OCS Monopoly Leads to Product Shortages – Cannabis | weed | marijuana

Do you see what’s happening? See what happens when you put all your cannabis eggs in one basket? They get a government monopoly called the Ontario Cannabis Store (OCS) which is subject to a cyber attack that is causing product shortages.

The cyberattack has reinforced the belief in many that Ontario doesn’t need a central government planner. That licensed cannabis producers should be able to ship directly to retailers without having to go through a centralized distribution system.

OCS cyber attack leads to product shortages

Vivianne Wilson, the founder of GreenPort, a Toronto-based cannabis retailer, said, “I’ve lost thousands of dollars. That’s the reality.”

“Right now they have a complete monopoly on the industry. They don’t partner with retailers and that’s a big failure,” she said. “Rather than build a system that can support the entire province, they built a very small monopolized process that is clearly inefficient.”

The province has only one distribution center in Guelph, Ontario.

This means cannabis producers in Thunder Bay, for example, must ship their cannabis to Guelph before it can be shipped back to Thunder Bay to sell at a local retailer.

That’s a round trip of almost 3,000 kilometers (or nineteen hundred miles). And for what reason? So-called “public health and safety”.

Wilson says this system is neither “financially nor environmentally sound”.

Wilson, like other retailers, says after this experience that the OCS monopoly needs to rebuild its trust.

Elisa Keay of K’s Pot Shop in Toronto said, “If you are my only wholesaler and you know exactly who can ship and when we can ship, we have no options. We are completely at their mercy.”

“I don’t like ordering huge quantities of one item because I’m crazy about a lot of things. So if I’m disturbed, it means the shelves are empty,” she said.

“That means some customers will walk in, shake their heads, be upset they’re not getting what they want, and go elsewhere because they don’t want to hear it’s not my fault.”

OCS monopoly favors large companies

The OCS monopoly favors large companies over smaller retailers. Whether intentional or not, this is the direct result of having a single monopoly dealer.

Larger retailers have been able to shift their offerings from lower-volume stores in smaller communities to higher-volume ones in the city.

Small businesses can’t do that. They are at a competitive disadvantage, but not because of bad business decisions on their part. They lose thousands because of a cyber attack on the government distributor.

It is similar to the Chinese-style authoritarian lockdowns that Western leaders imposed on the population in 2020 and 2021. The intent may have been “public health,” but the result was that small businesses closed their doors forever. At the same time, big companies like Amazon were making record profits.

As economist Thomas Sowell wrote, “Much of the social history of the western world over the past three decades has been one of substituting what worked for what sounded good.”

What works is private enterprise. What works is that entrepreneurs compete with each other for customers. And with private property rights. The ability to run your business without some government bureaucrat breathing down your neck.

But when it comes to cannabis, Ontario went with what they felt sounded good. Government regulation, government distribution, and government health and safety.

Or, to quote Sowell again, “It’s hard to think of a more foolish or dangerous way of making decisions than putting those decisions in the hands of people who don’t pay a price for being wrong.”

The OCS does not pay a price for this cyber attack. Nobody loses their job. If anything, they’ll get more taxpayer money to ward off future cyberattacks.

Solutions for the OCS monopoly

Leafythings’ Nima Derak calls the latest OCS cyberattack “catastrophic”.

“Local Canadian cannabis breeders and growers have formed the independent supply chain for over 40 years,” she said. “They are members of the public, they are Canadian, and they have been neglected and removed from the current process. Canada is to marijuana growing like Belgium is to chocolate. Over-regulation and financial obstacles associated with monopolizing the cannabis supply chain in Ontario are causing major resentment among independent Canadian growers and retailers and preventing them from operating successfully.”

He added: “Government’s role should be to regulate cannabis and not create an unnecessary role as a distribution intermediary.”

“It’s not in the Canadian taxpayer’s interest to take an existing industry, ignore it and introduce a new system that ignores the other 50% of consumers. Let’s call it what it is: the OCS as the only monopoly retailer and online shop has acted as just another broken and redundant arm of the government.”

Nima Derak said she would like to see a system where companies order directly from independent manufacturers. She says a system similar to the grocer should be the goal. Some foods come from the manufacturer. Others come from different, multiple and competing food centers.

“There’s no way to express this in a politically correct way,” says Derak. “Cannabis is proven to be safer than many unregulated household goods and medicines, and it’s time we recognized this.”

OCS response

OCS has not responded to inquiries from CLN as of this publication.

However, OCS CEO David Lobo released a statement:

“Our focus now is to work our way through the backlog of wholesale orders and get trucks on the road delivering to Ontario’s authorized retailers who count on us.”

“We are working 24/7 to get products onto the shelves of as many retailers as possible as quickly as possible. We apologize again to our retail customers for this disruption and are taking all steps to fulfill and ship orders promptly.”

In other words, we’re sorry you feel that way.

That’s not a real apology. And unless Mr. Lobo visits Premier Doug Ford to break up the OCS monopoly, many small cannabis retailers don’t want to hear about it.

The OCS monopoly has served its usefulness. If ever it was useful to start with.