Government of Ontario Announces 50 New Cannabis Retail Stores
On July 3, 2019, the government of Ontario announced plans to open 50 new cannabis retail stores across Ontario. The Alcohol and Gaming Commission of Ontario (AGCO) will hold a lottery on August 20, 2019 for 42 of the locations. The remaining eight stores will be allocated on a first come, first served basis to First Nations Reserves that have received Band Council approval in a process separate from the lottery.
The announcement comes after the Ontario Minister of Finance, Vic Fedeli, presented the 2019/20 provincial budget last April offering an insight into a pre-qualification process that would allow the government of Ontario to take a “market-oriented approach, which will allow private-sector business to build a safe and convenient retail system to combat the illegal market.”
The pre-qualification criteria set in the new iteration of the lottery includes three new requirements that were not part of the first lottery:
- Proof of financial capacity in the form of a letter from a bank or credit union indicating that the applicant has the capacity to obtain $250,000 in cash or cash equivalents
- Proof that, if selected, an applicant will be able to provide a standby letter of credit from a bank or credit union in the amount of $50,000
- Proof of having secured suitable retail space meeting all AGCO requirements that will be available for the operation of a cannabis retail location as of October 2019
Interested parties and their affiliates will be able to submit up to one (1) Expression of Interest (EOI) per region to enter the lottery process between August 7th 12:01 AM EDT and August 9th 8:00 PM EDT. Each EOI will have a non-refundable $75 fee. The 42 stores have been allocated per region as follows:
- East Region: 7 stores
- GTA Region: 6 stores
- Toronto Region: 13 stores
- West Region: 11 stores
- North Region: 5 stores, one (1) in each of Kenora, North Bay, Sault Ste. Marie, Thunder Bay and Timmins
For the North region, interested applicants will only be able to submit an EOI for one of the five cities listed above.
The AGCO has provided further information on parties that will be ineligible to submit EOI for the lottery process which will include current holders of an Ontario Retail Store Authorization (RSA), holders of a cultivation, processing or nursery license issued by Health Canada under the Cannabis Act, and those who are applying for one of the eight locations on a First Nations reserve. Before conducting the lottery, the AGCO will screen all applicants to ensure compliance with all regulatory and lottery rules and requirements and will disqualify ineligible applicants.
After the draw on August 20th, the AGCO will notify selected applicants (Aug. 21-28) who will have five (5) days to submit the appropriate applications and forms including:
- $50,000 standby letter of credit
- Lease, sublease or proof of ownership of selected retail location
- A Retail Operator License (ROL) application and its associated $6,000 fee
- A Retail Store Authorization (RSA) application and its associated $4,000 fee
The AGCO has indicated they will draw the standby letter of credit in full for selected applicants disqualified from the application process if the registrar determines that the applicant has not met the requirements of the regulations or the lottery rules. If a selected applicant is disqualified, a waitlisted applicant will move to the selected list and will be notified of their eligibility to submit the appropriate applications and documents to enter the application process.
These 50 new stores will add to the existing 25 stores allocated throughout Ontario in the first lottery (of which 22 have received Retail Store Authorizations to date), with the AGCO intending for the new stores to be operating starting in October as they become ready. Access to legal cannabis remains an important aspect of the legalization of cannabis and we expect that additional store allocations will open in 2020 as the supply of cannabis stabilizes.
CCI has navigated both the EOI/lottery and ROL/RSA application processes. Brampton lottery winner Clint Seukeran worked with our CCI Experts on his retail application and he successfully opened his retail store on April 1, 2019 in accordance with first round lottery rules.
If you are interested in submitting your EOI, or require Business Planning for the financial considerations required, contact us to see how we can help you be successful!