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New cannabis regulations: the facts for prospective cannabis retailers

Ontario introduces new rules

On November 14, 2018, the Ontario government published its long-awaited regulations for the licensing and operation of private cannabis stores in the province. The regulations are strict, keeping with the government’s stated objective of “protecting children and youth, keeping communities and roads safe, and combating the illegal market.” Private retail is anticipated to begin April 1, 2019 under the close oversight of the Alcohol and Gaming Commission of Ontario (AGCO). Ontario is currently the only Canadian province with no ‘bricks and mortar’ stores, private or public. The following are the highlights of the Ontario government announcement.

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  • The process for individuals and firms to apply for a private cannabis retail store licence will begin on December 17, 2018. Applicants should make haste in preparing their submissions, including securing potential retail sites, assembling personal information of key shareholders and considering how they will comply with all federal and provincial regulations.
  • Each store must be a minimum distance of 150 metres (approximately 500 feet) from any school, including private and First Nation schools off-reserve.
  • Retailers will not be permitted to allow anyone under the age of 19 to purchase cannabis or even enter their stores, even if they are accompanied by an adult.
  • Retail storefronts can only be stand-alone stores; in other words, the store must be enclosed by walls separating it from other commercial establishments or activities. Online retail sales will continue to be delivered by the government-run Ontario Cannabis Store website.
  • All retail employees will be required to complete approved training to ensure that any individual who works in the cannabis retail market is trained in the responsible sale of cannabis. The level of employee training is significant and should not underestimated.
  • Applicants will be denied a licence if they possess a criminal record, including cannabis-related criminal offences, nor can they be a member of or associated with organized crime. Importantly, illegal cannabis retailers (i.e. dispensaries) that were operating after October 17, 2018 are not eligible for cannabis retail licences.
  • No one operator can own or run more than 75 stores. Licensed producers (LPs) will be limited to one store at their growing facility (e.g. a farm gate store).
  • A company is not eligible for a cannabis retail licence if it is more than 9.9 percent owned or controlled by one or more licensed producers or their affiliates. This restriction applies whether the LP’s ownership of the corporation is direct or indirect. These regulations will make it difficult for some LPs that currently operate or own a share of retail stores in other provinces.
  • Finally, operators must be aware of and comply with comprehensive and strict regulations (per Health Canada and Bill C45) around the availability of cannabis formats (only flower/bud, oil and seeds are currently allowed for sale), product branding and promotion, and the handling of cannabis products in retail stores.