On January 2, 2019, the Alcohol and Gaming Commission of Ontario ("AGCO") published rules (the "Rules") surrounding its much-anticipated Cannabis Retail Store Licensing Expression of Interest Lottery, scheduled for January 11.

The AGCO has structured the Rules to encourage the opening of retail cannabis stores on April 1, 2019 and, in order to meet that target, lottery winners must be prepared to act quickly. Expression of Interest Applications will be accepted online through iAGCO from 12:01 am EST January 7, 2019 until 12:00 pm (noon) EST January 9, 2019, accompanied by a one-time, non-refundable $75.00 fee. The lottery will be held on January 11, 2019 at a time not yet set by the registrar, with the results to be published online by January 12, 2019. The 25 selected applicants will be allocated amongst the five previously determined regions of Ontario, and a wait list of subsequently drawn applicants will also be maintained.

It is important to note that within five business days of AGCO publishing the lottery results, the 25 selected applicants must each:

  1. Submit a Retail Operator Licence Application with the $6,000 non-refundable fee; and
  2. Provide a $50,000 Letter of Credit ("LoC"), issued by a bank listed in Schedule I or II of the Bank Act (S.C. 1991, c.46), in favour of the AGCO.

Selected applicants may withdraw from the process by January 25, 2019, at 5:00 pm, in which case they will be refunded their licence and authorization fee payments, and the LoC will be returned. At any point during the lottery process, the AGCO can disqualify any applicant for failure to follow the Rules of the lottery.

To further its objective of having licensed operators open cannabis retail stores on April 1, 2019, the AGCO will penalize selected applicants that are not selling cannabis by that date, by drawing on the LoC as follows:

  1. On April 1, 2019, if the selected applicant is not selling cannabis under their Retail Store Authorization ("RSA"), $12,500 will be drawn;
  2. On April 15, 2019, if the selected applicant is not selling cannabis under their RSA, an additional $12,500 will be drawn;
  3. On April 30, 2019, if the selected applicant is not selling cannabis under their RSA, an additional $25,000 will be drawn; and
  4. Wait list applicants who are notified that they may apply for a licence will have the timelines for drawing on the LoC adjusted by the AGCO to provide an equivalent duration.

In addition, the AGCO will draw the full $50,000 from the LoC if a selected applicant is disqualified during the lottery process.

Gowling WLG's Cannabis Group continues to monitor these developments and the cannabis retail lottery closely. For more information about these changes, please contact any member of our team.