Ending Ontario’s cannabis retail limbo

There was life before the lottery for prospective cannabis retailers in Ontario.

To meet the government’s licensing criteria ahead of the original application deadline last year, serious businesses were required to make substantial investments, including in real estate, company infrastructure and key personnel.

As a result, carrying costs are now the reality for many of those most prepared to operate cannabis stores in the province. And yet the number of retailers opening over the next three years will likely fall far short of the anticipated 1,500-store mark forecasted for a mature market.

While those of us in the cannabis industry understand that a product shortage is the primary driver for limiting retail licensing in Ontario, there is a way forward that would mitigate both supply and investment challenges: Reopen the application process for prospective operators with leases in place — with the caveat that stores would not be licensed to open until future dates to be determined by the province.

This would give the Alcohol and Gaming Commission of Ontario vital detail on who potential retailers might be, how many there are and where they plan to operate. It would also allow for flexibility to open stores sooner if supply issues are resolved.

For small- and mediumsized cannabis entrepreneurs, retailers and landlords, meanwhile, this approach promises muchneeded certainty, as well as a clear window for engagement with opt-in municipalities.

Applicants would need to establish their capacity to work within the constraints of the current supply shortage as they build out their businesses in accordance with the law. But the sector has reached a stage of development where there is now sufficient data to guide decision-making. Moreover, the Ontario Cannabis Store will soon distribute cannabis to the lottery winners and will be better positioned to engage with prospective retailers.

Well-organized businesses, in turn, will be able to time the opening of their stores to coincide with adequate supply. And clarity on the retail road map will be particularly helpful in terms of planning for municipalities who have opted-in.

Though targeted, this approach remains accessible and equitable for all responsible and prepared applicants — whether they have 30 leases in place or three — and leverages application criteria applied in other Canadian provinces (e.g., Manitoba).

It also effectively mitigates the unintended consequences of the Ontario lottery, mainly unprepared applicants. Businesses licensed through this process will be better situated to build out their operations and create well-paying jobs for Ontarians, which is what the government originally intended.

CARRYING COSTS ARE NOW THE REALITY FOR THOSE MOST PREPARED TO OPERATE CANNABIS STORES IN THE PROVINCE.