Allowing private cannabis retailers in Nova Scotia would be most consistent with the One Nova Scotia Report and good for entrepreneurs. Yet the online survey the Nova Scotia government organized to ‘consult’ the public about cannabis distribution betrayed a preference for the Nova Scotia Liquor Corp. (NSLC) to monopolize retail.
New Brunswick and Ontario will expand their liquor-peddling operations into retailing cannabis out of new facilities.
Newfoundland and Labrador’s hybrid model will be a step up. Newfoundland will allow private retailing but the wholesale distribution will be left to the province’s liquor agency.
There are two solid reasons for Nova Scotia to adopt a private retail model instead of government monopolizing the business: more entrepreneurship overall, giving rural entrepreneurs a chance to participate, and better distribution.
More Nova Scotians could have the chance to own and run a small business in this new market of medical and recreational cannabis.
The economic future of Nova Scotia, according to the Ivany Commission’s One Nova Scotia Report, rests in growing greater entrepreneurship in the province, not in having government (or its agents) expand further and deeper into the marketplace.
In rural communities, which have greater need for local enterprise to flourish, the sin of government taking over cannabis retail will be worse. Understandably, even in rural communities there’s likely a preference for the largesse of NSLC salaries and benefits, instead of the sober compensation paid by private enterprise. But the trade-off is that the NLSC model will take away two important elements from rural communities: market autonomy and more enterprise.
Judging by the Ontario and New Brunswick cannabis retailing models, NLSC cannot open a new facility in every community that wants (or can support) one. Ontario plans to have 150 (one per every 91,000 people) and New Brunswick plans 20 stores (one per every 38,000 people). In both cases, legal supply will be limited.
Government will decide what community gets a store, shutting others out of the business. Government will needlessly ration what market forces naturally handle.
Even if NSLC jobs pay more than private outlets selling cannabis, the state model will only provide salaried employees. And it will patriate its profits to government for priorities that may or may not square with rural priorities. Conversely, private outlets also provide jobs to local economies, likely many more than if government were in the business.
There are further benefits to communities in fostering enterprise and providing sound accessibility. One is the potential for successful entrepreneurs to accumulate some capital, grow in the community, spin off into other areas of the market, and innovate in attempts to become more efficient and more market-sensitive in their delivery and costs.
The question of cost-efficiency is also important because the lawful market needs to offer the product at a price that’s similar or lower than the illicit market. The same goes for reasonable availability. Too few government retailers in Nova Scotia (10 outlets using the Ontario standard and 25 with the New Brunswick formula) would presume that buyers will drive by several illicit sellers on their way to the shiny new government store. That will not keep profits away from organized crime as government promises.
Rural Nova Scotian communities (and in the Atlantic region) need more than the promise of a few government jobs to sustain themselves. They need to develop greater entrepreneurial expertise and experiment with productive and innovative market ideas.
A cannabis store alone won’t save a rural community, but the decision on cannabis retail will test government’s endorsement of the One Nova Scotia objectives.
Cannabis is the first new market opportunity to appear in a generation. If the Nova Scotia government is serious about supporting entrepreneurship, it will regulate the lawful sale of cannabis but leave the market distribution to the private sector.
Marco Navarro-Génie is the president of the Atlantic Institute for Market Studies.