Tag - Retail

Ontario’s Retail Cannabis Lottery – Its Almost Time!

The province of Ontario has announced the first 25 companies that can now legal apply for a retail licence to sell recreational cannabis in the province. This is a pivotal time in Ontario’s history and will also be a great case study to see how cannabis retail stores operate and whether they will have a positive impact or negative impact.

Although recreational cannabis consumption is now legal (with conditions) in Ontario and other provinces in Canada, the Ontario government has opted to only release 25 retail licences. The Ontario government will continue to operate the OCS Ontario Cannabis Store as their own retail platform.

With that said the Alcohol and Gaming Commission of Ontario is in charge of issuing retail licences and was also in charge of the retail cannabis retail store lottery. The agency received more the 18,000 application from prospective retail store companies. Of those, nearly 50% of the applicants were sole proprietors, while only a third of the applicants were corporations.

The Criteria

If you were one of the lucky one to receive approval to apply for a retail cannabis licence there are still some large issues that you must sort out.

Those selected have 5 business days to submit their applications along with a non-refundable $6,000 application fee and a hefty non-refundable $50,000 letter of credit.

If an Applicant is selected in the lottery the AGCO will apply its full due diligence process to determine if the Applicant will carry on business in accordance with the law, and with integrity, honesty, and in the public interest. This may prove very difficult with respect to zoning matter under the jurisdiction of local Municipalities.

“Opening a Retail Store by April 1, 2019 is Required”

If an applicant cannot find a suitable retail store location and be up and running by April 1, 2019 they risk losing their licence as well as their $50,000 letter of credit. The amount to be lost from the letter of credit will be up to the Registrar, and will be addressed on a case by case basis.

As noted above, a big issue for retailers will be seen at the local level. Although one may have an licence to operate (in part) they can only operate a retail store if they find a location that is in compliance with local land use provisions (Zoning By-law).

In simple terms, the Zoning By-law as directed by our Official Plans and other Provincial Policy will dictate where retail stores can be located. Where compliance to Zoning By-laws are in question, applicants may be required to amend such By-laws to permit their use, which may hinder them from operation by the April 1st deadline.

Although there are some hurdles to jump through, anyone who has received 1 of the 25 licences are very lucky. Until such time that the provincial government decided to release additional licences, these operators will have a huge “on the ground” cannabis monopoly for the legal purchase of such goods.

At this time it is premature to speculate on how the cannabis retail stores will fair out and whether or not they will have any adverse impacts. Time will only tell.

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