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HIGHLIGHTS
  1. As of Tuesday afternoon, 77 municipalities had ‘opted-out'
  2. About 2.8 million residents will only have access to cannabis via online ordering
  3. Local opposition to store locations could still complicate the roll-out of first 25 stores

Nearly one in five Ontario residents will not be able to buy legal pot from a physical storefront in their towns or cities on April 1, as dozens of jurisdictions across Canada’s most-populous province opt out of cannabis retail.

Municipalities had until 11:59 p.m. ET on Tuesday to e-mail written notification of their decisions to the Alcohol and Gaming Commission of Ontario. The AGCO will announce the final list by late Wednesday morning, but by Tuesday afternoon, 77 municipalities had formally said no to local cannabis stores.

More than 2.8 million people live in those villages, towns and cities, a Cannabis Professional analysis has found, representing nearly 20 per cent of Ontario’s total population. Prospective retailers, meanwhile, have largely held off on finalizing locations until after the provincial opt-out deadline in order to avoid signing leases in areas where they might never be allowed to open.

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Combined with the right to apply for Ontario’s first 25 pot store permits being won via lottery almost exclusively by individuals with no prior cannabis or retail industry experience, aspiring cannabis retailers now have barely two months to become experts in both. Some established retailers have been offering those lottery winners millions of dollars for branding and operational rights to their stores, despite no guarantee AGCO rules would condone those deals. Others are renting some of Canada’s most expensive retail space in hopes of Ontario moving to an open licensing process in the coming months, though the province has cautioned that is not likely to happen until December 2019 at the earliest.

It takes at least six months to set up a new retail space, commercial real estate experts estimate, with the unique requirements for cannabis stores set out in provincial regulations likely extending that timeline. Yet fines for failing to open for business on April 1st, just 68 days from the date of this publication, start at $12,500 and range up to $50,000.

Complicating matters further is the complete lack of local control over where cannabis stores can be located, which was how many of the municipalities that opted out justified their decisions. Mississauga Mayor Bonnie Crombie called that lack of local control “cause for great concern” after her city opted out and Brantford Mayor Kevin Davis said municipalities “need to show the province they need to consult with us,” after he voted against cannabis retail last week, along with a majority of his city council.

That leaves open the possibility of not-in-my-backyard-style opposition to stores, even in municipalities that opted in, once their specific locations are announced. According to an AGCO presentation from Nov. 27, retail applicants will be required to post a notice at their proposed store locations for at least 15 calendar days, with local residents allowed to submit feedback to the regulator, before the decision to issue a permit is made.

For prospective Ontario pot sellers, perhaps the only silver lining to the end of the provincial opt-in-or-out process is that the race to April 1 can now truly begin.

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