What’s Up in Weed

December 14, 2018

By: Andrea Hill

I am pleased to bring you this instalment of my blog, rounding up what’s currently happening in the cannabis industry in Canada and abroad.

“Severe Supply Shortages” cause AGCO to change course, initially licence only 25 retail cannabis stores selected by lottery

• Yesterday evening, the Alcohol and Gaming Commission of Ontario announced that due to supply shortages from licensed producers, it will dramatically change course to issue only 25 stores in the “initial phase” of licensing. Previously, the government had imposed no limits on the number of retail stores that could be opened in the province.
• The applicants who are permitted to apply for one of the 25 spots will be chosen by lottery on January 11, 2019, with the results posted on the AGCO’s website within 24 hours. People who wish to participate in the lottery will be able to submit Expressions of Interest, online, from January 7-9, 2019.  The lottery will be overseen by a third-party fairness monitor.
• Concurrent with the AGCO announcement, Ontario Attorney General Caroline Mulroney and Minister of Finance Vic Fedeli issued a statement rife with frustration, placing accountability for the change at the feet of the federal government:

“It is the federal government’s responsibility to oversee cannabis production and to provide a viable alternative to the illegal market by ensuring there is sufficient supply to meet consumer demand.  Yet, we continue to see severe supply shortages across the country in legal, licensed recreational cannabis stores.

For example, Alberta stopped issuing any new retail cannabis licences after only receiving 20 per cent of the stock it ordered from federally licensed producers, and in Quebec retail operating hours have been reduce to four days a week.  In addition, the shortage of supply has restricted online sales in many jurisdictions.

…The Government of Ontario has brought this to the federal government’s attention repeatedly. At a recent meeting of federal, provincial and territorial Finance Ministers in Ottawa, Minister Fedeli, along with Finance Ministers from several other provinces and territories, raised the issue of a severe shortage of supply across the country with Federal Finance Minister Bill Morneau.

Taking into consideration the required investments for a prospective Ontario private legal retailer, we cannot in good conscience issue an unlimited number of licences to businesses in the face of such shortages and the federal government’s failure to provide certainty around future supply.”

• Lottery rules will be published shortly to the AGCO’s website, and the AGCO will hold a webinar to explain them during the first week of January.
• The AGCO will therefore not begin accepting applications for cannabis retail licences and authorizations on December 17, as previously planned.
• The lottery is meant to be a “temporary solution” for issuing private retail licences. “When Ontario has determined that the federal government has provided for enough reliable supply, Ontario will communicate next steps for additional private stores,” the government stated.  There is no public information yet about when the second phase of licenses will be opened, or how (and how many) licensing opportunities will be awarded at that time.

What’s Up in Weed is not legal or financial advice. It is a blog by SkyLaw which is made available for informational purposes only and should not be used as a substitute for professional advice from a lawyer. This blog is subject to copyright and may not be reproduced without our permission. 

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