> what incentive is there to pass the savings on to the customer?

I mentioned this in another comment, but for alcohol there are a lot of external costs associated with consumption. It makes sense to try include some of those costs.

I have no idea how they will price marijuana.

Governments are beholden to people, not markets. Profit is not their main incentive.

You can tell yourself that, but the purpose of LCBO at this stage is the money it makes for government. Liquor prohibition is a distant memory. If you don't realize that, you risk buying into their rhetoric about "protecting children" that they're peddling for weed monopolies.