On December 13, 2018, the Alcohol and Gaming Commission of Ontario released a statement indicating the new lottery process for licence applicants vying for private cannabis retail operator licences (“RO”) and retail store authorizations (“RSA”). The RO and RSA are two of three components required for the operation of a private cannabis retail store in Ontario (See our article Ontario Cannabis Licence Act Regulations Summarized for more information).
Prior to the announcement, the process was uncapped for the number of licences and authorizations issued to applicants.
The government released the changes to the regulations, O. Reg. 468/18, under the Cannabis Licence Act, 2018, S.O. 2018, c. 12, Sched 2, governing the licence application process on December 14, 2018.
The changes to the regulation confirm that:
- the licensing process will proceed in phases;
- in the first phase, there will be a maximum of 25 RSAs issued; and
- those who may apply for licences and authorizations will be chosen by random lottery by Region:
There will still be an ‘ultimate’ cap of 75 RSAs issued to any one holder, including affiliates.
How to apply to the cannabis lottery system:
- applicants will be required to submit written ‘expressions of interest’ between January 7 and 9, 2019;
- the lottery is to be monitored by a third party which the AGCO will retain to oversee the random selection of applicants by Region.
Restrictions for applicants in the lottery system:
- In the first phase, and until the 25 RSA cap is changed, the AGCO will not issue RSAs to
- persons who already hold an RSA,
- licensed producers or affiliates, or
- in respect of a store where the population of the city is less than 50,000;
- Applicants must receive confirmation from the AGCO that they may apply for an RO;
- Applicants may submit an expression of interest for more than one Region, however applicants may not submit an expression of interest:
- for a Region where they have already submitted an expression of interest; and
- for a Region where an affiliate has already submitted an expression of interest.
- In other words, a person and their affiliate may submit multiple expressions of interest each, but those expressions of interest cannot overlap by Region. Example: Affiliate A and Affiliate B may submit together up to 5 expressions of interest covering all Regions. Affiliate A and Affiliate B may not both submit expressions of interest for Toronto. Violations of these restrictions may lead to the inability to apply for an RO for both affiliates.
- Applicants will only be issued an RSA identified by their expression of interest.
It is still unclear whether the Ontario model will follow the lottery system of other provinces such as Saskatchewan where, following the lottery phase, the applicants are assessed based on various factors including finances, character, and supply control.
Other details on the application process that are unclear include whether the AGCO will draw more than 25 submissions in case one of the 25 drawn ultimately fails to procure the licenses and authorizations. The wording of the regulation only suggests that the AGCO will cap the issuable RSAs at 25.
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