Ontario to hold lottery for 42 new recreational cannabis stores

Ontario’s plan to belatedly add more cannabis stores to its underwhelming roster of 23 authorizations is a sign the government is listening to industry and consumer feedback that the market can sustain – and requires – more outlets, according to experts.

The Alcohol and Gaming Commission of Ontario will hold a lottery on Aug. 20 for 42 new stores, the province announced Wednesday.

Entrepreneurs who wish to add their names to the lottery are required to meet prequalification requirements, including:

  • A bank letter confirming access to CA$250,000 ($191,180) in capital.
  • Demonstrating they have secured suitable retail space that could be used for it.

Independent from the lottery, eight recreational marijuana retail store permits will be available for First Nations reserves. Band Council approval will be required and those will be issued on a first-come, first-served basis.

Ontario’s recreational cannabis sales had been puttering along until the first physical stores opened in April, a sign that consumers have little appetite for making legal purchases on the government-run Ontario Cannabis Store website.

Sales more than doubled that month on the back of a small number of stores.

Ontario’s 75-store limit contrasts with Alberta’s approach, which has a plan to get to more than 200 cannabis stores in the coming months.

Omar Khan, vice president of public affairs at Toronto-based consultancy Hill+Knowlton Strategies, said Ontario needs to aggressively move toward an open licensing system as soon as the national supply situation permits.

“This will still mean that the total cannabis retail footprint in Canada’s largest province will still be less than 10% that of beverage alcohol and around 15% of what we see in Colorado, a state with a population which is less than half of Ontario’s,” he said.

“If the government wants to eliminate the illicit market, they will need to ensure that consumers are able to access legal product offerings conveniently and in a timely manner.”

The 42 stores will be allocated as follows:

  • East Region: 7 stores
  • Greater Toronto Area: 6 stores
  • Toronto: 13 stores
  • West region: 11 stores
  • North region: One store in each of Kenora, North Bay, Sault Ste. Marie, Thunder Bay and Timmins.

Alanna Sokic, a consultant at Toronto-based Global Public Affairs, expects the rollout of the 50 new stores – including the eight First Nations outlets – to go more smoothly than the initial batch of stores, partly because of the inclusion of the prequalification requirements.

“With the coming into force of new product forms in October 2019 and their subsequent availability to consumers in December of this year, Ontario Cannabis Store suppliers who intend to manufacture these products will now have access to an increased number of channels to get their products to consumers,” she said.

Matt Lamers can be reached at mattl@mjbizdaily.com