On April 1, Ontario’s very first cannabis retail stores will begin to open their doors, almost six months post-legalization. Until then, the Ontario Cannabis Store (OCS) website will continue to be the only legal option for purchasing cannabis in the province.
In January, the Ontario Government held a lottery to determine winning applicants that were selected to apply for a retail operator license through the Alcohol and Gaming Commission (AGCO), and establish Ontario’s first 25 cannabis stores. In addition to applying for an operator license, retailers must also apply for a retail store authorization that includes a public notice process and a pre-authorization inspection. As of today, 18 of the 25 lottery winners have officially applied to have their stores authorized.
Although licensed retailers are permitted to operate one or more (up to 75) authorized stores in Ontario, current rules require them to wait for a minimum of two years to apply again for another authorization.
Where will the stores be located?
Applications currently under review are for stores in Ajax, Brampton, Burlington, Kingston (2), London (3), Niagara Falls, Oshawa, Ottawa (3), St. Catharines, Sudbury, and Toronto (3). Some of the notable cities that decided to act on the Ontario Government’s option to opt out of allowing stores within their limits include Markham, Milton, Mississauga, Oakville, Vaughan and Whitby. Municipalities that chose to opt out can opt back in at any time—however once they are in, they may no longer opt out.
- OCS.ca will remain the only legal online source for recreational cannabis in Ontario—authorized stores will not be permitted to create an e-commerce platform to sell their products.
- Customers interested in purchasing cannabis from an authorized store will have to physically order and purchase product in store—authorized stores will not be permitted to allow customers to place pickup orders online or requests for delivery upon purchase in store.
- OCS will become the only legal supplier (wholesaler) of cannabis products for licensed retailers in Ontario.
- Mandatory training for all retail license holders, managers and employees will be required—the CanSell certificate can be acquired by taking an online course and exam at a cost of $49.99.
- Authorized stores will be permitted to sell accessories that meet the requirements of a federally defined cannabis accessory—authorized retail stores will not be required to purchase their accessories through the OCS.
What about licensed producers?
As of today, licensed producers (LPs) and their affiliates are ineligible to apply for a retail operator license or a retail store authorization. Also, corporations applying for a retail operator license are deemed ineligible if more than 9.9% of the entity is owned or controlled, directly or indirectly, by one or more LPs or their affiliates. Affiliates are defined in a variety of ways, in an attempt to further stifle the involvement of LPs altogether. While the rules might seem resilient enough to withstand the influence of producers, some of the larger LPs have begun exploring possible loopholes such as licensing agreements through revenue-sharing, and brand affiliation through store names and in-store installations.
Further, there are currently no strict rules in place preventing licensed retailers from sourcing preferred brands through the OCS to stock their shelves. For the time being, however, the OCS will be prioritizing the “fair” distribution of available cannabis amongst all licensed retailers due to national supply constraints. Retailers will be subject to a monthly maximum purchase limit to ensure a reasonable amount of supply is available for all stores.
The road ahead
It is expected that part of the regulations will eventually be amended to allow LPs to open a single authorized store, as previously announced by the Ontario Government. The stores will have to be located at the same site as the producer’s production facility. It is also safe to assume that purchasing limits will be softened upon the arrival of adequate supply at the OCS.
Ultimately, demand among consumers will play a key role in the future of cannabis in Ontario, and according to the OCS, feedback and input from retailers will guide future considerations for sourcing cannabis products.
As we near the official launch date of cannabis retail in Ontario, our team of public affairs experts is available to provide insight and help guide your organization through its intricacies.