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Ideal next steps for cannabis retail in Ontario

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Ideal next steps for cannabis retail in Ontario

If you kept up with our last blog entry you would know we didn't win the lottery...again.  If you are unfamiliar with the lottery generally, allow me to explain (if you are fully caught up with our licensing saga, skip down to What Should Happen Next?).  Around this time last year the provincial government led by Doug Ford announced that not only would Ontario allow private sale of cannabis (meaning stores like ours could finally sell cannabis products) but also that there would be no limit to the number of stores in the province.  "As many as the market could bear" was what we were told.  So we got to work creating a new brand and building a new store to AGCO standards.  Then, 3 days before we were supposed to apply in December, the government went with a "phased approach" first.  Citing "supply issues" (which have been refuted by both Health Canada and Licensed Producers) the government introduced a lottery system (not for a license, but for an invitation to apply for a license). 

The first lottery was for 25 stores, which would open by April 1, 2019 or face penalties (which many unprepared lottery winners paid).  There were a lot of issues with the first lottery, but the main one was that anyone could apply from anywhere in the world (as long as they had some luck and $75).  Additionally no reserves were included and only cities (who had opted in) with over 50,000 residents could apply.  The province was split up into "regions" (we are in the Eastern Region) and the AGCO was overwhelmed with over 59,000 entries overall.  Obviously no one was chosen based on merit, and many brands came from out of province (and country) to secure brand licensing deals with winners (like Fire & Flower, Spiritleaf and HighLife). To put this all into context, Alberta, a province that also has private sale and a population of 4 million people already has over 270 stores with 5 more being licensed every week.  Ontario has a population of 14 million and as of today only 24 stores are licensed. 

The second lottery was for 42 stores (plus 8 stores allocated to reserves on a first come, first served basis).  The difference this round was that store owners had to show a proof of a lease/ownership of a commercial space, and $300000 in the bank.  Additionally ALL municipalities of all sizes that had opted in would be able to apply.  The letters from the bank proved to be a huge barrier of entry for most store owners, and in the second round before disqualifications there were only 5000 applicants across all regions (and under 400 qualified applicants in our region).  We were lucky enough to squeeze in just in time with all requirements but became two-time losers.  Why?  There were some entrants that tried (and so far have succeeded) at gaming the system by entering hundreds of submissions for the same address.  5 out of 7 applicants chosen from our region had up to 13 entries (2/7 had only 1 entry each).  Again, nothing was chosen based on merit and the financial requirements kept many from applying (especially after some owners, like us, spent so much money preparing our spaces already). These stores are supposed to open in October.

What Should Happen Next?

Realizing they goofed, and obviously embarrassed, the Attorney Generals office has said they are going to start working with the AGCO and the OCS on moving back to the original plan of licensing more stores.  In an ideal scenario, and working from the waitlist of the most current lottery (because everyone who has applied already demonstrated they have space and financial competence), here are the steps the province would take moving forward:

1)  On a first come, first served basis, allow applicants from the last round to "declare readiness" to the AGCO:  Operators would show they not only have a lease, but also a space built and ready for inspection.  Any entrants from the last round who applied but don't have a space ready yet, would wait and apply once construction is complete.

2) From those declarations, the AGCO would start the process of approving retail operators (which means doing background checks, paying appropriate fees, etc.)

3) At the same time, the AGCO would start moving through the list and start issuing Retail Store Authorizations to the spaces that declared they were ready for inspection.  The public notice period would begin.

4) Once all approvals are met with licenses granted, the AGCO give the operators a date in the future they will be able to order cannabis from the OCS.  This step is crucial for morale among operators like us that are right now just wishing and hoping with no light at the end of the tunnel.

5) With a start date available, store owners would be able to start hiring and training additional staff to prepare for cannabis sale.  This would lead to a better-informed workforce overall.

6) Stores will be prepared to start selling cannabis with well-trained staff on their start date.

Seems pretty simple to me, but what do I know?  I have tweeted to DoFo that if we are given the opportunity to apply before the end of the year I will name the next puppy Dog Ford.

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