David George-Cosh

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Ontario will issue 50 new cannabis retail licences this year, a move aimed at expanding legal pot sales in the country's largest marijuana market while helping to stamp out the illicit industry, the provincial government announced Wednesday. 

The province plans to issue 42 new licences for private-sector retailers who successfully pre-qualify to be part of a new lottery system later this month. The remaining eight licences will be allocated for outlets in First Nations communities. 

“Our government is continuing to take a responsible approach to opening cannabis stores across Ontario, allowing private sector businesses to build a safe and convenient retail system to combat the illegal market,” said Ontario Finance Minister Rod Phillips in a statement. “With marginal improvements in national supply, we are proceeding to issue up to 50 new cannabis store licences.”

There are currently 22 cannabis stores operating in Ontario with three retailers still awaiting final approval to obtain their licences, according to the Alcohol and Gaming Commission of Ontario (AGCO). 

Since Ontario pot shops opened in April, cannabis sales in the province have grown to $19.6 million in the month, up from $7.6 million in the prior month, according to Statistics Canada.

Ontario is projected to lead the country in legal pot sales with US$1.8 billion spent by 2024, according to a recent report by BDS Analytics.

The province says it will continue to employ a "phased-in" approach in issuing cannabis retail licences given a persistent and ongoing supply shortage of legal pot, according to the province's attorney-general Doug Downey. A government official told BNN Bloomberg that Ontario remains committed to eventually going to an open cannabis retail market once supply issues are solved. 

As indicated in the provincial government's fiscal budget, each prospective cannabis retailer will be vetted to ensure they are equipped to open their doors. 

From Aug. 7 to 9, interested participants will need to submit to the AGCO a letter of secured retail space, a bank letter confirming the applicant has access to $250,000 in capital and another statement confirming the ability to obtain a $50,000 letter of credit, the government official said. The AGCO will vet applicants between Aug. 10 to 19 and conduct a lottery on Aug. 20 to award the 42 new licences. 

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Licensed retail stores will also ​be allowed to open in any jurisdiction in Ontario regardless of population size, as long as the municipality did not opt-out of allowing retail cannabis stores to open in their respective area. Previously, stores could only open in municipalities with populations above 50,000. 

Meanwhile, Ontario will award eight cannabis retail licences in First Nations communities in a separate, first-come-first-served basis beginning this month. Several First Nations communities, notably in Alderville and Tyendinaga, are home to dozens of cannabis stores operating without a provincial retail licence and maintain a robust business selling non-licensed cannabis. 

Of the 42 soon-to-be-awarded licences, Toronto will be granted 13 new shops, while the Greater Toronto Area will be allowed six new stores. In eastern Ontario, seven licences will be issued, while western Ontario will receive 11 new licences. In northern Ontario, one licence will be allocated to each of the following cities: Kenora, North Bay, Sault Ste. Marie, Thunder Bay and Timmins.

The vetting process is likely to be applauded by critics of the previous lottery system, who raised concerns over how some winners were found to have little-to-no retail experience. This led some to partner with established cannabis players under side agreements valued in the millions of dollars.

The initial lottery drew more than 16,000 applicants who paid ​$75 to have a shot at being one of the first to open a pot store in the province.