Canada: Changes To Cannabis Retail Licensing Announced In Ontario

Last Updated: December 21 2018
Article by Savvas Kotsopoulos

The landscape of cannabis retail regulation in Ontario is evolving on a daily basis. As new standards continue to emerge in this field, it is essential that those involved in the retail, real estate, and cannabis industries stay informed of any significant adjustments. Below, please find some of the latest changes to cannabis retail licensing in Ontario.

The Applicant Licensing Lottery

On December 13, 2018, the Government of Ontario announced changes to the allocation of cannabis retail licensing.

Given the shortage of cannabis supply from federal producers, the Ontario Government introduced a new approach under which it will allow cannabis retail stores to open in "phases". In the initial phase, the government has allowed the Alcohol and Gaming Commission of Ontario ("AGCO") to license up to 25 stores so operators can open for business on April 1, 2019 and stay open for business.

To ensure a "fair and transparent process," AGCO announced that it will implement a lottery system to determine who is eligible for the initial licenses. AGCO will not begin accepting applications starting on December 17, 2018, as was initially indicated. Instead, from January 7, 2019 to January 9, 2019, any interested parties will be allowed to submit an "expression of interest form" online. These entries will be put into a lottery pool for a draw.

The draw will be held on January 11, 2019 with the results to be posted on AGCO's website within 24 hours. The 25 stores chosen will be divided between five regions in Ontario – North Region, East Region, West Region, Toronto Region and the GTA Region – as more particularly defined under Ontario Regulation 497/18.

As per Ontario Regulation 497/18, two retail stores will be situated in the North Region, five in the East Region, seven in the West Region, five in Toronto Region and six in the GTA Region.

The lottery process will be overseen by a third-party fairness monitor to ensure equality and transparency. Once a monitor has been approved, the rules for the lottery will be posted on AGCO's website.

The Government of Ontario has indicated that the lottery is going to be a "temporary model" for issuing private retail licenses until the Federal Government is able to provide a reliable cannabis supply.

Other Material Items Concerning the Registrar's Standards for Cannabis Retail Stores

On December 14, 2018, AGCO conducted a seminar detailing the application of the newly formed Registrar's Standards for Cannabis Retail Stores – which are available on AGCO's website. The Registrar's Standards provide practical guidance on how the provincial Cannabis Licence Act (2018, S.O. 2018, c.12, Sched. 2) and Ontario Regulation 468/18 should be applied. Some relevant notes from AGCO's seminar on the Registrar's Standards include:

  • The Standards provide details regarding physical store requirements. Notably, cannabis retail stores must: have a secure high-resolution surveillance system in place at all times; store all cannabis securely; ensure that cannabis and accessories are not visible from the exterior of the premises; and ensure all points of access to the premises are secure and protected against unauthorized access.
  • The Standards outline restrictions on the advertising and promotion of cannabis and cannabis accessories. More specifically, the Standards provide that advertising may not, among other things: detail cannabis pricing and promotions; associate cannabis with medicine; present cannabis in a manner that associates it with a positive or negative emotion; or present cannabis in a way that might appeal to young persons.
  • The Standards dictate that Retail Operators must exercise oversight of their store by ensuring that all employees act in accordance with the law and demonstrate honesty and integrity. This requires that Retail Operators must, at a minimum, obtain criminal background checks from employees, ensure employees understand applicable laws, regulations, standards and policies and ensure employees are given adequate training prior to their first scheduled shift.
  • The Standards provide various clerical requirements for Retail Operators. Notably, a retail store's operating name must be the same as the name set out on the retail store authorization, and a copy of the Retail Manager Licence must be kept at the store at all times. A Retail Operator must also report specific changes to corporate structures to the Registrar as they occur.
  • The Standards set out robust record-keeping requirements, which state that retailers must maintain, among other things, employee records, records for all cannabis in the authorized store, all purchased cannabis and any cannabis that has been destroyed.

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.

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Savvas Kotsopoulos
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