Lotto things have to go right to open Ontario pot shop
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.