David George-Cosh

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A panel of three Ontario judges have pushed their decision on whether a group of disqualified cannabis store applicants should return back to the application process to next Monday. 

The ruling, which came after a two-week wait that delayed the opening of new cannabis stores in the province, came after a full day of deliberations between lawyers representing the Alcohol and Gaming Commission of Ontario, 11 disqualified candidates and another 11 people on a waiting list. 

The ruling will be released Sept. 30, no later than 5 p.m. ET, a panel of judges at the Ontario Divisional Court in Toronto said. The presiding three-member judicial panel consisted of Justice David Corbett, Justice Katherine Swinton and Justice Robbie Gordon. 

Lawyers representing the 11 disqualified applicants argued that their clients didn’t receive fair process when they were notified that they won the lottery. Each of the disqualified candidates stated in court filings that notification from the Alcohol and Gaming Commission of Ontario (AGCO) was received at least one day after a date-stamped notice was submitted to them via email, couriered letter or through a phone call. 

“They had a golden ticket and it was taken away from them and that golden ticket was given to someone else who wasn’t entitled to it,” said attorney Michael Lacy during the hearing. 

Ray Kuhnert, a spokesperson with the AGCO, told BNN Bloomberg in an email that the provincial regulator will not review or proceed further with any cannabis store applications until the judges release their decision.  

“The AGCO will continue to comply with all court orders and will make no further comment on any active proceedings,” Kuhnert said.

Successful lottery winners were required 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 an Ontario pot shop licence.

Lawyers representing the AGCO said in court that it was “inconceivable” that the applicants didn’t receive adequate notification, adding that if they weren’t able to receive an email or pick up a couriered letter, their names were publicly posted on the regulators’ website. 

Two weeks ago, Justice Corbett declared a stay for the entire cannabis licence process in order to avoid complicating the entire list of lottery winners and individuals on the waiting list. 

The stay has effectively led to a delay for any new cannabis store to open in Ontario by Oct. 1, the stated goal of the province’s second lottery process. 

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 11 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.

The delay further exasperated the challenge Canadian cannabis producers face in selling their legal products in the country’s most populous province since legalization last October. 

A lack of available bricks-and-mortar retail outlets, supply shortages, and other supply chain issues have resulted in soft sales volumes for some major cannabis players in Ontario. 

Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formation of the entirely new – and controversial – Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.