Canada: Ontario Is The First Province To Reveal Plan For Sale Of Recreational Cannabis

Last Updated: November 3 2017
Article by Barbara Miller, Christelle Gedeon and Rachel Devon

On September 8, 2017, Ontario announced its framework to govern the lawful sale and use and of recreational cannabis. This framework involves a retail distribution system of 150 stand-alone cannabis stores as well as an online ordering service to be managed and operated by a subsidiary of the LCBO. Ontario's announcement follows legislation introduced in April by the federal government to legalize recreational cannabis by July 1, 2018. The plan makes Ontario the first Canadian province to publicly announce a regulatory regime for the distribution of recreational cannabis within its borders.

Key Details of the Proposed Cannabis Regime
Ontario's proposed distribution model for the sale of recreational cannabis involves a progressive establishment of a network of retail stores, beginning with 80 stores to be opened by July 1, 2019 with the goal of opening 150 locations by the end of 2020. Overseeing the operation will be the LCBO, through a subsidiary. However, alcohol and cannabis will not be sold together. Rather, these new retail stores will be dedicated solely to the sale of cannabis. According to Ontario's Ministry of the Attorney General (the "Ministry"), the hope is to leverage the operational and institutional experience and capabilities of the LCBO and its employees and to apply similar principles and policies to the sale of cannabis.

Under the Ministry's plan, online distribution will also be made available across the province beginning in July 2018. Similar to the online sale of alcohol, online sales of cannabis will require ID checks and signatures upon delivery.

Ontario's regime, set to be enshrined in legislation being introduced this Fall, also contemplates a proposed minimum age of 19 (the same as alcohol and tobacco) for the use, purchase, and, possession of recreational cannabis. Notably, this proposed minimum age is higher than the federal minimum age under the Cannabis Act, currently set at 18 years old. Under Ontario's regime, the use of recreational cannabis will be limited to private residences; cannabis use in public places will be prohibited.

Unanswered Questions
Finance Minister Charles Sousa has provided no details about expected cannabis revenues. Decisions with respect to key matters such as pricing and taxation will be finalized at a later date, likely following the release by the federal government of the regulations intended to govern the operation of the Cannabis Act. Further, the locations of the 150 cannabis stores across the province have not yet been determined and are expected to be carefully curated in order to ensure sufficient distance from schools where children and under aged adolescents could have access to the product.

Consequences of the Regime: Dispensaries and other local operations
According to Ontario's Attorney General, Yasir Naqvi, one of the primary goals of Ontario's plan is to combat the sale of illegal and unregulated cannabis. This means that illicit cannabis dispensaries, which have been subject to police crackdowns, will continue to not be legal retailers in Ontario. In its press release, the Ministry stated that the province will pursue "a coordinated and proactive enforcement strategy, working with municipalities, local police services, the OPP and the federal government to help shut down these illegal operations." However, other than devoting additional funds to enforcement efforts, details of an enforcement strategy were not disclosed.

What does this mean for Licensed Producers?
The Cannabis Act appears to contemplate the co-existence of both the medicinal and recreational markets, and the majority of licensed producers appear to be interested in supplying, at least partially, to the recreational market. Given that the province intends to create a monopoly on the sale of cannabis, licensed producers will be faced with the prospect of negotiating with a single body, the price, quantity and quality of the product that will be available for recreational consumption. Unless the province intends on acquiring producer licenses in order to unilaterally supply the recreational market, the province will have the upper hand in such negotiations. If the LCBO is any example, the province will likely impose significant downstream obligations and potentially, discounts on products purchased from Canadian Licensed Producers.

Moreover, the limitations of selling cannabis products on a "black-out" market (similar to tobacco), places significant limitation on a licensed producer's ability to engender brand awareness and loyalty, even when they succeed in having their products sold by the provincially run cannabis retail locations. More importantly, such treatment of cannabis products may reinforce negative perceptions and stereotypes surrounding the use of cannabis by Canadians.

Early Criticism
Responses to the Ministry's proposal have been mixed. Some critics question whether the proposal will be effective in combatting the illegal market, given the limited number of retail outlets set to open across Ontario. For context, there are currently 660 LCBO stores serving communities across Ontario, whereas there will only be 150 cannabis stores serving the province. Other critics have expressed concerns about the significant costs of legalization. For example, shortly after the Ministry's announcement, the Cannabis Canada Association released a statement urging the province to permit private retail sales alongside government-controlled stores to allow for a competitive model that reduces taxpayer burden of upfront capital expenditure.

It remains to be seen whether other Canadian provinces will follow Ontario's lead in enacting a similar regime for the regulation of recreational cannabis. If other Canadian jurisdictions permit more liberal retail operations we might anticipate more 'cross border' shopping by Ontario residents, particularly if the price is lower elsewhere because of more robust competition.

About our expertise
Fasken Martineau lawyers have been at the forefront of the cannabis industry since the market opened up in 2013. Read our brochure to find out more.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions