November 19, 2021
Agency and Tribunal Relations Branch
Ministry of the Attorney General
720 Bay street, 3rd floor
Toronto, ON M5G2J8
Thank you for the opportunity to comment on the proposed amendments noted above, which the Competition Bureau (Bureau) sees as favourable to competition in the retail sale of cannabis. As part of its mandate, the Bureau promotes and advocates for the benefits of competitionFootnote 1 based on the guiding principle that competition is the best way to improve choice, lower prices and prompt innovation.
Over the last year and a half the COVID-19 pandemic has had a profound impact on Canada’s economy. Provincial governments across the country rightfully focused on the health of their citizens through lock-downs and stay-at-home orders. The impact of these measures was felt by businesses of all sizes. In conjunction with direct support, governments of all levels supported businesses by reducing regulatory barriers, in order to facilitate innovative, COVID-19 safe business practices. Such regulatory changes have largely had a positive impact on Canada’s small- and medium-sized businesses, who were disproportionately affected by COVID-19 safety measures.Footnote 2
As the Canadian economy recovers from COVID-19, policy makers and regulators have a unique opportunity to re-examine regulations that may be unnecessarily restricting competition. In this vein, the Bureau is encouraged by the Ontario Attorney General’s proposed legislative amendment to permanently allow authorized cannabis retailers to offer curbside pick-up and delivery services, continuing an action that was introduced earlier in the pandemic on a temporary basis. Further consideration may be given to evaluating other restrictions to competition in this space. For example, it is the Bureau’s understanding that, even under the temporary order, the Ontario Cannabis Retail Corporation (OCRC) is the only entity in Ontario permitted to ship purchased cannabis products to customers. Allowing private cannabis retailers access to secure shipping methods would further encourage competition between retailers by allowing private retailers to compete on a more level playing field with the OCRC on this basis.
Allowing Private Cannabis Retailers to Offer Delivery and Curbside Pick-up Will Benefit Consumers and Retailers
While we recognize that competition is one of many policy considerations that governments must balance when developing rules, these pro-competitive amendments can increase consumer choice, lower prices, and help facilitate greater competition and efficiency among cannabis retailers. Delivery options will allow consumers to shop in a larger market, expanding the product and service options available to them. This may be particularly important for remote consumers or those whose mobility may be restrained, for whom cannabis retail options may be limited. For authorized cannabis retailers, the ability to offer delivery or curbside pick-up creates another way to differentiate their business and offer new and innovative service offerings. It also allows retailers to expand their potential customer base by offering services to a larger market. This can increase the number of competitive alternatives in a given market, which puts added pressure on retailers to offer lower prices and offer innovative, more differentiated and specialized product and service offerings. Finally, allowing private cannabis retailers the option to offer shipping would help to level the playing field between the OCRC and small- and medium-size retailers by allowing private retailers access to the same province-wide pool of consumers.
Now More than Ever, Policymakers Should to Look for Ways to Reduce Unnecessary Barriers to Competition
The pandemic has had a disproportionate impact on small- and medium-sized business, who represent 30% of Canada’s GDP.Footnote 3 Governments and regulators moved quickly to support these businesses by removing unnecessary barriers to competition. Policymakers must now continue this momentum to help Canadian businesses recover by asking whether regulations can provide more room for competition while achieving their central policy goals. As noted by the OECD, “regulatory decisions are vital at nearly every stage of resolving the health crisis and its social and economic effects”.Footnote 4 Coming out of the pandemic, Canada has an opportunity to improve its productivity and standard of living by removing unnecessary restrictions to competition, which heavily affect nearly one quarter of the Canadian economy.Footnote 5 The Bureau encourages all regulators to consider whether temporary or “emergency” regulatory actions taken in response to COVID-19 should be continued where they welcome competition (e.g., lowering barriers to entry and encouraging a broader range of players or services) while still achieving the regulator’s policy goals.
Increased competition benefits consumers through improved choice, improved quality and lower prices. Competition also increases productivity and stimulates economic growth by encouraging the efficient use of resources, innovation, and allowing more productive businesses to thrive.Footnote 6 The Bureau has recently published a Competition Assessment Toolkit to assist policymakers in identifying competition issues and tailoring policies appropriately to maximize the benefits of competition to the economy.Footnote 7
Should the you have any questions or would like additional information, please do not hesitate to contact Anthony Durocher, Deputy Commissioner (anthony.durocher@cb-bc.gc.ca) and Bradley Callaghan, Associate Deputy Commissioner (bradley.callaghan@cb-bc.gc.ca).
Yours truly,
Anthony Durocher
Deputy Commissioner
Competition Promotion Branch
Competition Bureau