Canada: Changes To Ontario's Cannabis Licensing Rules Limit Number Of Stores

Last Updated: January 3 2019
Article by Barbara Miller, Laurie M. Turner and John Webster

Background

On December 13, 2018, the Government of Ontario published a news release (News Release), announcing that it would be taking a phased approach to recreational cannabis retail licensing, beginning with the issuance of twenty-five retail licences that will permit licensed operators to open retail cannabis stores (Licences) in Ontario on April 1, 2019. The government also released an amending regulation (Regulation) to enact these changes to the licensing process.

This approach marks a significant departure from the cannabis retail licensing system introduced by the government in November of this year under Ontario's Cannabis Licence Act (the Act) and its accompanying regulation.1 The News Release cited the insufficient supply of recreational cannabis to meet consumer demand as the motivation behind the new licensing regime, and referred to such shortage of supply as a "national issue" demanding an immediate response from the federal government and Prime Minister Justin Trudeau. In response, the prime minister has stated that there will be relief within the coming months and that resolving the supply shortage completely may take up to a year.

New Approach to Licensing

The News Release confirmed that the Alcohol and Gaming Commission of Ontario (AGCO) will be utilizing a lottery system (which will be overseen by a third-party fairness monitor) to determine who can apply for the initial round of twenty-five Licences. According to the Regulation, no applicant shall be granted more than one store during this initial phase. Persons wishing to participate in the lottery are required to submit an online expression of interest between January 7-9, 2019. Following that process, the expressions of interest that are received will be placed into the lottery pool for a draw which will be conducted on January 11, 2019. The News Release indicates that the results of the lottery will be published on the AGCO's website within twenty-four hours of the draw.

Initial Approach

New Phased Approach

Number of Licences

Unlimited/no cap.2

25 during initial phase.

Deadline for Application for Licence

December 17, 2018

(Application)

January 7-9, 2019

(Expression of Interest)

Results of Application Process

The AGCO did not announce a timeline for determining whether the applicant was successful.

Between January 11 and 12, 2019.3

Location of Stores Operating under Licence

No restrictions on the distribution of retail cannabis stores across the province.

Distributed across the province, with each region allowed a set number of cannabis stores as follows:4"> City of Toronto - 5 stores

Greater Toronto Area (Durham, Peel, Halton, and York Regions) - 6 stores

Western Ontario (including Hamilton, London, Niagara, Waterloo) - 7 stores

Eastern Ontario (including Ottawa, Kingston, Prince Edward County) - 5 stores

Northern Ontario - 2 stores

Date of Opening of Stores Operating under Licence5

Stores operating under Licence permitted to open beginning on April 1, 2019.

25 stores operating under Licence will be permitted to open beginning on April 1, 2019.

The Regulation sets out a number of restrictions regarding the initial twenty-five Licences:

  • A person may submit an expression of interest with respect to more than one region, but can only be selected to apply for one region.
  • Two or more persons who are affiliates of one another may submit expressions of interest, but only one will be selected to apply. Additionally, affiliates are not permitted to submit an expression of interest for the same region.
  • None of the initial twenty-five Licences will be issued to a federally licensed cannabis producer or their affiliate.
  • None of the initial twenty-five Licences will be allocated to municipalities that have a population of less than 50,000.

Moving Forward - FAQs

What rules will apply to the lottery for Licences?

The AGCO has given little indication as to what these rules will look like or how successful applicants will be chosen. However, the AGCO has announced that it will publish the lottery rules to its website during the first week of January 2019.

What information will be required to be submitted as part of the expression of interest?

The AGCO has not announced what information will be required to be submitted as part of the expression of interest. However, based on: (i) the requirements of Ontario's Cannabis Licence Act (and the regulation thereto); (ii) information released by the AGCO in respect of the initial licensing approach; and (iii) the information required to be submitted in certain of the other provinces as part of their respective retail cannabis licensing application process, it is expected that persons submitting expressions of interest will likely be required to submit the following:

  • Constituting documents of the business (e.g. Articles of Incorporation).
  • A schematic diagram outlining the ownership structure of the business and the individuals and entities involved.
  • Documents evidencing the financial history of the business, including financial statements, tax returns and tax assessments.
  • Details of shareholders, including names, addresses and shareholdings.
  • Personal disclosure documents for shareholders, officers, and directors.

When will the Government of Ontario allow more cannabis stores to open beyond the initial twenty-five stores?

It is unclear at this time. It is expected that the answer to this question will depend, at least in part, on whether supply of recreational cannabis is increased to meet consumer demand.

Are municipalities still able to opt out of having retail cannabis stores?

Yes, municipalities still have until January 22, 2019, to opt out of having retail cannabis stores in their community. As of December 20, 2018, a number of municipalities have already exercised this option, namely Markham, Mississauga, Milton, and Pickering, and the matter is under active consideration in several other jurisdictions. The AGCO maintains an ongoing list of municipalities that have opted out of retail cannabis stores.

It is clear that many questions remain regarding the Government of Ontario's new approach to recreational cannabis retail licensing. Interested persons may monitor the AGCO's website for current information over the coming weeks. Fasken is closely watching developments and will continue to provide updates on retail cannabis licensing and the application process in the lead-up to the opening of cannabis retail stores on April 1, 2019.

Footnotes

1 Refer to our Bulletin New Cannabis Regulations Provide Guidance on Retail Cannabis Stores in Ontario.

2 The initial approach did not include a cap on the number of licences to be issued. This approach appeared to better align with section 3(7) of the Cannabis Licence Act which provides that the "Register shall consider every application for a retail operator licence, and shall (a) issue the retail operator licence, if the applicant has met the application requirements, is not ineligible to be issued a retail operator licence and has paid the required fee [...]" [emphasis added].

3 As noted above, the AGCO will publish the results of the lottery within 24 hours of the draw on January 11, 2019.

4 Refer to the Regulation for further examples of the municipalities located in each region.

5 Assuming all applicable requirements have been met by the licensee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions