Apr 11, 2019
Ontario to vet future pot shop licence applicants in bid to combat black market
The Ontario government plans to introduce new measures to vet applicants for future legal cannabis stores when it is ready to start awarding new licences, a move it hopes will set up better operators to help eliminate the black market.
Ontario will collaborate with the Alcohol and Gaming Commission of Ontario, the province's cannabis regulator, in developing a process to pre-qualify operators but stopped short of scrapping the lottery system it used before to issue licences to private retailers, the government said in the release of its fiscal budget on Thursday.
Those new measures may include a payment of a fee or obtaining a standing letter of credit, financial information -- including information about a retailer's corporate structure and affiliates -- criminal background checks and information confirming lease or ownership interests in potential store locations.
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. Due to the slow roll-out of legal cannabis stores and limiting sales to online, Ontario only spent $181 million on cannabis last year, BDS said.
Ontario capped the amount of pot retail shops to only 25 across the province, although roughly half have opened to lengthy line-ups since April 1, when they were permitted to open their doors. Those licences were issued through a random lottery where more than 16,000 people paid $75 to have an equal chance of being awarded the ability to open a pot store in the province.
The proposed process to vet cannabis retail applicants is likely to be applauded by critics of the previous lottery system, who blasted an outcome where many winners were found to have little-to-no retail experience, leading some to partner with established cannabis retailers under side agreements valued in the millions of dollars.
Queen's Park pulled back late last year from plans to award as much as 75 pot shop licences to retailers after determining there wasn't enough cannabis supply in the country to meet consumer demand.
Prior to April 1, the only available outlet to purchase legal marijuana in Ontario was online through the provincially-owned Ontario Cannabis Store, which is also the province's wholesale supplier.
The Ontario government hasn't determined a date for when it plans to issue additional licences. As it stands, Ontario plans to keep the 25-store cap in place until mid-December, according to government legislation tabled earlier this year.
"We have taken a responsible approach by opening stores that we know we have the product for, and we know we have enough product for just 25 stores," said Vic Fedeli, Ontario's minister of finance, during a press conference Thursday.
The government stated in its budget it plans to issue additional retail store authorizations when it determined the federal government "provided for enough reliable supply" but hasn't specified the threshold it believes needs to be met to go forward with new cannabis stores.
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