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Bulletin

Ford Government Shifting to Private Model for Retail Cannabis Sales

Fasken
Reading Time 3 minute read
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Life Sciences Bulletin

With the October 17 target for the legalization of the recreational use of cannabis in Canada rapidly approaching, the government of Ontario appears to be poised to announce that the province will shift to a private sector retail model.

Under the previous Liberal government, the Province of Ontario released the "Safe and Sensible Framework To Manage Federal Legalization of Cannabis", which stated that the Liquor Control Board of Ontario (LCBO) would oversee the exclusive retail distribution of cannabis through a subsidiary called the Ontario Cannabis Store (OCS). This plan was to be accomplished through the opening of 40 standalone cannabis stores in 2018, with approximately 150 stores set to open by 2020 throughout Ontario. The opening of physical stores would be accompanied by the concurrent launch of an online order service. The policy rationale for this model was to allow the province to benefit from the LCBO's experience selling regulated substances to ease the transition, while also allowing the province to generate significant revenue.

The newly-proposed system for the sale of cannabis in Ontario would reportedly more closely resemble that proposed in Alberta, which will enable privately run stores to sell cannabis and cannabis accessories under strict regulation. Under the Alberta regulatory framework, the Alberta Gaming and Liquor Commission (AGLC) will be responsible for oversight, compliance and retail licensing. Cannabis producers will be required to obtain licences from the federal government and sell cannabis directly to the AGLC, which will then distribute the cannabis to licensed private retailers. The AGLC will also exclusively operate the online sale of cannabis, and all online sales by private retailers will be strictly illegal. As with Alberta, the online sale of cannabis in Ontario will be sold exclusively through the Ontario government.

In Alberta, to apply for a retail cannabis store licence, applicants will be required to undergo a personal and financial background check, complete a lengthy application form, obtain municipal approval, and pay several fees. Additionally, businesses are required to be incorporated in Alberta (or extra-provincially registered in Alberta) and be independent from any other business, operating only the business of selling cannabis or cannabis accessories.

It is currently unclear how many retail store licenses the Ontario government intends to grant. Under the previous model, the Ontario government had announced that it would be proactive in its enforcement, working with municipalities, local police services, the OPP and the federal government to close illicit cannabis dispensaries. How the proposed system will impact dispensaries currently operating illegally is an open question.

General information regarding new plans are expected to be announced by Provincial Finance Minister Vic Fedeli and Attorney-General Caroline Mulroney next week. Until further information is revealed, the details of the new sales regime, and the extent to which the new plan will mirror Alberta's regulatory framework, is uncertain.

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