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Medical marijuana plants is pictured in the grow room January 21, 2016 at Tweed Inc. in Smith Falls. Ontario is planning to open dozens of government-run stores across the province to sell cannabis and will allow for the drug’s online sale after the federal government legalizes its recreational use.

Dave Chan/The Globe and Mail

Ontario is planning to open dozens of government-run stores across the province to sell cannabis and will allow for the drug's online sale after the federal government legalizes its recreational use.

The Globe and Mail has learned through industry and government sources that Ontario's Liberal government will allow the sale of marijuana at 40 storefronts across the province by July that will be run by a government-owned entity that will also control online sales, however more retail locations will be added over time. The government hopes to have 80 locations by the following year and up to 150 stories by 2020.

The locations of the stores haven't been determined yet, but will be finalized after municipalities are consulted.

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High stakes: A Canadian investor's guide to marijuana

Ontario Attorney-General Yasir Naqvi will unveil the province's retail distribution model for marijuana on Friday morning and will be joined by the province's finance and health ministers, according to his office.

Ontario will be the first province to outline how it plans to tackle the contentious issue of distribution.

Late last year, Mr. Naqvi said his province was most concerned with ensuring cannabis is consumed in a socially responsible way.

"This is a very complex issue," Mr. Naqvi said in December when asked about where pot will be sold. "This is the end of prohibition of our time. We have to get it right."

The province's plan will focus on the price of the drug according to sources, specifically not charging consumers too much. A lower price will be aimed at concerns that heavy taxes could drive Ontarians to the black market. Most of the rules establishing how stores are laid out and how they can be operated will be set by coming federal legislation.

Despite calls from many premiers for more guidance on the file, the federal government has committed to legalizing the recreational use of the drug by July 1.

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But, to date, Ottawa has indicated that it will leave the contentious issues of regulating the wholesale distribution and retailing of cannabis up to the provinces and territories.

Provinces and territories will also have a significant say in how cannabis revenues are spent. A study by the Parliamentary Budget Officer released late last year stated about 60 per cent of marijuana taxation should flow to the provinces.

The first stores in Ontario will be limited in what they can sell, sources say, with the government ruling out edible snacks and drinks containing the drug.

While Premier Kathleen Wynne had suggested in the past that the LCBO might be the best option for the distribution of marijuana, in recent months she had stepped back from those remarks, stating only that the government should have a strong hand in marijuana retail. Ms. Wynne had drawn the ire of public health and addiction experts when she floated the idea of selling cannabis in government liquor stores, which critics said could lead many more people to mix cannabis and alcohol before getting behind the wheel.

A number of premiers, notably Manitoba's Brian Pallister, have expressed concerns about how the federal legalization of marijuana could lead to more cases of unsafe driving. Mr. Pallister has called on his fellow premiers to call for the delay of legalization to little success.

While federal legislation would allow 18-year-olds to buy marijuana, Ms. Wynne said over the summer that the age of sale for the drug in Ontario would be the same as alcohol at 19.

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Some of Canada's largest pharmacy chains have also indicated they are interested and qualified to distribute cannabis once it's legalized. It's unclear whether the province will allow any private sales of marijuana.

Experts say choking off the black market – which is booming through online and illegal storefront sales – will be key to the long-term success of legalization.

Earlier this summer, Toronto city staff estimated roughly 60 dispensaries remained open despite a year of raids by police.

Dozens of illegal dispensaries spread east from Vancouver to Toronto after the Liberals swept to office two years ago on a promise to legalize the drug. A year ago, Toronto police raided more than 40 of the city's 100 illegal pot shops in a co-ordinated attack on the sector, which operates outside of Health Canada's mail-order system for medical cannabis.

Since then, many shops have closed while others have taken their place.

In B.C., many municipalities, led by Vancouver and Victoria, have chosen to create bylaws to regulate these pot shops – choosing to ticket rather than raid these locations and try to keep them at least 300 metres from schools and other dispensaries.

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