Ontario will scrap lottery system, move to expand retail cannabis market in 2020

Cp24.com
Dec. 13, 2019
Joshua Freeman

The provincial government says that it is scrapping the lottery system for cannabis shop permits and will begin issuing dozens of new retail permits in the spring as part of efforts to open up the weed market.

In its recent fiscal update, the province said that it would move to do away with the lottery system, which has faced criticism.

On Thursday, the province unveiled a timeline for issuing new retail cannabis permits, saying that applications for prospective owners will open on Jan. 6, with the first new licenses to be distributed in April.

Speaking with CP24 Thursday evening, Ontario Attorney General Doug Downey said the government wanted to go to an open market model from the start, but needed time to manage the changes and ensure adequate supply.

“We wanted to go at a pace so that we could actually make sure the supply was there and that was part of the constraint,” Downey said. “And now that the federal supply has been solved, we are now in a position to go much wider and faster.”

Beginning in April next year, the province will issue approximately 20 new pot store authorizations.

Prospective owners will still be subjected to criminal record checks and an approval process.

“We have to do this in a responsible way to make sure that we have top quality operators in the best spots," Downey said.

The province said it will eliminate the temporary cap on the number of private stores and cancel the pre-qualification requirements for prospective retailers.

Previously, applicants will have to show evidence that if they are selected, they have already secured retail space that could be used as a store and that they have enough capital to open it by providing a bank letter confirming access to $250,000 cash and another confirming the ability to get a $50,000 standby letter of credit.

Starting September next year, retail operators can own a maximum of 30 cannabis stores. It will increase to 75 in September 2021.

Under the new guidelines, legal cannabis producers will also be allowed to enter the retail market by opening shops on their premises. Also, retailers will be able to sell cannabis-related items such as magazines and cookbooks.

Robin Ellins of the Friendly Stranger Cannabis Culture Shop said it's something that's long overdue. He said it has been impossible for many prospective pot retailers to get license due to the lottery.

“It’s a great opportunity for the industry," said Ellins. "I think it’s an amazing opportunity to really get people from the black market into the legal market."

He said some customers have told him they still deal in the black market due to price and convenience.

“I think if you have a store down the street from you that’s licensed that you can buy good quality cannabis at reasonable prices and you know where it came from and you could find the right strain for yourself because you have the right people helping you, I think it’s going to really shift us into a much better place within the market."

Abi Roach of the Hot Box Lounge said the move made by the province is fantastic and hopes there are no funny loopholes.

She said the lottery system created a lot of problems for many pot retailers.

“I just hope they stick to it,” said Roach. “I really hope they allow entrepreneurs to flourish and don’t close Ontario for business.”