Ontario's Progressive Conservative government announced Monday it will allow recreational pot to be sold in retail stores while the province will handle online sales.

Minister of Finance Vic Fedeli and Attorney General Caroline Mulroney laid out the government's plan for a hybrid system in an announcement Monday at Queen's Park, stressing their priorities would be ensuring public safety and eliminating the black market.

"The government of Ontario will not be in the business of running physical cannabis stores," said Fedeli. "Instead we will work with private-sector businesses to build a safe, reliable retail system that will divert sales away from the illegal market."

Starting Oct. 17, the province will introduce a system for online sales through the Ontario Cannabis Store (OCS) to meet the federal government's requirements that provinces be ready for retail sales by that date. The government will then launch a consultation process with the aim of introducing a private retail model by Apr. 1.

The proposal scraps the previous Liberal government's plan for a provincial monopoly on cannabis sales that would have seen the government operate 150 brick-and-mortar stores by 2020.

Under the new plan, the Ontario Cannabis Store will not operate any storefronts, but will provide an online channel that will include an age-verification system to ensure safe home delivery of cannabis products.

The OCS will also act as a wholesale supplier for private retailers. Fedeli said the government will propose creating an official Ontario Cannabis Retail Seal which will help consumers identify stores where federally qualified cannabis products can be found.

"Consumers can look to this seal to confirm they are buying from a legal channel," said Fedeli. "This is an assurance that the illegal market simply cannot match."

Changes require new legislation

Setting up a private retail system will require changes in legislation to the Ontario Cannabis Act of 2017.

The key elements of the act will set the legal age for the purchase of cannabis at 19, ban the use of recreational cannabis in all public places and workplaces and prohibit those under the age of 19 from possessing consuming or cultivating the drug.

The province says it plans to address illegal selling — that includes storefronts that currently operate in cities across the province. Fedeli stressed these dispensaries remain illegal.

"For those engaged in the underground [cannabis market] today, our message is simple: Stop," said Fedeli.

Ontario's Minister of Finance Vic Fideli and Attorney General Caroline Mulroney following an announcement on Ontario's cannabis retail model, in Toronto on Monday. (Christopher Katsarov/Canadian Press)

He also stressed the government will take sales to underage people very seriously.

"If a private retailer is caught selling cannabis to any underage buyer, even once, their licence is done," he said.

The full regulatory framework for the private sector model will be designed in consultation with stakeholders, including municipal governments, Indigenous communities, law enforcement, public health advocates, business and consumer groups.

Fedeli said there will be a "one-time window" following municipal elections taking place across the province this fall during which municipalities will have the option to opt out of allowing sales in physical stores within their boundaries.

The province will provide $40 million over two years to help municipalities across Ontario with costs related to the legalization of cannabis, Fedeli pledged.

Politicians, industry react

Reaction from across the political spectrum was swift.

NDP Leader Andrea Horwath said her party still believes the safest way to sell cannabis is through the public sector because LCBO staff have the training and experience to ensure socially responsible access.

She expressed her hope that the consultation process is "open, transparent and thorough" and that it includes "the voices of as many Ontarians as possible."

Green Party Leader Mike Schreiner,​ whose party has opposed the provincial monopoly since it was introduced in September 2017 — said the PC government was right to change course.

"I look forward to seeing how a new wave of entrepreneurs can benefit local economies from regulated, safe and controlled cannabis sales," said Schreiner.

Toronto Mayor John Tory said he supports legalization as long as it ensures three things: that neighbourhood and family safety is ensured, that public health isn't compromised and that it doesn't impose additional costs on the city of Toronto.

"Finance Minister Vic Fedeli made it clear that safety is the Ontario government's top priority when it comes to cannabis sales," said Tory's office in a statement. "That is absolutely Mayor Tory's top priority and he wants to see exact details on how that safety will be ensured before supporting a private retail model."

The Cannabis Council of Canada, an industry group, responded positively to the announcement, saying the move would save taxpayers money and will better equip the legal industry to replace the illegal market.

"By heavily regulating and overseeing the private sector, the provincial government will create a truly competitive and inclusive landscape that will allow for law-abiding companies to more quickly replace the bad apples in the cannabis space," said Avtar Dhillon, the Cannabis Council of Canada board chair.