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Ontario to issue 50 new pot store licences, including 11 in region

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Cannabis industry insiders applauded Ontario’s decision to license another 50 retail stores, including 11 in the region encompassing Southwestern Ontario, but say more are still needed.

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The Alcohol and Gaming Commission of Ontario (AGCO), the provincial pot regulator, is holding a second lottery next month to award another 42 retail licences to open stores as early as October. Another eight licences will go to First Nations communities on a first come, first served basis, the province said July 3.

“It means that Ontario is moving toward loosening up regulations to allow the free market to expand,” said Jon Conquergood, chief executive of Ontario Cannabis Holdings (OCH), a Calgary-based consultant hired to help open Central Cannabis in London.

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“I would have hoped for more stores . . . but recognize that they have to be cautious and make sure things are done properly.”

The first 25 retail store licences were doled out in a January lottery before the brick-and-mortar stores were allowed to open on April 1. Seven of those licences were allocated to the west region, stretching from Windsor to Waterloo to Niagara Falls.

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London, the only Southwestern Ontario city to land any of the coveted outlets, has three stores. Hamilton has two, while Niagara Falls and St. Catharines have one apiece.

Unlike the first lottery, which limited stores to municipalities of more than 50,000 people, the second round allows the businesses to open anywhere they’re permitted. Seventy-seven of Ontario’s 414 municipalities, including Brantford and more than a dozen others in Southwestern Ontario, have voted to bar the businesses.

Applicants for the Aug. 20 lottery must meet pre-qualification requirements, such as demonstrating they’ve secured an appropriate retail space and have access to $250,000 in cash or short-term investments.

Those new requirements favour deep-pocketed players and may shut out small-scale operators, Ottawa-based cannabis lawyer Trina Fraser said.

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“It really is restricting the access to the lottery to those who already have that cash on hand,” Fraser said, noting banks won’t lend to aspiring cannabis retailers.

“It’s not going to be enough to have potential investors . . . (or) lenders lined up . . . It’s cash in the bank.”

Critics blasted the AGCO’s first lottery, which drew more than 17,000 expressions of interest, for not imposing any entry requirements beyond a $75 fee, resulting in unprepared applicants winning some licences. Two of the first 25 approved stores still haven’t opened.

While the first lottery saw most winners penalized between $12,500 and $50,000 for not opening on time, the next one won’t impose similar penalties. Lottery winners will have a year to be up and running and only face financial penalties for violating commission rules, the AGCO said.

Conquergood said OCH will apply to open stores in each of the five designated regions, as is permitted under the rules.

“Ultimately our goal is to open the maximum allowable 75 stores, so we’ll be applying to every region that we can and try to get to that number as quickly as possible,” he said, noting the company is looking to expand its footprint in Southwestern Ontario.

“London has been very good to us . . . sticking around in that part of Ontario is very much in the cards for us as a company.”

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