Weed at the bar? The tourism industry wants Ontario pot venues open by spring

While Ontario’s longest patio season is serving its last calls under well-used heat lamps, industry groups representing the hard-hit restaurant, tourism, and live events sectors are calling on the province to advance talks on selling and consuming cannabis inside public venues. Beth Potter, president and CEO of the Tourism Industry Association of Ontario (TIAO), wants new pot regulations for lounges, cafes, festivals and concerts established by the spring.

The Ontario government launched a public consultation in February to collect feedback on consumption venues and special occasion permits for events. The feedback period ended on March 10, just as COVID-19 was tightening its grip on the province.

“The pandemic hit, and we’re now at a place where we’d like to go back and pick up the conversations with government to get the regulations put in place, especially in time for next patio season,” Potter said at a virtual event about “on-premise” cannabis business opportunities in Ontario earlier this week.

The province’s Ministry of the Attorney General said in February that no changes to the cannabis framework were expected at the time, and there is no timeline for updates informed by the public feedback. Yahoo Finance Canada contacted the ministry regarding timing, but did not receive a response in time for publication.

What the province has made clear is the Smoke-Free Ontario Act, which prohibits smoking and vaping cannabis in enclosed public spaces and patios, will not be changed as a result of the consultation.

Potter, whose organization represents nearly 200,000 businesses, expects the initial rules will focus on selling legal-aged customers packaged products like the chocolates, gummies, mints and drinks currently available from licenced producers. She said the policies could eventually be expanded to include chef-prepared cannabis-infused food and drink items.

Scores of Ontario bars and restaurants have closed their doors since the onset of the pandemic. Many who have held on are barely scraping by. In the heavily populated Toronto and Peel regions, new lockdown measures enforced by the province starting Monday will limit business to take-out only until at least Dec 21.

Tony Elenis, president and CEO of the Ontario Restaurant and Motel Association, notes the province’s food services industry was operating on thinner margins than any other region in Canada prior to the pandemic. He said the addition of cannabis as a new revenue stream could be “an enormous benefit to the food service industry,” with gains extending to the hospitality sector through tourists lured by pot-influenced entertainment and dining experiences.

“Wait until those chefs in the kitchen start preparing a type of food that we’ve never seen before,” he said at the Nov. 24 event presented by TIAO, JLM Strategic Marketing and pot giant Canopy Growth (WEED.TO)(CGC).

Elenis sees the risk of serving legal cannabis in restaurants no differently than serving beer, wine and spirits. However, the prospect of selling both at the same time raises many questions. Today’s regulations explicitly separate cannabis and alcohol. For example, a pot drink is not allowed to contain booze. Molson Coors (TPX-B.TO), which has invested in infused drinks, can’t put beer branding on cannabis products. Would restaurants have to ditch alcohol to sell cannabis? Or would patrons be free to chase an infused sparkling water with a glass of wine?

Richard Anderson, executive director of Smart Serve Ontario, is not yet sure if his agency will be tapped to educate workers who serve cannabis for on-premise consumption, as it has done for years with bartenders and restaurant servers. He expects the Ministry of Health to require a one-or-the-other approach, at least when it comes to cannabis and alcohol at events like outdoor festivals.

“Do you have a cannabis tent with a blue bracelet and a beer garden with a red bracelet, and you can’t go back and forth? How does that work?” he asked at the event. “We’ve had a lot of discussion around the table on that. Clearly the Ministry of Health is [wanting] one or the other, not both.”

David MacNeil, chief executive officer of Festival Events Ontario, wants clear rules that will be easy for patrons to follow in potentially chaotic environments like large outdoor events and concerts.

“Cannabis has been a part of the festival and event world for a long time, legally and otherwise,” he said. “I think the big hold up is how that liquor licence and cannabis will combine. Can you do both? Or do you have to isolate, and you don’t move from one tent to the other. There’s a lot of questions.”

Ontario Premier Doug Ford has faced tough questions about his government’s approach to establishing a legal cannabis market since taking office in 2018, and hastily transitioning to a more private model than his predecessor had planned.

Then came widespread criticism about the slow roll out of private retail stores. More recently, Ford has been hit with backlash from private retailers for allowing click-and-collect and delivery only at certain times during the pandemic while the province-run Ontario Cannabis Store can sell online permanently.

A survey by the polling and research firm Abacus Data commissioned by Canopy suggests Ford would face minimal opposition if the province were to embrace the sale of certain legal cannabis products in restaurants, bars and lounges. Abacus questioned 2,440 Canadian adults between Sept. 23 and 29, including 500 respondents in Ontario. The results show two-thirds of Ontario respondents either support or accept on-premise consumption of cannabis edibles and beverages.

“I see no evidence in this data that this decision would hurt or be very risky for the provincial government right now,” said Abacus CEO David Coletto.

“Ontarians understand the scale of the challenges that tourism operators, food service operators, live music venues are facing because of the pandemic. They recognize how important that is to the quality of life in their neighbourhoods. Anything that not only gives these businesses an opportunity to diversify, to offer new products, and attract new visitors to the province, I think would find very broad support.”

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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