Cannabis Professional’s daily roundup of industry news. View archive here.
Two items of note in the early hours of this Tuesday morning in marijuana: Ontario is selecting 42 pot store licence applicants in its second cannabis retail lottery - though we likely won’t learn who won until Wednesday - while Alberta considers hiking taxes on the 20 licenced cannabis cultivation facilities active in the province.
– Jameson Berkow
Ontario to announce results of second cannabis retail lottery
Anyone who submitted an expression of interest to the second Ontario cannabis retail lottery can expect to spend much of their Tuesday obsessively refreshing their email inbox.
The Alcohol and Gaming Commission of Ontario (AGCO) will be contacting 42 winners of the right to apply for a cannabis retail store licence in one of five regions across the province. Exact timing of the draw was not disclosed, though AGCO spokesperson Ray Kahnert told Cannabis Professional it would still occur on Tuesday but that the results will not be released publicly until Wednesday.
The lottery itself will utilize software developed in-house by the AGCO’s technical and laboratory services branch and certified by Gaming Laboratories International. KPMG will also oversee Tuesday’s draw as a third-party fairness monitor.
Individual winners can expect to be contacted directly by the AGCO, potentially before the results are broadly released, as they will need to formally submit their application, pay at least $6,000 in fees and provide a $50,000 letter of credit no later than August 28.
After the first lottery in early 2019 resulted in 25 winners with virtually no relevant experience being given the right to apply for Ontario’s only brick-and-mortar pot stores, the province introduced more requirements for the second lottery. Applicants had to prove they had access to a suitable retail space as well as at least $250,000 in working capital in order to qualify for the second lottery, compared to the first lottery requiring participants only to prove Ontario residence and pay a $60 fee.
Several lawyers contacted by Cannabis Pro said those added requirements reduced the total pool of applicants from over 17,000 in the first lottery to no more than 2,000 this time around. Given the number of licences up for grabs is also nearly double the first lottery, some established retailers have signed deals with lottery applicants in advance of the draw.
After the first lottery, those established retailers already selling legal cannabis elsewhere in Canada tracked down individual winners and launched multimillion-dollar bidding wars over the right to brand their stores. Ahead of the second lottery, because of the additional requirements, many aspiring applicants found they were unable to get the financial documentation ahead of the Aug 8 deadline.
In addition to posting the full names of winners as the AGCO did with results from the first lottery, Mr. Kahnert said the address of the winner’s proposed store will be published as well.
– Jameson Berkow
Alberta mulls tax hikes for cannabis producers
Growing cannabis in Alberta is currently taxed as any other agricultural business in the prairie province, but that could change as soon as next month.
Cultivation facilities specifically are taxed at low rates in line with other crop production while processing, packaging and other finishing facilities are taxed as light industrial businesses in the province. The Alberta Urban Municipalities Association passed a resolution in late 2018 calling on the provincial government to make changes that will require cannabis facilities to be taxed at higher rates and it appears policymakers are starting to listen.
“Alberta taxpayers shouldn’t be responsible if these facilities are being assessed at an inappropriate rate,” Alberta municipal affairs minister Kaycee Madu told the Edmonton Journal earlier this week, saying he plans to raise the subject during a cabinet meeting in September and “will likely propose recommendations for change.”
- Jameson Berkow