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Ontario cannabis retailers are being given an opportunity to avoid steep financial penalties if they’re unable to open their doors to customers on April 1.

The province awarded the right to apply for 25 legal pot store permits via lottery earlier this year, with winners required to submit a $50,000 letter of credit as part of their application. Lottery rules, established by the Alcohol and Gaming Commission of Ontario (AGCO) were explicit: complete the licensing process and be ready to open by April 1 or the AGCO would take $12,500 from that account, eventually taking the full $50,000 if sales had still not commenced by April 30.

As of Thursday morning, only 10 of the 25 proposed bricks-and-mortar locations have been fully authorized to sell recreational cannabis. Despite the AGCO previously saying it planned to strictly enforce its drawdown rules, the regulator now appears to be offering a way to avoid losing thousands of dollars for not opening on time.

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“Any reason for the [AGCO] to exercise discretion to delay drawing on the letter of credit funds will be based on extraneous factors that are fully outside the control of the applicant,” the regulator said in a letter to all 25 cannabis retail lottery winners, a copy of which was obtained by Cannabis Professional. “If there are any extraneous factors that you believe the registrar should be made aware of to inform this decision, you may provide that information in writing by Monday, April 1 2019.”

AGCO spokesperson Ray Kahnert confirmed the details of the letter, adding the regulator “will only use this discretion in exceptional circumstances and if fully satisfied a store is unable to open due to factors that are not, and could not have been, in the applicant’s control.”

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