The Government of Ontario is making steps towards the legalization of cannabis. Legislation was introduced back in April by the federal government with the goal of regulating recreational marijuana by July 1, 2018. However, this task is being left up to the individual provinces to develop plans and systems to implement. Ontario is taking a government controlled approach. By 2020, they plan to own 150 pot shops that will be run by the Liquor Control Board of Ontario (LCBO). In this plan, Ontario plans to make all illicit and non-government controlled marijuana stores illegal and shut them down; creating a monopoly. These stores will be similar to liquor stores and will only sell to those 19 and above. The main question is: will this be able to eliminate black-market sales of cannabis?

One factor that will come into play is the price of the marijuana sold at these government controlled stores. If it is not lower or on par with the black-market price, then black-market sales will not drastically change. Having a competitive price will not only lower the sales within the black-market, but it will also result in more sales in the LCBO shops. However, the legalization of pot is not expected to be a huge income for the government. This is due to pricing and the black-market. It is expected that the black-market will lower prices to compete with these government operated dispensaries. Another point of consideration is the possibility of taxing the sales of cannabis. This is expected to bring an annual tax revenue of $130 to $180 million. This may seem like a large amount of tax revenue; however, it is only a tenth of a percent of the provincial budget[1].

From the perspective of a business, one must investigate into the profitability of creating the government controlled marijuana dispensaries. Colorado can be used as a comparison to determine the expected sales of pot in Ontario. According to a senior economist from CIBC World Markets, it is estimated that there is a $10 billion demand for legal cannabis. Ontario is projected to receive $2.1 to $2.3 billion in retail sales[2]. Controlling a monopoly will make it easier for the government to gain profit as there will be no more cannabis shops and the only competitor will be the black-market. Ontario will also be making wholesale deals with the suppliers allowing them to mark up the price, while remaining competitive. This in combination with a tax on legal marijuana will bring a profit. The legalization of pot in Canada, more specifically Ontario, is bound to eliminate parts of the black-market, while bringing another form of income to the government.

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[1] http://www.cbc.ca/news/canada/toronto/marijuana-ontario-price-market-sales-1.4298311

[2] http://www.cbc.ca/news/canada/toronto/marijuana-ontario-price-market-sales-1.4298311

http://www.huffingtonpost.ca/2017/09/08/ontario-recreational-marijuana-to-be-sold-in-dozens-of-new-stores-sources_a_23201511/?utm_hp_ref=ca-business

http://pot.tv/video/2017/06/06/canadian-parliament-debates-cannabis-legalization/ (Image)

The EpiPen is known for its medical innovation and lifesaving capabilities; however, as of late, it is being know for its large price tag and unwillingness to investigate malfunctions within their product. EpiPen controls a monopoly on this type of product, meaning they can charge any price and the public is forced to buy it as there are no close substitutes. This does not give EpiPen the right to charge $608 for a two-pack; a price that has increased 500 percent since 2007. This package is not only a burden on families who need the product to ensure that in the case of an allergic reaction their life will be saved, but that product may not even work.

The situation had escalated to the point where the Food and Drug Administration (F.D.A.) had to get involved. They addressed some of the wrongdoings by EpiPen: “our own data show that you received hundreds of complaints that your EpiPen products failed to operate during life-threatening emergencies, including some situations in which patients subsequently died.” EpiPen responded by backing up the safety and efficacy of their product and said, “It’s not unusual to receive product complaints, especially when the product is frequently administered by non-medically trained individuals.” EpiPen is now blaming the malfunctions of their products on the consumers and users. Although EpiPen eventually made a recall on certain products due to this issue, this did not occur until after an F.D.A. inspection of one of the manufacturing facilities.

The choices made by EpiPen were clear attempts to maximize profit at all costs. Which meant burdening families and allowing malfunctioning products to remain on the market, despite the complaints the company received. If EpiPen were to make decisions based on their social responsibility then they would decrease the price of their product to be easily affordable to all consumers and ensure that all products work as expected. These choices were not made and the reason: because EpiPen holds a monopoly. Even though they are acting socially un-responsible consumers are still forced to buy their product. However, their actions did not go without punishment as EpiPen saw a decrease in stock price of almost 25% as of mid August 2017. This is directly related to the scandalous behavior of the company. The F.D.A. stepped in to punish and attempt to resolve some of these issues that EpiPen has created. Which include the recalling certain lots of products as well as reaching a $465 million settlement with the U.S. Department of Justice for overcharging the federal government for the product. Even though EpiPen faced certain punishments, how much control does the government really have over this medical monopoly?

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Citation: https://www.nytimes.com/2017/09/07/health/epipen-fda-malfunction.html?rref=collection%2Fsectioncollection%2Fbusiness

https://www.statnews.com/2016/07/06/epipen-prices-allergies/ (Picture)