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2nd Lottery: Where Calyx + Trichomes landed

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2nd Lottery:  Where Calyx + Trichomes landed

Ontario held it's second lottery for cannabis retail.   It's important to preface this by saying that the lottery is not for an actual guaranteed spot--it is a lottery for an INVITATION TO APPLY for a cannabis retail license.  The hurdles for entry were much higher this round than the last round (where you only had to be an adult over 18 with $75 to spare).  This round we had to have 3 letters:  1 from our landlord saying we lease our space, and 2 from the bank showing we have access to $300,000.  We managed to get all 3 letters with a day to spare before applying.  We submitted our single application and waited a couple weeks for the results.  A day late and a dollar short, the AGCO made us 2 time losers.  Our final number is 231/342 entries.   

Or is it our final number?  Could people ahead of us be disqualified? What went wrong?  Why were there so many applications for certain locations?   Why did an illegal dispensary get chosen? Why did one store win 5 lottery spots? Those are all loaded questions, ones that the AGCO and provincial government are going to be answering to for the next little while.  

Why didn't Calyx + Trichomes apply multiple times?

There is a rule in the lottery system that prevents affiliates from applying together.  If more than one affiliated entity apply for the same region, both are to be disqualified.  Or so we thought.  Our issue (and the issue of many like us) was that there is no one we are involved with that we aren't "affiliated" with.  According to the AGCO this is what an affiliate is.  So we didn't want to mess up our one and only chance and possibly get disqualified.

Could chosen winners be still be disqualified?

Short answer:  Yes.  If there is any dishonesty or contravention of the rules set out by the AGCO, lottery winners, applicants and store owners can all be disqualified at any point.  Right now the disqualifications have removed any clear conflicts of interest, but there could still be more that are found.  If all the applicants we think are affiliates turn out to actually be affiliates, our number goes down to 82/146.

Long answer:

Yes, and here is what we asked the AGCO:

Can lottery winners still be disqualified if they are found to be affiliated with one another? Or have all disqualifications already happened at this point?

AGCO response:

Please reference Allocation Lottery Rules 18 and 19:

18. If the Registrar determines an Applicant has not met the requirements of Ontario Regulation 468/18 or the Allocation Lottery Rules:

a. Once an Expression of Interest Application is made, and prior to the Lottery, the Applicant will be disqualified and the Registrar will note this disqualification when the Lottery results are published. The Expression of Interest Application fee is non-refundable; or,

b. Once an Applicant is placed on the Selected List, the Applicant will be disqualified. Assuming the $50,000 Standby Letter of Credit has been provided it will be drawn in full, unless the selected Applicant submits a request to the Registrar not to draw down on the Standby Letter of Credit due to extenuating circumstances, and the Registrar agrees to the request. Any pending application for a Retail Operator Licence will be considered abandoned.


19. If the Registrar determines that an operator has not followed the requirements in the Cannabis Licence Act, 2018, Ontario Regulation 468/18, or the Allocation Lottery Rules, the Registrar may revoke the Retail Operator Licence.

For the full Allocation Lottery Rules, please reference the following link:

https://www.agco.ca/cannabis-retail-store-allocation-lottery-rules

For general inquires and complaints, please contact the AGCO online via the iAGCO online portal, at www.agco.ca/iAGCO or contact Customer Service at 416-326-8700 or toll free in Ontario at 1-800-522-2876. 

Regards, 

AGCO Customer Service

Will multiple applicants at the same address be disqualified?

It seems weird that one location had hundreds of submissions for the same address.  So we asked the AGCO: When a retail store authorization is approved for a specific address, are all other applicants who applied for the same address eliminated from the waitlist?

The AGCO replied:

Thank you for contacting the Alcohol and Gaming Commission of Ontario, Customer Service.

No they are not eliminated. The Allocation Lottery has no rule that prohibits the same address from being listed in multiple Expression of Interest Applications.

Rule 2:
C. Must operate their cannabis retail store at the same address as provided on their Expression of Interest Application unless:
i. The Applicant submits a request to the Registrar to operate a cannabis retail store at a different address due to extenuating circumstances, and the Registrar agrees to the request; or,
ii. The Applicant is moved from the Wait List to the Selected List, pursuant to Rule 16 and Rule 17. 

For general inquiries, please contact the AGCO online via the iAGCO online portal, or by phone at 416-326-8700 or toll free in Ontario at 1-800-522-2876.

Regards,

AGCO Customer Service

How did an illegal dispensary get a spot?

Have you been following the CAFE saga?  They have been caught selling cannabis so often they are actually the reason that dispensaries in Toronto now have cement blocks put in front of them to prevent re-entry.  CAFE is so brazen they even started selling on the sidewalk in front of the cement blocks.   One of the locations was raided as recently as this week!  How did they qualify?  Well the lottery in and of itself does not prevent basically anyone from applying, it doesn't mean they are approved.  The AGCO has made it clear that with regards to CAFE, they still need to get through the actual licensing process (which very clearly states among other things that they must have no charges under the Cannabis Act).  So CAFE did get a spot in the lottery, but they may not have a real chance at an actual license.

What happens next?

The province is fed up with these results as well.  Attorney General Doug Downey issued a short statement saying the government “is working with the AGCO and Ontario Cannabis Store to return to our original plan to allocate retail store licenses based on market demand.”  We also reached out the the AGCO and they said "In the future, if the government proceeds with additional retail store allocations, rather than moving to an open marketplace, any such retail store allocations may be based on the results of this second lottery. Rules for any future retail store allocations may differ from these Allocation Lottery Rules." This means we will hopefully see a preapproval process announced in the coming weeks.  Based on what the AGCO said hopefully our readiness pays off and we are preapproved sooner than later!

 

 

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