Mississauga City Staff Report Sets the Stage for Cannabis Retail Opt-in to be Brought Back Before City Council on June 9

A report to Mississauga City Council dated May 27, 2021 (the “Report”), by the City Manager has set the stage for the City of Mississauga to reconsider whether it should opt-in to allowing cannabis retail stores within the City limits on June 9, 2021.  While the report does not provide a recommendation as to whether or not the City should opt-in, the contents of the Report provide some illumination on the considerations that may be most important to City Council when it ultimately makes its decision.

Municipal Control Exceptionally Limited

The Report highlights that “other than deciding to permit or prohibit retail sale, municipalities have a very limited role to play in regulating cannabis in Ontario.”  It goes on to highlight how municipalities are not permitted to license cannabis retail businesses, nor are they permitted to designate cannabis retail as a separate land use from retail or commercial.

The Report sets out the limited instances in which the AGCO will not grant a retail store authorization:

• The location is less than 150 metres from a public or private school;
• The applicable municipality has opted out of permitting the sale of cannabis;
• The applicant does not have a retail operator license;
• The issuance is not in the public interest of the municipality; and
• The location is not enclosed by walls separating it from other businesses, is not equipped with a surveillance system, cannabis is visible for people passing by on the street.

The Report goes on to highlight that while municipalities have the ability to provide feedback to the AGCO during the public notice period, the decision to license is made by the AGCO alone.  In fact, the Report highlights that the AGCO has never denied a retail store authorization on account of a municipality objecting to a particular location.  The Report gives the City of Hamilton as an example, where Hamilton has objected to 29 locations and despite these objections all 29 were issued licenses by the AGCO.

Despite the fact that there is little municipal control, City staff recommend the development of cannabis retail guidelines for the purposes of informing the AGCO of the broader community interests for stores located in the City, including identifying sensitive areas where cannabis retail stores should not be permitted.

Clearly, a municipal lack of control over where the stores may be situated will be a concern for City Councillors when deciding whether or not to opt-in.

Enforcement Issues

The Report notes that inspection of licensed retail stores is carried out by inspectors designated by the AGCO and that the “City of Mississauga has found the AGCO an effective and cooperative partner in the enforcement of liquor laws.”  This portion of the report is noteworthy insofar as it signals to Councillors that the cost of inspection will not be borne by the City and that the existing inspection body (the AGCO) has been found to be “effective”.

The Report goes on to note that the powers that the Peel Regional Police have with respect to enforcement and annexes a report from the Peel Police Services Board entitled “Illicit Cannabis in Peel Region” which contains a number of interesting points for those in favour of Mississauga opting-in.  In particular, the Peel Police Services Board report notes that:

• Legal cannabis stores are safer than illegal ones (fewer police reports and non-violent crimes);
• Illegal bricks and mortar dispensaries are decreasing within Mississauga; but,
• Mobile illegal dispensaries (i.e. delivery to doorstep) are increasing, with approximately 100 – 150 mobile dispensaries in existence within Peel Region.

The Peel Police Services Board report also sets out a number of the police’s enforcement challenges related to illegal dispensaries but does not indicate if or how the legal retail market has impacted the trends or enforcement challenges.

Legislative Updates

The Report outlines a number of legislative changes that have occurred since the time that Mississauga first opted-out, including that:

• Edibles are now legal for sale;
• The cap on RSAs permitted in the province generally has been removed;
• There are currently 772 retail stores in Ontario that have been given permission to open by the AGCO;
• Farmgate stores are now permitted, which would impact two licensed producers within Mississauga; and
• As of July, 2020 the Attorney General for Ontario has indicated that it does not plan to make any changes to provincial cannabis legislation to permit cannabis lounges or allow for special occasion permits to consume cannabis publicly in locations such as festivals.

Impact of Retail Sale on Illegal Market

The Report contains a short, but powerful, section on the inroads that the legal cannabis market has made in displacing the illicit market since March 2019.  It notes that the legal market share of the overall cannabis market has increased from 14.1% in Q1 2019 to 59.7% in Q3 2020.  It also notes that the average price per gram for dried cannabis flower is actually now lower in the legal than in the illicit market at $6.24 vs $7.76, respectively.

Financial Impact

Speaking of short and powerful sections, the financial impact of the Report, which is one sentence in length, is perhaps its most powerful.  It notes that in December 2020, monthly retail sales in Ontario was approximately $94 million dollars and that the OCS projects that businesses in the City of Mississauga would see approximately $74 million per year in cannabis retail sales if Council decides to opt in.

Conclusion

Politicians not surprisingly tend to vote in a self-interested manner, namely by taking positions that will support their popularity and re-election prospects.  However, the contents of the Report, in my opinion, give City Council members the tools they need to justify and even make popular the decision to vote “yes” to opting-in.  In particular, the economic incentives are very strong and the Peel Police Services Board report appears to dispel the societal costs (e.g. crime), that some may raise in opposition.

While no one knows whether or not Mississauga opts-in, it is safe to say with certainty that all eyes will be on this municipality of nearly one million people, the largest in Ontario to have opted-out, as it makes its decision.

A full copy of the Report can be found here.