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Government-owned cannabis: better or spoiling?

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Government-owned cannabis is gaining speed. At least in Canada. This week, I saw a file tweet From Matt Lammers, business journalist at MG Biz Daily, said:

The most profitable cannabis company in Canada Government owned. Profit/loss of cannabis wholesalers monopolizing the provinces (last fiscal year): Ontario: $70.2 million; Quebec: $66.5 million; British Columbia: $22.4 million; NB: [$16.5 million]; Alberta: $7 million (expected).

His sources for these numbers are included in this thread in the third tweet. Canadian private players seem to have lost a total of $15.5 billion this year.

The concept of a government owned and operated cannabis business in the United States doesn’t get much legal, political, or otherwise. Part of that is because cannabis remains an illegal drug federally under the Controlled Substances Act. Basically, there is nothing to stop the Department of Justice from arresting and prosecuting anyone who deals in illegal drugs, including government employees (and don’t forget many other preventative cases).

In Canada, however, government-owned cannabis pretty much prevails today when it comes to profit. Canada specifically set it up this way in its framework cannabis law (which legalized cannabis in 2018) Where county governments They can decide to handle retail and distribution themselves or give it up to the private sector (or allow both).

I don’t somehow advocate state cannabis over the private sector, but it does make me wonder if government-owned cannabis stores won’t possibly solve some of the policies and legal issues we see today in the US cannabis market. At the same time, it is clear that thorny problems will arise.

One example to look at is the alcohol “control” model in the US, where some states/local governments own all liquor stores within their borders. Currently, per NACBAEighteen states have adopted forms of a “control model,” in which the state controls the sale of distilled spirits and, in some cases, wine and beer through government agencies at the wholesale level.

Proponents of the control model like it because of public safety, job loss prevention (many states work with unions to retain employees), less choice to cut consumption, lower prices, and because of increased profits that accrue directly to different communities and the needs and initiatives of the state. Opponents favor privatization because of increased access and diversity, higher quality products arising from competition, allegedly better prices due to competition, mergers and acquisitions where private companies buy liquor licenses upon privatization (so the state gets immediate financial gain anyway), ethics (for example example, the state should not be in the liquor trade).

There is at least one government-owned cannabis store in the United States (at least it was there as of 2018). this shop cannabis corner In a small town north of Bonneville, Washington (and apparently now located in Stephenson, Washington). I wrote about them over here In 2015. This cannabis store was not owned by the local government, but that shouldn’t shock anyone given the competition from the private sector, and frankly its location in a not so populous state outside of Seattle. At the same time, the experience of a government-owned cannabis enterprise only works if it is a monopoly, as we have in some Canadian provinces in Canada.

If states really care about things like limiting young people’s access to cannabis, cutting consumption, and promoting things like social justice while delivering promised tax revenue, then perhaps the state-run cannabis business is the way to go. However, the US appears to be a little too far in the privatization pit for that at this point. Who is to say whether this is a good or a bad thing so far. We cannot know.

Ultimately, the numbers from Canada will likely tell us more about the commercial judgment of some of the licensees there rather than the talents of the government when it comes to selling cannabis. Still, like countries like Germany Surveying different models to determine which regulatory standard is “best”, I’m sure they will consider a “control model” for cannabis.

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