Ontario cannabis retail hopefuls can enter lottery next week

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Those interested in opening a cannabis retail store in Ontario will have the chance to enter a lottery early next week to receive one of the first 25 retail licenses for the province.

When the Progressive Conservative (PC) government took leadership of the province in October, they decided to switch the Liberal’s plan of having only government-run retail locations to having privately owned shops as well. As such, no stores were opened for legalization in October so for now, the only way to purchase legal cannabis in Ontario is online through the provincially-run Ontario Cannabis Store.

The PC government initially planned not to place a cap on retail licenses but have since decided to give licenses to only 25 retailers. The Government has said that this is in response to nationwide shortages and that in order to successfully rollout retail stores it would be best to start with only 25. The Liberal government had planned for 40 government-run stores to be open at the start.

The Alcohol and Gaming Commission of Ontario (AGCO) will be assisting in choosing the applicants in the lottery with their own technology. According to the AGCO, the software they are using is the same software that puts the slot machines through testing before people use them in the casinos.

“This is special software developed and verified externally which will begin to select people who have expressed interest,” said Raymond Kahnert with the AGCO.

“That same principle of randomness will be applied to the selection of the individuals who have had an opportunity to apply.”

It should be noted that “winning” one of these 25 licenses is costly. Applicants need to fork out $75 just to submit an application, along with $10,000 in additional fees -- $6,000 for a retail operator license and $4,000 for a retail authorization fee. Hopefuls will also need to have a $50,000 letter of credit.

“That’s an indication to the AGCO that this is a serious application,” said Kahnert.

According to the AGCO, licenses will be chosen for the following five regions:

  1. East Region (Stormont, Dundas and Glengarry, Prescott and Russell, Ottawa, Leeds and Grenville, Lanark, Frontenac, Lennox and Addington, Hastings, Prince Edward, Northumberland, Peterborough, Kawartha Lakes, Simcoe, Muskoka, Haliburton, Renfrew): five stores
  2. GTA Region (Durham, York, Peel and Halton): six stores
  3. North Region (Nipissing, Parry Sound, Sudbury, Greater Sudbury, Timiskaming, Cochrane, Algoma, Thunder Bay, Rainy River, Kenora): two stores
  4. Toronto Region: five stores, and
  5. West Region (Dufferin-Wellington, Hamilton, Niagara, Haldimand-Norfolk, Brant, Waterloo, Perth, Oxford, Elgin, Chatham-Kent, Essex, Lambton, Middlesex, Huron, Bruce, Grey, Manitoulin): seven stores.

As in the rules listed by the AGCO, the lottery is open to a corporation, partnership, limited partnership and sole proprietor, but Canadian Licensed producers are not allowed to enter into the lottery for the first round of licenses.

“It’s to inject that level playing field so that no one corporation can absorb the majority of those licenses,” explained Kahnert.

Those interested in applying can apply from January 7 to January 9, with retailers being chosen on the 11th. Applicants are warned not to apply if they’re not confident about being able to open by April 1. Those who receive a license need to be ready to go by April 1 or risk a $12,500 fine, followed by another of the same amount on April 15 and an additional fine of $25,000 on April 30.

“The heavy fines that could be imposed will push smaller players to the sidelines and ensure serious players that are genuinely interested in running a retail store will succeed in the lottery system,” said Aleem Kanji, vice president of Sutherland Corporation, a lobbying firm that focuses on cannabis.

Applicants must be at least 19-years-old, the store must be located in a town with at least 50,000 people and must meet the school distance requirements. Municipalities in Ontario still have until January 22 to opt out of hosting cannabis retail stores.

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