Lotto things have to go right to open On­tario pot shop

The Observer (Sarnia) - - NEWS - DALE CAR­RUTHERS

The odds are bet­ter than winning the lot­tery jack­pot, but they’re still not great.

But slim chances haven’t stopped an army of would-be cannabis en­trepreneurs, some with se­ri­ous money al­ready spent, from flood­ing On­tario’s mar­i­juana reg­u­la­tor with thou­sands of sub­mis­sions for a chance to open one of the prov­ince’s first 25 pot shops in April.

The del­uge of last-minute in­ter­est was so strong, it crashed the web­site of the Al­co­hol and Gam­ing Com­mis­sion of On­tario, the agency reg­u­lat­ing cannabis re­tail­ing, dur­ing the three-day ap­pli­ca­tion pe­riod this week.

Win­ners of Fri­day’s muchan­tic­i­pated draw will be an­nounced within 24 hours.

But the win­ners — peo­ple or com­pa­nies — will have to move quickly to show the AGCO they’re se­ri­ous about open­ing a pot shop by April 1.

By month’s end, they’ll have to pay a $6,000 li­cence ap­pli­ca­tion fee and ob­tain a $50,000 line of credit. Re­tail­ers that fail to open by April 1 will be fined $12,500, while those still not in busi­ness at the end of that month get dinged $50,000.

“There’s a lot of things that have to hap­pen pretty quickly,” said Trina Fraser, an Ot­tawa-based lawyer who ad­vises the cannabis in­dus­try.

The 25 li­cences are di­vided among five re­gions. Seven li­cences go to re­tail­ers in the west re­gion, which stretches from Windsor to Water­loo to Ni­a­gara and in­cludes London.

The com­mis­sion isn’t re­leas­ing a fi­nal tally of the expressions of in­ter­est it re­ceived un­til Saturday, when a de­tailed break­down will be pub­lished, in­clud­ing a wait­ing list for each re­gion, a spokesper­son said Thursday.

But in­dus­try in­sid­ers es­ti­mate thou­sands of sub­mis­sions were filed be­tween 12:01 a.m. Mon­day, when the lot­tery opened, and 1 p.m. Thursday, when its closed.

One news re­port put the to­tal at more than 6,000 ap­pli­cants.

Ad­ding to the un­cer­tainty, some mu­nic­i­pal­i­ties still haven’t de­cided whether they’ll al­low cannabis stores in their com­mu­ni­ties ahead of the Jan. 22 dead­line to alert the com­mis­sion.

“There’s a lot of mov­ing parts, cou­pled with the fact that you have to ac­tu­ally get your store built out and ready to go,” Fraser said.

Some as­pir­ing re­tail­ers al­ready have signed leases, started ren­o­vat­ing spa­ces to meet se­cu­rity re­quire­ments and be­gun hir­ing staff.

“The win­ners re­ally have to be pre­pared to take some busi­ness risk, be­cause they’re just go­ing to have to go,” Fraser said.

Koby Smutylo, chief op­er­a­tor of London-based cannabis grower In­diva, knows those risks all too well. His com­pany went on a lease-sign­ing spree in a bid to open a string of dis­pen­saries across On­tario af­ter the Progressive Con­ser­va­tive govern­ment nixed the pre­vi­ous Lib­eral govern­ment’s planned mo­nop­oly on store­front pot sales and vowed to of­fer an un­lim­ited num­ber of re­tail li­cences.

But reg­u­la­tions the Tories in­tro­duced in De­cem­ber lim­ited li­censed pro­duc­ers like In­diva to just a sin­gle store at­tached to their pro­duc­tion site.

In­diva part­nered with a newly cre­ated com­pany to get around that rule, but its re­tail dream was again dashed when busi­nesses af­fil­i­ated with li­censed mar­i­juana pro­duc­ers were ex­cluded from this week’s lot­tery.

Now, Smutylo is of­fer­ing lo­ca­tions in London, Guelph, Toronto and Ot­tawa where the setup ground­work al­ready has been laid.

“What we’ll do is fa­cil­i­tate these win­ners’ abil­ity to be suc­cess­ful (and) open within the time pe­riod,” Smutylo said.

“I know first-hand how much work (is in­volved) and how long it will take, be­cause we went through it be­fore the rules changed,” he said of set­ting up a re­tail space.

Some crit­ics doubt whether any brick-and-mor­tar pot shops will open April 1, but Fraser says it’s pos­si­ble.

“It de­pends on who wins,” the lot­tery, she said, ad­ding some com­pa­nies, like Fire and Flower in Toronto, have been prepar­ing for a long time.

“If op­er­a­tors like that win, I be­lieve they’ll fig­ure out a way to get it done,” she said.

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