Ontario Government Changes Rules for Cannabis Retailers

After a year of struggle in trying to create a retail cannabis marketplace in Ontario, the Provincial government is changing the rules to make it easier to get stores off the ground. Come 2020, there will be no more quotas, and no more lotteries, as Ontario tries to play catch-up with other parts of Canada in making it easier to get legal pot.

“In response to the federal government’s decision to legalize cannabis, our government is determined to open the cannabis market as responsibly as possible,” said Attorney General Doug Downey in a media statement. “We have said all along that opening more legal stores is the most effective way to combat the illicit market, protect our kids and keep our communities safe. That is our number one priority.”

As of January 6, 2020, the Alcohol and Gaming Commission of Ontario (AGCO) will begin accepting operator licence applications from prospective retailers under the new regulations. The process now has two steps: they have to qualify for a retails operator license under the criteria of the Cannabis Licence Act, and the proposed physical store must qualify under the retail store authorization for all location, security and other requirements. In Guelph, that includes a a bylaw that says a cannabis retailer can’t be opened within 150 metres of a school, daycare, or park.

Previously, people looking to open retail cannabis stores had to submit for a lottery draw, and, once drawn, they had a week to produce documentation to show that they had secured the location, and had the required capital on-hand to establish the store. The complicated process has resulted in less than half of the total number of licences drawn  being turned into actual stores.

At the same time, the lottery process was also divided into regions, which limited the number of potential stores that could open in any given area. For instance, May’s lottery authorized 42 stores split between 13 in Toronto, seven in eastern Ontario, six in the GTA, five in the north, and 11 in western Ontario, which included Guelph. The Royal City has won the lottery twice, but no stores have opened as a result.

“The lottery system simply wasn’t working. It was failing to make a dent in the illegal market, while doing a disservice to entrepreneurs who wanted to start a business the responsible way,” said Guelph MPP Mike Schreiner in a media statement. “There were so many examples of people who made upfront investments, signed leases, and went through all the proper channels only to be locked out by the lottery system.”

Other changes to the licencing system include allowing producers to own or control up to 25 per cent of a retail operation, which is up from 9.9 per cent, and stores are now allowed to sell “items directly related to cannabis or its use,” with the exception of edibles, which retail stores will be able to sell starting in January. And while the restriction on the total number of stores will remain at 93 for the time being, all regional and quantity restrictions will be lifted on March 2.

The AGCO will begin accepting application from all interested parties on March 2, but until then, only those applicants already pre-approved by the Registrar can apply for a Retail Operator Licence.

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