On July 3, the Government of Ontario announced that by October 2019, 50 new retail cannabis stores will be authorized to open in Ontario on a rolling basis. This will represent a significant increase in the number cannabis retailers in Ontario. To date, only 25 licenses have been allocated, and while 25 stores were intended to be up and running by April 1, several have yet to open.

One of the principal rationales of the Ontario Government for initially limiting the number of cannabis retail stores was a lack of reliable supply. The Government has indicated that given that there has been a modest increase in available supply in recent months, there should be enough products to sustain 50 more stores. The Government’s phased approach to opening stores is part of its plan to eradicate the illegal market in favour of private sector businesses that are intended to create a safe, reliable and convenient retail system.

The Alcohol and Gaming Commission of Ontario (AGCO), the retail cannabis regulator in Ontario, will hold a second lottery on August 20, 2019 for 42 of the 50 licenses that allow for the operation of a retail cannabis store in Ontario. Expressions of Interest Applications can be submitted between August 7 and August 9, 2019 at 8:00 pm EDT. The key difference from the AGCO’s first lottery of 25 licences is that applicants will be required to demonstrate retail readiness. This means that applicants must have secured appropriate retail space, and have access to capital to the tune of $250,000 in cash or cash equivalents and the ability to obtain a $50,000 standby letter of credit.

The 42 retail stores will be allocated as follows:

• East Region: 7 stores
• GTA Region: 6 stores
• Toronto Region: 13 stores
• West Region: 11 stores
• North Region: 1 store in each of Kenora, North Bay, Sault Ste. Marie, Thunder Bay and Timmins

The stores may be opened in any municipality regardless of population size (unless the municipality opted out of the cannabis market altogether).

The remaining 8 stores will be located on First Nations reserves. That allocation will be conducted through a separate process on a first-come, first-served basis.

Information on the requirements to qualify, the application process and timelines is available on the AGCO website.

If you or your business operates, or wants to operate, in the retail cannabis sector, the second lottery may affect you as early as this summer. For information and advice on how to navigate this change, contact the McCarthy Tétrault Cannabis Law Group.  

For more information on this Legal Update, contact Rami Chalabi, Paul Kunynetz, Jessica Firestone or Victoria Zed.