Ontario Increases Efforts to Combat Illegal Cannabis Market

Ontario is intensifying its crackdown on the illegal cannabis market with a $31 million investment over the next three years.

This funding, reaffirmed in Ontario’s economic and fiscal outlook for 2024, is intended to support provincial cannabis enforcement teams, the Provincial Joint Forces Cannabis Enforcement Teams (PJFCET).

Led by the Ontario Provincial Police (OPP), this specialized unit targets illegal cannabis activities both online and offline, responding to its commitment to regulate cannabis distribution and protect licensed operators.

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Timeline of Ontario Crackdown

Earlier this year, Toronto’s city council, the capital of the Ontario province, called for a thorough review of the provincial Cannabis Control Act (2017) to more effectively combat the illegal cannabis trade.

The council’s motion explains that municipalities need increased resources and enforcement capabilities to tackle these illicit operations, suggesting that new tools, stricter enforcement measures, and better collaboration between municipalities and the provincial government are necessary.

This request reflects growing frustration, particularly among licensed businesses that face compliance costs while illegal operators enjoy fewer operational constraints.

Growth of the Illegal Cannabis Market in Ontario

Over the past year, the unlicensed retail cannabis market in Ontario has not dwindled. Unlicensed shops continue to exist in the province, and while some of these operations have faced sanctions, law enforcement efforts have not been consistent. This disparity has sparked discontent among legal retailers, who feel that unlicensed sellers have an unfair advantage.

One such retailer, Paul McGovern, a former Toronto police officer turned cannabis entrepreneur, expressed his concerns to Stratcann regarding Ontario’s fragmented law enforcement approach. He suggests that a more unified provincial strategy, similar to those in British Columbia and New Brunswick, could help control the illegal market more effectively.

Paul McGovern also emphasizes the need for public awareness, noting that while industry insiders and law enforcement agencies recognize the problem, the general public and the judicial system may not be fully aware of the current dynamics of the illegal market.

“I feel like everyone in the judicial system may not be aware of what’s happening,” Mr. McGovern said. He notes that while industry professionals closely follow these trends, the general public and some lawmakers may still view the situation through the lens of the pre-legalization years and not understand the modern regulatory landscape.

Ontario’s largest cannabis retailer, High Tide, which operates over 70 stores under the Canna Cabana brand, also welcomed the $31 million allocation. High Tide CEO Raj Grover expressed support for Ontario’s budget commitment, anticipating that these resources will assist law enforcement in addressing illegal advertising and promotion activities in the cannabis sector.

“As Canada’s largest cannabis retail chain, with 72 stores and over 700 employees in Ontario, we [High Tide] applaud the Ontario government’s commitment,” Raj Grover tweeted. He added that the company looks forward to detailed implementation plans.

This investment is also part of the significant revenue Ontario derives from the cannabis excise tax, from which it receives 75% of federal collections, approximately $379 million in 2024-2025.

This revenue source has seen steady growth, rising from $215 million in 2021-2022 to $344 million in 2023-2024. Meanwhile, the Ontario Cannabis Store (OCS), the province’s only authorized online cannabis seller, has reported steady revenues, projected to reach $225 million by 2024-2025.

An Activation to Raise Consumer Awareness

To mark the sixth anniversary of cannabis legalization, the OCS and the Alcohol and Gaming Commission of Ontario (AGCO) launched an unconventional consumer education initiative, “Buzzkill.”

Designed in collaboration with the Toronto agency LG2, this pop-up experience replicates an illegal dispensary but serves only to inform the public about the risks of unregulated cannabis. Through satirical product labels like “Pesti Cider” or “Magic Mould” (see illustrative photo), the initiative highlights health risks associated with illegal cannabis, which can contain contaminants such as heavy metals, toxic pesticides, and inconsistent THC levels due to the lack of testing.

OCS President David Lobo and AGCO CEO Karin Schnarr explained that the “Buzzkill” operation challenges consumer perceptions and aims to demonstrate that only licensed products are tested for safety and traceability, as indicated by the Ontario cannabis retail seal.

A recent study in Ontario found that 86% of samples of illegal cannabis contained multiple pesticides, and 62% of Ontarians acknowledge that illegal products pose safety concerns. However, 46% of consumers continue to purchase cannabis from unauthorized sources, partly due to widespread confusion about where illegal cannabis is sold.

“Buzzkill” has gained attention through social media and community posters, creating buzz around the importance of making informed cannabis choices.

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(Featured image by James Wheeler via Pexels)

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