Ontario: Second pot lottery closes, fewer applicants expected

Twitter icon

Cities and towns in Southwestern Ontario will soon find out whether they’ll be home to the any of the second wave of cannabis retail stores opening in the fall.

Applicants vying for a shot at one of 42 marijuana retail licences had until Friday to submit an application to the Alcohol and Gaming Commission of Ontario (AGCO), the province’s pot regulator, with the winners to be announced on Aug. 20.

But one leading cannabis lawyer says the financial requirements placed on applicants may be problematic, because many financial institutions remain skeptical of the marijuana industry.

“Last go-around, the big question was, ‘How many entries are there going to be?’ ” Ottawa-based lawyer Trina Fraser said of the January lottery that drew more than 17,000 expressions of interest.

“And I think the more relevant question this go-around is, ‘How many qualified entries are there going to be?’ ”

Lottery applicants were required to, among other things, get confirmation from a bank or credit union that they have the access to $250,000 in cash or short-term investments and the ability to quickly obtain a $50,000 letter of credit.

Some hopeful retailers couldn’t get the necessary documents from their bank or credit union, while others received paperwork that’s unlikely to meet the AGCO’s requirements, Fraser said.

“And I’m concerned that’s going to lead to those entries being disqualified,” she said Friday.

While most financial institutions have shunned the cannabis industry, Ontario-based credit union Alterna has moved in to fill the void.

“It has been in the industry pretty hard core for years now and is been very friendly to the industry when other banks and credit unions have not been,” Fraser said of Alterna.

The AGCO announced in July it would license an additional 50 pot shops, including eight reserved for First Nations communities, to open as early as October.

Unlike the January lottery for the first 25 licences, this one required applicants to provide confirmation they’d secured a lease.

That demand, along with the financial requirements, will weed out applicants like the ones who entered the first lottery without doing any preparations, Fraser said.

“The cost to enter this lottery became much higher than $75,” Fraser said, referring to the entry fee for the last lottery.

Eleven of the next 42 licences are allocated to the west region, an area stretching from Windsor to Niagara.

The only Southwestern Ontario city to land any of the coveted outlets in the last lottery, London emerged as the big winner thenn with three of Ontario’s first stores, the same number as Ottawa.

Unlike the first lottery, which limited stores to municipalities of more than 50,000 people, the second round allows the businesses to open anywhere they’re permitted. Seventy-seven of Ontario’s 414 municipalities, including more than a dozen in Southwestern Ontario, have voted to bar the operations.

“You definitely could see some people strategically placing themselves in small locations where they think they’re going to draw from surrounding communities because there’s nothing anywhere close,” Fraser said.

e-mail icon Facebook icon Twitter icon LinkedIn icon Reddit icon
Rate this article: 
Regional Marijuana News: