Most pot shop lot­tery win­ners are in­di­vid­u­als, not cor­po­ra­tions

Ottawa Citizen - - CITY - JACQUIE MILLER [email protected]­media.com twit­ter.com/Jac­quieAMiller

Nearly 17,000 ap­pli­cants par­tic­i­pated in the lot­tery to win the right to ap­ply for a li­cence to run one of On­tario’s first cannabis shops.

And the ma­jor­ity of the 25 lucky en­trepreneurs cho­sen in Fri­day’s draw were in­di­vid­u­als, not cor­po­ra­tions, ac­cord­ing to re­sults posted Fri­day night by the Al­co­hol and Gam­ing Cor­po­ra­tion of On­tario.

Trina Fraser, an Ot­tawa lawyer who is a key ad­viser to the cannabis in­dus­try, tweeted that she didn’t rec­og­nize any of the win­ners.

She warned that in­di­vid­u­als may have a harder time get­ting stores up and run­ning by the prov­ince’s April 1 dead­line.

A win has been widely seen as a golden ticket. The first shops to open will have a big head start in the coun­try’s largest mar­i­juana mar­ket.

The prov­ince has tem­po­rar­ily limited the num­ber of stores to 25 be­cause of a short­age of pot. Politi­cians de­cided that a lot­tery was the fairest way to de­cide who could first ap­ply for the li­cences.

The lot­tery was a blow to en­trepreneurs who already had plans to open shops un­der way. Some had signed leases and com­pleted brand­ing and store de­signs.

At least half a dozen com­pa­nies, in­clud­ing Ot­tawa’s National Ac­cess Cannabis, planned pot-shop chains or fran­chise op­er­a­tions.

Those big play­ers found them­selves at the mercy of chance, just like ev­ery­one else who paid $75 to en­ter the lot­tery. It didn’t ap­pear that any of the big play­ers won the lot­tery.

Among the 25 win­ners across On­tario, 19 are in­di­vid­ual names, in­clud­ing all five win­ners in the Toronto re­gion.

The AGCO said that 64 per cent of the 16,905 peo­ple lot­tery ap­pli­cants had been sole pro­pri­etors, while 33 per cent were cor­po­ra­tions, three per cent were part­ner­ships and one per cent were limited part­ner­ships.

Each of the 16,905 peo­ple, cor­po­ra­tions or part­ner­ships that par­tic­i­pated in the lot­tery was al­lowed to bid in as many as five re­gions. Many of the ap­pli­ca­tions made bids in sev­eral re­gions, with a to­tal of 59,069 bids sub­mit­ted.

In east On­tario, the re­gion in­clud­ing Ot­tawa, five lot­tery win­ners were drawn: Daniel Te­lio, Bran­don Long, Pat­ter­son and Lavoie, Pure Al­pha Hold­ings and Karan Somesh­war.

There were a to­tal of 11,084 lot­tery bids in the east­ern re­gion, so the odds of win­ning were small.

It was the same in other re­gions. There were 13,693 bids in Toronto, 13,453 in the Greater Toronto Area, 8,545 in the north and 12,294 in the west.

The next big ques­tion is where the shops will be lo­cated. That piece of the puzzle won’t be com­plete un­til later in Jan­uary, when the AGCO starts post­ing pro­posed lo­ca­tions for pub­lic com­ment.

Win­ners in each re­gion can choose to ap­ply for a shop li­cence in any mu­nic­i­pal­ity with a pop­u­la­tion of more than 50,000 that hasn’t “opted out” of al­low­ing cannabis shops.

Win­ners have five busi­ness days to ap­ply for the first of two li­cences.

That tim­ing is “awk­ward,” con­sid­er­ing that mu­nic­i­pal­i­ties have un­til Jan. 22 to opt out of cannabis sales, says Ed­ward Collins, a vice-pres­i­dent with Cannabis Com­pli­ance, a con­sult­ing firm that helped more than 200 clients en­ter the lot­tery.

In east­ern On­tario, for in­stance, Ot­tawa, Kingston and Peter­bor­ough have agreed to al­low cannabis shops. Other cities large enough to qual­ify for stores vote next week on whether to opt out in­clude Bar­rie, Kawartha Lakes and Belleville.

Lot­tery win­ners must pass the AGCO li­cence screen­ing, which in­cludes checks for crim­i­nal back­ground, con­nec­tions to or­ga­nized crime and fi­nances.

Open­ing a shop isn’t cheap, ei­ther. Win­ners must post $50,000 lines of credit that will be drawn down if they don’t open their shops on time by April 1. There is also a $6,000 non-re­fund­able fee for an op­er­a­tor’s li­cence, plus $4,000 for the store li­cence.

How­ever, any “mom and pop” lot­tery win­ners should have no prob­lem find­ing com­pa­nies with deep pock­ets will­ing to help. Cannabis con­sul­tants ex­pect lot­tery win­ners to be in­un­dated with of­fers of fi­nanc­ing, ser­vice agree­ments and fran­chis­ing-type deals.

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