The head of Ontario’s government cannabis agency, Patrick Ford, strategically retired just days prior to the revelation that the agency lost an astonishing $42 million on $64 million revenue this fiscal year.

The “Ontario Cannabis Store” (OCS) oversees the provinces’ online and retail cannabis outlets.

Ontario’s consolidated financial statements show the OCS racked up expenses totalling $106 million during the period.

“Canada legalized cannabis for adult use on Oct. 17 last year,” recounted the CBC, “and the Ontario rollout was mired by supply chain issues and product shortages”.

“You may have noticed the lack of clouds of pot smoke wafting over major cities,” stated Now Magazine two weeks later, “That’s because street-level dispensaries won’t be open until next spring.”

“Although some 150,000 orders were placed online in the first week of legalization, only a fraction have actually made it to customers. What’s the deal?”

Before running the province’s cannabis business, Ford had a long management career at the Liquor Control Board of Ontario.

Like many bureaucrats, he excelled in the art of the calorie-free sound-byte.

“Efficiencies and ways to further expand capacity at the OCS distribution facility continue to be made to help meet the massive demand,” stated Ford 10 days after Ontario’s bungled roll out.

A week later, the OCS was forced to admit that the privacy of 4,500 of its customers was breached through “a weakness in Canada Post’s tracking website.”

A hacker obtained the buyer’s name, postal code, the date of cannabis delivery, and the Canada Post tracking number.

Instead of holding up his hand and apologising, Ford’s strategy was to point out that the same misfortune could – but didn’t – happen to other parties.

“We have learned that this Canada Post website vulnerability is not unique to OCS customers,” stated Ford, “and that in fact could apply to any Canada Post customers through manipulation of tracking and/or reference numbers.”

“Sales of legal adult-use cannabis in Ontario hit a fresh low in the month of February,” stated the excellent cannabis news portal, MJBizDaily on April 29, 2019, “receipts at the OCS declined to just $7.5 million, down from almost $9 million in January.”

Ontario’s sales have been so poor that the Bank of Montreal (BMO) warned that revenue from the fledgling industry would come in lower than expected over the coming quarters.

Last week, an Ontario judge paused the licensing process for Ontario’s latest round of cannabis retail stores, while a judicial review is completed to determine if 11 applicants were unfairly disqualified.

New retail licenses were awarded through a 2-round lottery system.

The winners had five business days to turn in their application for a license, along with a $6,000 non-refundable fee and a $50,000 letter of credit.

Ontario sent emails to these 11 applicants — but they all bounced back – so the deadlines were missed.

No-one expects provincial governments to be models of efficiency.

But some level of competency is to be expected.

Example: my neighbour’s 5-year-old autistic daughter recently vacuumed my living-room and successfully removed 80% of the dust.

How the do you burn through $106 million, selling $64 million worth of a red-hot product?

“There were investments required for setting up a system that could achieve our objectives,” explained the OCS.

The OCS claimed the $106 million burn rate was justified by “the need to make foundational investments to support Ontario’s approach to retail sales.”

The “foundational investments”?

“The Ontario Government has put rules in place to keep cannabis out of the hands of children and youth,” confirmed the provincial government.”

You may grow up to four cannabis plants per residence (not per person) if:

  • you are 19 years of age and older
  • it is only for your personal use
  • the starting material was purchased from the OCS or an authorized retail store

No doubt, the endemic inefficiency of Ontario’s retail cannabis system, will push some Ontario residents into growing their own flower.

The OCS website features “Backstreet seeds” from Tweed, that produce “buds highlighted with orange-hued pistils and covered with trichomes, giving it a juniper scent.”

Although that sounds closer to underarm deodorant than something you’d roll into a joint, it beats driving 80 kilometers to the nearest legal Ontario cannabis store.

Anyway – no matter – the OCS (the only place you can legally by seeds in Ontario) – has already sold out – with no information about a time-line to re-stock the product.

Equity Guru’s Chris Parry recently claimed that “BC has the worst cannabis system in Canada.

“BC isn’t alone in completely botching its dispensary rollout,” admitted Parry, “The recent lottery in Ontario, to decide who’d get licenses for the next rollout of stores, was gamed by disgraced former Aphria boss Vic Neufeld and friends, who laid out hundreds of applications using falsified information, for friends and family, real addresses and imagined, and received government blessing while others who did things the right way were ignored.”

Ontario Lottery VP. Cal Bricker is now serving as interim CEO of OCS.

At Ontario Lottery, Mr. Bricker was Senior V.P of Horse Racing. A Director of the Canadian Journalism Foundation, and the Toronto Zoo, he also earned a PhD in Political Science.

The agency says it is conducting a search for a full-time replacement for Ford.

Written By:

Lukas Kane

Lukas Kane was previously the CEO of a North American investment news syndicate. He was also the Communication Director for a consortium of publicly traded companies. A Senior Writer at Equity.Guru, Mr. Kane writes about mining, cannabis, energy, technology and biotech.

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