Cannabis Licensing Update: The Good, the Bud, and the Ugly
The good news for those looking to open a cannabis retail store: The Ottawa City council has opted into the private cannabis licensing regime, which means Ottawa will see private cannabis retail stores opening. Or will it? This leads us to the bad news: As some of you already know, on December 13, 2018, the Government of Ontario announced that, due to a shortage of legal cannabis from federally-licensed producers, it would (for the time being) be limiting the number of retail store authorizations which the AGCO can issue to twenty-five, with different maximum store authorizations for different regions of Ontario. Currently, the maximum number of licenses for the East Region is capped at five. To determine which individuals or entities are to be awarded these few retail store authorizations, the AGCO is holding a lottery, with KPMG acting as third-party fairness monitor.
While the number of retail store authorizations is limited to twenty-five, there are additional restrictions on who can hold these authorizations; for example, you cannot hold a retail store authorization if you are a licensed producer or an affiliate of a licensed producer, or if you already hold a retail store authorization or have an affiliate which holds a retail store authorization. In addition, no retail store authorizations are to be issued to any cannabis retail store that would be located in a municipality with a population under 50,000.
The lottery process itself is straightforward enough. Interested parties must submit an Expression of Interest Application online from January 7, 2019 to January 9, 2019. The lottery itself is to be held on January 11, 2019, and the AGCO intends to publish the results within twenty-four hours therefrom. Applicants must pay a $75.00 non-refundable application fee, and applicants are expected to carefully review all federal and provincial rules, as well as the AGCO’s standards, to ensure they are ready to meet all requirements before submitting their Expression of Interest Applications. Applicants should be especially aware that, should they be selected in the lottery, they will need to submit a Retail Operator License Application, the necessary licensing fee, and a $50,000.00 letter of credit in the AGCO’s prescribed form, all within five business days of the publication of the lottery results.
The AGCO has also released its standards for cannabis retail stores, which were still pending at the time of our previous article 'So you want to (legally) sell cannabis?'. These standards set out guidelines for, among other things, store premises, advertising, training, and record-keeping. Under these standards, for example, all cannabis retail stores require cameras and lighting to provide 24-hour coverage of the premises, including all entrances and exits, points of sale, receiving areas, and cannabis storage areas. All video footage must be retained for at least thirty days and must be made available to the AGCO upon request. In addition, if the licensee destroys any cannabis, the entire destruction process must be recorded by the store’s surveillance system and must be overseen by a Licensed Manager or Licensed Retail Operator. Licensees cannot stockpile unsellable cannabis for longer than one month.
As mentioned in our previous article, aside from assisting you with the licensing application, lottery, and renewal process, our lawyers can help you incorporate a business or prepare a partnership agreement, prepare a commercial lease or assist with the purchase of a commercial property, and draft employment agreements and advise you on issues you may face with respect to those employees. If you’re looking to set up a private cannabis store in Ontario in 2019, we can help you make that happen, from start to finish (if you’re lucky enough to win the AGCO lottery, that is).