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420 with CNW – Ontario to Select Cannabis Retailers Using a Lottery

Did you, in your wildest dreams, ever imagine that the start of your business venture would depend on the outcome of a lottery? Well, that is exactly the fate awaiting cannabis retail license applicants in Ontario, Canada. The provincial government led by the Progressive Conservatives has decided to use a lottery to select the first 25 private entities that will be allowed to open marijuana retail businesses.

Previously, the province had resolved to sell recreational cannabis in government-run retail outlets only. However, the change of government towards the end of the year resulted in a modification of that plan, thereby giving private players a chance to take part in the retail segment.

That change of government, and the resultant decision regarding how cannabis will be sold, led to a delay of the start of retail sales in brick and mortar outlets. For now, residents of Ontario can only buy cannabis from the online stores that have been operating since legalization took place on October 17.

The retail license applicants should not worry that the lottery equipment will be rigged. The system to be used during this lottery (that can make or break businesses) is the same system used by AGCO (Alcohol and Gaming Commission of Ontario) to test all slot machines before they are installed for use in casinos.

This particular lottery comes at a steep cost for those who want to participate. First, they were required to pay $75 as an application submission fee. Additionally, the applicants also forked out $4,000 as a retail authorization fee in addition to another $6,000 as payment for a retail operation license. To crown it all, each applicant was required to present a $50,000 letter of credit to prove that they had the financial ability to operate a cannabis retail outlet.

The applications were submitted between January 7 and January 9. AGCO will select the winners tomorrow (January 11). This round of the selection process excluded LPs (Licensed Producers of cannabis) in order to prevent a single entity from controlling the retail market.

AGCO had also warned that only serious entities or individuals should enter this lottery because stiff penalties will be imposed on those who don’t open their businesses by April 1. For example, a fine of $12,500 will be imposed if they don’t open their outlets by that date. A similar fine will apply if the business isn’t operational by 15th, and then a larger fine of $25,000 will have to be paid if the month ends when a licensed business hasn’t opened its doors to the public. In short, prepare to pay a fine of $50,000 if April 30 finds that your retail business isn’t operational.

Meanwhile, the supply shortages don’t show any sign of ending, and that is why AGCO decided to issue only 25 retail licenses instead of the 40 they had originally wanted to issue. Sunniva Inc. (CSE: SNN) (OTCQB: SNNVF) and other players like Supreme Cannabis Company Inc. (TSX.V: FIRE) (OTCQX: SPRWF) hope the supply issues get resolved so that offline retail sales can take off without a hitch in Ontario.

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CannabisNewsWire (CNW) is an information service that provides (1) access to our news aggregation and syndication servers, (2) CannabisNewsBreaks that summarize corporate news and information, (3) enhanced press release services, (4) social media distribution and optimization services, and (5) a full array of corporate communication solutions. As a multifaceted financial news and content distribution company with an extensive team of contributing journalists and writers, CNW is uniquely positioned to best serve private and public companies that desire to reach a wide audience of investors, consumers, journalists and the general public. CNW has an ever-growing distribution network of more than 5,000 key syndication outlets across the country. By cutting through the overload of information in today’s market, CNW brings its clients unparalleled visibility, recognition and brand awareness. CNW is where news, content and information converge.

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