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Three years after the Ontario government threw open the doors to retail pot shops and sparked a boom that blanketed many parts of the province with cannabis retailers, January marked the first month not a single new store opened its doors to the public.

It’s the latest sign that a reckoning may be coming to an industry where expectations outpaced the market for legal marijuana.

In January, 2020, the Ontario government created an open licensing system for pot stores to replace the controversial lottery that existed before. That set off a flurry of store openings. The pace of expansion peaked in July, 2021, when 110 new stores opened, then slowed dramatically last year, according to Alcohol and Gaming Commission of Ontario figures.

As of last month, Ontario had 1,600 cannabis stores in operation.

Observers have long expected a shakeout, citing a glut in some markets that has helped push down prices for legal marijuana products and hurt margins. Yet while more than 110 pot shops shut their doors last year, the pace of closings has also dropped off.

Fears about market saturation have not been enough to deter new entrants. As of last week, more than a dozen applications for new cannabis store licenses in Ontario were at the public review stage.

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