Over the next few weeks, the Alcohol and Gaming Commission of Ontario (“AGCO”) will be updating its online Cannabis Retail Regulation Guide (“Cannabis Guide”). The Cannabis Guide will be continually updated as information becomes available on the application process for retail cannabis licenses. The new retail scheme will allow stores to open their doors on April 1, 2019. However, the licensing application process will open in December, 2018.
In Ontario, Cannabis can only be sold by licensed and authorized retailers approved by the AGCO. All licensed retailers must have a supply purchase contract with the Ontario Cannabis Retail Store (OCS). Only cannabis obtained through the OCS can be sold by licensed retailers. Further, the AGCO recently published the Registrar’s Standards for the Private Retail Sale of Cannabis.
Currently, the AGCO has established three different licenses: Retail Operator License, Retail Store Authorization and a Cannabis Retail Manager License. The requirements of each license are set out in the Cannabis Licence Act, 2018 (Cannabis License Act) and the Registrar’s Standards for the Private Retail Sale of Cannabis (Registrar’s Standards).
Retail Operator Licence
The Retail Operator Licence is required to legally open a retail store selling recreational cannabis. To attain this license, the eligibility criteria set out in the Cannabis License Act must be met. A Retail Operator Licence allows you to operate one or more retail stores in Ontario. However, each store will require a Retail Store Authorization.
There are several restrictions on applicants of a Retail Operator License. For example, applicants will not be eligible for a Retail Operator Licence if they are under the age of 19. In the case of corporate applicants, all directors, officers and shareholders must be over 19. Convictions or charges under certain legislation will limit eligibility, such as any offence under the Cannabis Licence Act, certain offences under the Cannabis Control Act and Cannabis Act, and certain roles or connections with a criminal organization as defined in subsection 467.1(1) of the Criminal Code (Canada). Failure to file personal or business tax returns will also affect eligibility. Additionally, if more than 9.9 percent of the corporation is owned or controlled, either directly or indirectly, by a licensed producer or their affiliate, the corporation will not be eligible. For the full set of requirements of eligibility, see the Cannabis Guide and the Cannabis License Act.
Retail Store Authorization
As each retail location must satisfy a specific set of requirements under the Cannabis Licence Act, a Retail Store Authorization is required for each store. However, there is a limit of 75 Retail Store Authorizations per individual, corporation and any of their affiliates. Municipalities and band councils of First Nation reserves may also opt-out of the legislation to stop the establishment of retail stores within their boundaries.
Many of the requirements of eligibility are related to the requirements of a Retail Operator License. Additional requirements based on store layout and location are set out in the Registrar’s Standards for the Private Retail Sale of Cannabis and the Cannabis Licence Act. This includes a limitation on the proximity to a school.
In addition, after an application for a Retail Store Authorization, the Registrar of the AGCO will inform residents and the municipality of the proposed location by a posted notice. The municipality and local residents will have 15 calendar days after the notice is posted to submit written submissions to the Registrar in respect to the public interest. Specifically, the public interest will be based on protecting public health & safety, protecting youth and restricting their access to cannabis, and preventing illicit activities in relation to cannabis. If the Registrar determines that a location is not in the public interest based on the need of the people who live in the municipality, it will not be eligible for a Retail Store Authorization.
Cannabis Retail Manager Licence
Each authorized store location must have one licensed manager. The Cannabis Licence Act sets out the eligibility criteria for the persons in the management role. The manager with a Cannabis Retail Manager License will be responsible for cannabis inventory, hiring and managing employees, managing compliance issued relating cannabis, entering into contracts for the store and ensuring the store operates with honesty and integrity at all times.
To obtain a Cannabis Retail Manager License, an individual must be 19 years of age. Also, they cannot have been convicted of any offence under the Cannabis Licence Act, certain offences under the Cannabis Control Act and Cannabis Act or certain roles or connections with a criminal organization as defined in subsection 467.1(1) of the Criminal Code (Canada):
- you are, or have been a member of the criminal organization
- you are, or have been involved in the criminal organization
- you contribute, or have contributed to, the activities of the organization.
The Cannabis Guide outlines the fees associated with each license:
|Retail Operator License||$6,000||$2,000||$4,000|
|Retail Store Authorization||$4,000||$3,500||$7,000|
|Cannabis Retail Manager License||$750||$500||$1,000|
* If you are a sole proprietor or in a partnership between two or more individuals, and will be both the licensed operator and performing the duties of the retail store manager for a particular store, you will not need to get a Cannabis Retail Manager Licence for that store.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004 or Ray Luckiram (416) 601-0591.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.