What the city report says about Ottawa's cannabis retail market

A new report from the city estimates Ottawa could support as many as 69 pot shops, generating as much as $200 million a year when retail sales become a reality next year. 

The report released Wednesday on cannabis retail gives councillors an outline of what legalization has meant for the city and where it might be heading.

City staff used projections from the Parliamentary Budget Officer and data from Statistics Canada to estimate Ottawa's pot market and the potential lost opportunity if the city doesn't opt into private retail.

They envision Ottawa having between 87,000 and 162,000 cannabis consumers, generating between $50 million and $200 million in potential business each year. 

City staff say those consumers could support 34 to 69 cannabis stores. The Ontario government's rules place no limit on how many stores can open.

"This government's model is to let as many of these shops establish themselves and the rules of the market will establish [equilibrium]," said Anthony Di Monte, the city's general manager of emergency and protective services.

"What that is and how many stores end up in Ottawa — I'm not sure."

The city has no control over store locations.

The Alcohol and Gaming Commission of Ontario (AGCO) will regulate the stores with rules the government has laid out, including:

• Licensed and authorized retailers need to pay $10,000 in initial registration fees, plus $750 for a cannabis retail manager licence if they have staff.
• Products cannot be visible from the street.
• Minors are not allowed to enter and sales are restricted to people 19 and older.
• The stores must be located at least 150 metres from elementary or secondary schools.
• Stores can open from 9 a.m. to 11 p.m., seven days a week.

The AGCO will have a 15-day notice period for licence applications.

City staff are suggesting they could work with councillors during that process and encourage the commission to prevent shops from clustering in certain areas.   

Mayor Jim Watson said he will continue to advocate for cities to have more control over locations.

'Whack-a-mole' with illegal shops

DiMonte said while storefront retail might change things, legalization has not resulted in any major issues thus far. 

"There doesn't seem to be a big upheaval," he said.

Ottawa police support the move for legal private retail as a way to drive out the black market, the report said.

"We have a problem now with these mom-and-pop shows that are opening everywhere," Watson said. "It's like whack-a-mole. You whack one down, another one pops [up] and the police are going after them."

The city report said there have been between 12 and 18 illicit retail storefronts operating in Ottawa in the last two years. 

Special meeting Dec. 13

Ottawa police have filed 465 criminal charges related to illicit storefronts, grow operations and extraction labs in the last three years.

Prosecution was largely ineffective because the stores would reopen and could profit on average between $6,000 and $10,000 per day, the report said.

The city report will be discussed, debated and voted on by the new city council at a special council meeting Dec. 13, when council will also hear from public delegations.

The Ontario government has given cities until Jan. 22, 2019, to say whether they want to host cannabis retailers.