The launch of the next wave of cannabis stores set to open in Ontario this October will be delayed after a provincial judge suspended the province’s regulator from issuing any new pot shop licences for two weeks.
Justice David Corbett said he will rule on Sept. 25 whether 11 disqualified cannabis retail lottery winners should resume the application process for a coveted pot shop licence in Ontario or let people on a waiting list take their place.
In an effort to avoid complicating the tangled nature of the lottery winner and waiting list process, all licences will be on hold until he can make a final ruling, the judge ruled.
“After hearing [all arguments], everything has to be stayed,” said Justice David Corbett during a hearing Thursday at the Ontario Superior Court.
Lawyers representing some of the applicants previously on a waiting list and now in line to apply for a licence argued to stay the entire application process to "ensure the integrity of the process."
AGCO spokesperson Ray Kuhnert confirmed via email the lottery process will be paused pending the judge’s decision.
The disqualified applicants’ main argument centres on whether they breached a rule that they needed to provide a $50,000 letter of credit within five days of being notified that they had won one of the 42 spots to apply for a pot shop licence.
“The best way to deal with this ... is to place this process on hold to make sure we know where everyone stands,” argued Lawrence Gridin, a lawyer with Brauti Thorning representing the 11 disqualified applicants.
Ontario held a second lottery to issue another 42 cannabis store licences last month as part of the province’s plan to have 75 pot shops open by the end of the year. On Aug. 30, the AGCO said 12 of the lottery winners were disqualified for not providing required documents by the regulator’s deadline. One other applicant withdrew its application, the AGCO said.
Thursday’s court ruling could add more delays to what has already been a difficult process to open legal cannabis retail outlets.
Sales of recreational cannabis in Canada’s most populous province have had a slow start since legalization last October due to a lack of available bricks-and-mortar retail outlets, supply shortages, and other supply chain issues.
Several cannabis producers — including Aurora Cannabis after the company reported sales that missed analyst expectations — have cited the lack of retail opportunities across Canada as the main reason behind weaker-than-expected revenues.
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