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UPDATED: Lottery Update: Disqualifications in Ontario

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UPDATED:  Lottery Update:  Disqualifications in Ontario

Update: Justice David Corbett has put all licenses on hold until these disqualified applicants are dealt with.  He said he will rule on Sept. 25 if the 11 disqualified lottery winners should resume the application process for a licence in Ontario or let people on a waiting list take their place. There is absolutely no way stores will open October 1 unless they are already built and ready to go.

Surprise, surprise, the lottery for invitations for cannabis retail sales has failed the province again.  If you have been keeping up with the news or updates from the AGCO directly, you know that the AGCO has disqualified 25% of the applicants in the first round (meaning people on the waitlist, and ultimately the whole list, moved up a couple spots in each region).  These companies were disqualified for breaking one or more of the following rules: 

  • Rule 8: The same iAGCO account holder had submitted multiple EOI Applications
  • Rule 4: EOI Applications were made by an Applicant(s) deemed ineligible, which include:
    1. Employees and board members of the Alcohol and Gaming Commission of Ontario
    2. Employees and board members of the Ontario Cannabis Retail Corporation
    3. KPMG LLP, its partners and employees
    4. Gaming Laboratories International LLC (GLI) employees, owners, and/or board members
    5. The holder or the Affiliate of the holder of a cultivation, processing or nursery licence issued by Health Canada under the Cannabis Act (federal) and the regulations.
  • Rule 6 and/or Rule 9: Multiple EOI Applications were made by the same legal entity.
  • Further, as set out in Rule 5, at any time during the Lottery Process, if the Registrar determines that an Expression of Interest Applicant has not followed the requirements in Ontario Regulation 468/18, or the Expression of Interest Lottery Rules, that Applicant will be disqualified from the Lottery Process.  Any pending application for a Retail Operator Licence will be considered abandoned.   If a Retail Operator Licence has been issued, the Registrar will revoke the licence.

 If you want to take a deep dive into the rabbit hole of affiliations, we recommend reading this reddit entry with some impressive investigative work and analysis.  We thought the reason between the application submission and actual drawing being a couple weeks later was to give the AGCO time to go through all the disqualifications, but we were wrong.  According to the AGCO, applicants can be disqualified at any point after they make a submission.  Even if they are granted a license, if they are found to have violated terms or were dishonest in any way they can have their licenses revoked.

At a quick glance this would seem like good news for us--that people are getting disqualified and we are moving up the list, but think again: each of these stores now has the opportunity to appeal a disqualification or revocation which will draw the entire process out even longer. Considering some companies gamed the system so hard and stuffed the ballot boxes with so many applications, some applicants who were disqualified still had spots on the waitlist that were moved into chosen positions.  So this means more vetting will come as each applicant moves from the waitlist to selected list.  This also means those entities who stuffed the box and who have already been disqualified will waste more time while their hundreds of entries are vetted (and most likely eliminated).  

In our region, originally we had originally landed at spot 231.  If everyone we think is affiliated/has a conflict gets disqualified, we move up to space 81 (but it could be even lower if there are affiliates we don't know or people forged the bank documents).  Again, the issue is everyone has the opportunity to appeal a decision made by the registrar.  In fact, some of the disqualified applicants are filing a judicial review contesting their disqualification and demanding that all other AGCO reviews stop until their file is reviewed (meaning no one moves up the list).  If we have to wait for everyone ahead of us to appeal, it could take years before we are actually licensed. Imagine all the stores who couldn't get bank/money/lease etc. together in time to submit into this lottery--they will be waiting years longer than us before they are able to participate. 

Our future is on hold until we are licensed but I am confident that the AGCO will start working from this list as they have stated.  In case you missed it, here is our best case scenario after that.  Going into the federal election, Doug Ford will very likely impact Andrew Scheer/Federal Conservative chances of winning in Ontario (and the election overall) with this fiasco (among many).  There are many communities he has angered but all of them would chill out a little better if they had reasonable access to cannabis.  Not 24 freaking stores in a province of 14 million.

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