Twenty-five bidders win Ontario’s legal pot retail lottery; 100 applicants make it to wait-list

The first 25 legal cannabis retail stores to open in Ontario will be run almost entirely by individuals rather than large corporations, based on lottery results announced Friday evening.

Nearly 17,000 expressions of interest were included in the draw, conducted randomly by the Alcohol and Gaming Commission of Ontario on Friday afternoon, with roughly two-thirds coming from sole proprietorships. Twenty-five applications were selected but none of the names drawn were recognized by multiple industry insiders who saw the list and spoke to The Globe and Mail.

The first 100 applicants selected for wait-lists across Ontario’s five regions were also posted to the AGCO website on Friday, although the province has said no more cannabis retail storefronts will be allowed to open until December, 2019, at the earliest.

Licensed cannabis producers were excluded from the lottery and the province has imposed a 10 per cent ownership limit on marijuana growers’ stakes in pot retailers. However, any connections between the 25 successful bids for cannabis retail licences and Canada’s largest cannabis companies were not immediately clear Friday, as only names and application numbers were posted to the regulator’s website.

Winners now have five business days to submit at least $6,000 in licensing fees and provide a $50,000 letter of credit to the AGCO. Failure to open for business on April 1 will result in fines that start at $12,500 and rise to a total of $50,000 if marijuana sales have still not commenced by April 30.

Ontario had originally planned to open 150 government-owned cannabis stores by 2020, with 40 scheduled to be in operation when recreational pot became legal on Oct. 17. But the Progressive Conservative government cancelled the roll out of those stores after taking power from the Liberals last spring, pledging instead a private retail model.

Upwards of 1,000 private retail locations were initially expected by industry observers to open as the government had not set a cap on retailers. Aspiring retailers argued that was a small number when compared to the 2,332 retail outlets selling alcoholic beverages across Ontario as of April, 2018, according to the Liquor Control Board of Ontario’s latest annual report.

Those plans changed when evidence of a nationwide cannabis supply shortage began to appear almost immediately after legalization. Alberta, for example, had received just one-fifth of the cannabis it expected to have available for sale as of Oct. 17 and was forced to temporarily stop issuing retail permits in late November as a result.

On Dec. 13, three days before the AGCO was due to begin accepting applications, Ontario’s Attorney-General and Finance Minister jointly announced the province would be taking a “phased approach” to issuing cannabis retail permits, calling the initial 25-store limit necessary to ensure stores can open on April 1, “and stay open.”

Nearly half of Ontario’s first 25 stores will be located in the Greater Toronto Area, with five licences set aside for the city itself and another six for its surrounding cities. Five cannabis stores will be spread across the eastern region that includes Peterborough and Ottawa and seven will service the region west from Hamilton to the U.S. border.

The remaining two cannabis retail licences will be for stores in Northern Ontario. As cities with less than 50,000 residents were excluded from the first phase of licensing, only North Bay, Sudbury, Sault Ste. Marie and Thunder Bay are large enough to host one of those stores.