legal cannabis as a better alternative to illegal cannabis?”

The OCS CEO is out for lunch.

Legal cannabis has never had the moral credentials it deserves in Canada. Provincial governments granted large, well-connected producers exclusive deals with monopoly distributors, while the ‘illegal’ BC Bud struggled to survive.

Legalization was never about lifting British Columbia’s cannabis community out of the shadows. Once Justin sat in the PMO, they were renamed “organized crime.” Already, they are hampered by “micro-licensing” and excise taxes.

Canada’s cannabis consumers continue to buy from these “illegal” underground markets for a variety of reasons.

They might know and trust their local grower better than these big pharmas. You might want a food that authorities don’t arbitrarily limit to 10mg for reasons of “public health and safety”.

Canada’s connoisseurs know that cannabis is a vegetable. It belongs at the farmer’s market, not in sterile pharmaceutical facilities.

The CEO of OCS doesn’t see the crash coming

The OCS CEO is out for lunch. What is happening is a correction. Cannabis in Canada is returning to its economic fundamentals.

But market chaos and insolvencies are just beginning. The best governments can do for cannabis in Canada is to follow Saskatchewan’s lead: avoid them.

As for the “race to the bottom,” when did lower prices become a bad thing? Last time I checked, cannabis users can get more for less money.

Some may argue that “deflation,” or lower prices, hurts producers at the expense of producers. But this is economic illiteracy.

If lower consumer prices are negatively impacting cannabis producers, it’s because the cost of doing business has been pushed up by “public health” measures and central bank inflation.

The OCS CEO addresses a real problem. But he is looking for solutions. Which is not surprising.

As Upton Sinclair once wrote, “It is difficult to get a man to understand when his salary depends on his not understanding.”