Ontario will add 50 more retail cannabis stores by October in an effort to stamp out black market sales and boost legal revenues, the provincial government said on Wednesday.
The Alcohol and Gaming Commission of Ontario (AGCO) will hold a lottery on Aug. 20 to issue retail licenses for 42 stores across the province. The remaining eight will be allocated to retail shops opening in First Nations communities and will go through a different process.
Ontario opened the doors to private cannabis retailers on April 1, and currently 23 stores are operating with three still waiting for final approval to receive retail licenses. Those licenses were also acquired through a lottery system.
When legalization began on Oct. 17, the province only offered an online store at the Ontario Cannabis Store, which racked up thousands of complaints.
Ontario blames supply issues for slow retail rollout
A lack of supply has been the reason for the restricted number of stores as the government is taking a calculated approach to help ensure the rollout is successful.
“Our government is continuing to take a responsible approach to opening cannabis stores across Ontario, allowing private sector businesses to build a safe and convenient retail system to combat the illegal market,” Finance Minister Rod Phillips said in a statement.
“With marginal improvements in national supply, we are proceeding to issue up to 50 new cannabis store licences.”
Ontario’s attorney general said a phased rollout is still necessary.
While the federal supply issues persist, we cannot in good conscience issue an unlimited number of licences to businesses
But critics say the country’s most populated province still needs more stores if it wants to eliminate the black market.
According to data from Statistics Canada, sales doubled from around $8 million to $19.6 million once consumers had the option in April to buy cannabis at physical stores over the OCS online option.
Ontario is expected to rake in the bulk of Canadian sales with US$1.84 billion by 2024, according to BDS Analytics.
Greater requirements this time around
For the new lottery, the AGCO will require applicants to supply a bank letter stating they have access to $250,000 cash, and a letter of credit for $50,000. The requirements will help ensure the lottery winner is ready to go on day one.
Ontario aims for all stores to be open by October, a few months prior to when the new edible market becomes legal and available for sale.
Edibles are expected to drive further demand and licensed producers have been adding supply to ensure they’re ready for mid-December when they will be allowed to start selling the next generation of cannabis products. The Canadian government has developed restrictive model for the new edible market to help minimize the risk of children accessing cannabis-infused gummies, sweets and brownies.
Here’s a breakdown of where the 42 lottery locations will be awarded:
- Toronto: 13
- Greater Toronto Area: 6
- West Region: 11
- East Region: 7
- Kenora: 1
- North Bay: 1
- Sault Ste. Marie: 1
- Thunder Bay: 1
- Timmins: 1