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By Natasha Taylor
Associate Consultant, CannDelta
May 1st, 2020
Evolution of Cannabis Retail Licensing in Ontario
In August of 2019, the Alcohol and Gaming Commission of Ontario (AGCO) conducted lottery draws that proved to be a slow process for initiating the private Ontario retail licensing market. The industry took a turn for the better in December 2019, when the decision was made to end the controversial lottery system and allow for an unlimited number of retail licences to be issued to Ontario applicants. On January 6th, 2020, Retail Operator Licences (ROLs), which focus on the financial, criminal, and tax history of applicants, were made available to applicants. The second stage of the licensing application is Retail Store Authorization (RSA), which focuses on the physical store requirements (e.g., security systems), and was made available to applicants on March 2nd.
The AGCO governs the regulation of provincial cannabis retail stores and the operators’ activities. Currently, private retailers are only allowed to obtain and sell cannabis and cannabis accessories provided through the provincially run Ontario Cannabis Store (OCS).
The Impact of COVID-19
In response to the COVID-19 pandemic, on March 12th, 2020the Ontario Government initiated the shutdown of places of congregation such as schools and urged businesses to have their employees opt to work from home is as soon as possible. Later in March, the provincial and federal governments put more restrictions on travel and released an official list of essential workplaces that were permitted to remain open. Fortunately, cannabis-related businesses made the cut in the first round allowing for continued cannabis supply.
On April 3rd, the Premier of Ontario, Doug Ford, released an amended list of essential workplaces that excluded cannabis retail stores. This was a devastating blow to the nascent cannabis retail market in Ontario, especially given the surge in sales many retailers were experiencing in the wake of COVID-19. Concerns began to arise of a shortage of cannabis supply available to people who severely depend on its use, as well as the risk of benefitting the illicit market.
The introduction of curbside pick-up/click and collect, as well as delivery options were made available through an emergency provincial order. This allowed licensed cannabis retail stores to remain open under these restrictions. Benefits to this new service included the convenience and accessibility of retail products to customers and helped to lower the dependency on obtaining cannabis from the illicit market.
Provincial Government Restricts AGCO from Issuing Retail Store Authorizations
On April 7th, the AGCO declared that it would temporarily stop issuing Retail Store Authorizations (RSAs) as a response direct orders from the provincial government due to the emergency order of business closures. Notably, the AGCO had been consistently working with the Government to date to provide a retail structure that is safe, convenient, and supports the objectives of the emergency order designed to decrease the spread of COVID-19.
During this period, the government is placing a temporary pause on the issuing of retail store authorizations. The AGCO will not issue new store authorizations until the government’s Emergency Order has been lifted. In the meantime, the AGCO will continue to issue Retail Operator Licences and Retail Manager Licences and will process store authorization applications and conduct eligibility assessments to the extent possible, so that businesses will be prepared to move forward once restrictions are lifted.
-AGCO Info Bulletin Tuesday, April 7, 2020
The decision to stop issuing RSAs sparked outrage and prompted applicants already in the queue, as well as prospective applicants and their supporters to lobby the AGCO and the Ontario Government to overturn their decision. The AGCO continued to provide ROLs and completed the initial stages of the RSA but was bound by the mandate to stop issuing RSAs until further notice.
“A big thing throughout the industry is we’re in this together because if one fails, we all fail,” she said. “It’s a very controversial industry, but the willingness to share any helpful information is there.” –Anonymous Retail Store Manager
AGCO Announces they will Resume Issuing Retail Store Authorizations
In response to growing pressure from retail applicants and lobbying groups, on April 22nd, the AGCO announced that they will resume issuing RSAs to cannabis retailers who have completed the majority of the licensing requirements. The AGCO recognized that some retail stores had already completed construction prior to the enforcement of the emergency order and the decision was made to continue with approvals. Applicants are required to meet all regulatory obligations and comply with restrictions in the emergency order for COVID-19 specifically pertaining to construction. Strategies led the charge in lobbying to the provincial government.
An RSA approval will allow an operator to order cannabis products from the OCS for their establishment. The store would have to successfully pass an on-site pre-opening inspection by the AGCO before being allowed to open their doors to customers. Until the emergency order is lifted, stores are only permitted to offer curbside pick-up and delivery to sell their cannabis products. In early April 2020, the AGCO announced that they plan on meeting their long-standing goal of issuing 5 RSA’s per week, which is terrific news for cannabis retailers who have endured a roller coaster ride of events over the past few months.
As you may know, Hill+Knowlton Strategies has been working with a coalition to secure a partial lift to the recently announced freeze on cannabis retail store authorizations (RSAs) in Ontario. Today the AGCO announced here that it will lift the RSA freeze for applicants who have met all regulatory requirements. Congratulations to everyone who was involved in making the case to the government and the AGCO on this important matter.
-Omar Khan, National Cannabis Sector Lead
CannDelta is Here to Help
Any cannabis producer or retailer affected by COVID-19 should reach out to CannDelta for a free consultation on how best to navigate the ensuing months. CannDelta is a Toronto-based regulatory cannabis consulting company that can be reached at info@canndeltav2:8890 or (416) 535-1935 and toll free at 1 (877) 274-6777.
