On November 14, the Ontario government passed the regulations of the Cannabis License Act, 2018. Ontario cannabis retail stores selling for recreational purposes will be under the jurisdiction of the Alcohol and Gaming Commission of Ontario (AGCO). Here’s a summary of the key points from the regulations:
- Licensed producers are limited to one (1) retail license, which must be located on or within the site set out in the license.
- If a licensed producer owns more than 9.9% percent of a corporation, that corporation is not eligible for a retail license.
- A retail location cannot be less than 150 meters (492 ft) from a school or private school.
- Cannabis stores must be standalone locations. Strip plaza and malls are acceptable but there cannot be a non-cannabis store within a cannabis store.
- An applicant cannot have more than 75 retail store authorizations (this includes its affiliates).
- The authorization display seal must be displayed in the store.
- There will be several licenses and authorizations required from AGCO including a retail operator license, a retail store authorization and a cannabis retail manager license
- Applicants must be in good standing with the Canada Revenue Agency
Applications will begin being accepted on December 17, online only.
Based on the regulations there are several due diligence steps that can be taken to determine feasibility of proposed cannabis retail locations:
- Check with city officials if cannabis retail establishments will be allowed. Given the “red tape” that one must go through in some municipalities, to get this clarification, begin with a ward councillor (councillors in a municipality collectively influence city decisions and by-laws). Keep in mind that municipalities have until January 22 to opt out of allowing recreational retail stores in their city.
- For a specific location, determine if the site is zoned for commercial retail use (some cities have created cannabis retail zoning, so ask about this).
- Ensure the location meets the location and stand-alone definition requirements as per the Cannabis License Act in points 3 and 4 above. Consider other outlets similar to schools that may be nearby, such as adult learning centre and day care facilities.
- If operating as a sole proprietor and performing the retail store manager duties for one store, that person will not require a Cannabis Retail Manager License for the one store.
Aside from this due diligence, ensure the necessary capital is available to build or retrofit a retail location, security systems, Point of Sale (POS) equipment, personnel hiring, advertising and marketing budget, lease costs, and inventory purchase (cannabis wholesale cost can run from $1600/lb and up).
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The Regulations of the Cannabis License Act, 2018