Ontario Government Cannabis Retail Licence Lottery, Part Deux

On July 3, 2019, the Ontario government announced plans to conduct a second cannabis retail licence lottery process. The regulation under the Cannabis Licence Act, 2018 has been amended to authorize the Alcohol and Gaming Commission of Ontario (“AGCO”) to issue 50 new cannabis store licences, in addition to the 25 previously authorized.

Of the 50 licences to be issued, 42 will be allocated to private retailers throughout Ontario, and eight to retailers on First Nations reserves. The First Nations licensing process will be conducted on a first-come, first-served basis, rather than through the lottery. Prospective indigenous retailers will need to obtain First Nations band council approval before applying for a Retail Operator Licence.

The lottery to select the applicants for the 42 off-reserve licences is to be held on August 20, 2019, following submission of Expression of Interest Applications between August 7 (at midnight) and August 9 (at 8:00 p.m.).

The government has learned something from the January 2019 lottery that generated over 17,000 entries and resulted in 25 mostly-unprepared retail licence applicants. This time, to enter the lottery, participants must submit to the AGCO letters from a Canadian bank or credit union proving the participant can obtain a $50,000 letter of credit and at least $250,000 in cash to construct the store, as well as confirmation from the participant that it has secured retail space in the applicable region. Within five business days following the lottery date, each winner will have to submit to the AGCO the $50,000 letter of credit, a legal agreement proving the retail space is secured (with possession no later than October 1, 2019), a Retail Operator Licence Application (and its $6,000 fee) and a Retail Store Authorization Application (and its $4,000 fee).

The 42 off-reserve licences will be allocated to the following regions, but may be opened in any municipality, regardless of population size, provided that the municipality did not opt-out of the cannabis retail market prior to the January 22, 2019 deadline. Regional allocations are:

• East region: seven stores
• GTA region: six stores
• Toronto region: 13 stores
• West region: 11 stores
• North region: one store in each of the following cities: Kenora; North Bay; Sault Ste. Marie; Thunder Bay; Timmins

The AGCO is aiming to have the first of the 50 new stores open in October 2019.

For further information, please contact Jeremy Burke or another member of the Aird & Berlis Cannabis Group.