Ontario plans to prequalify privately owned cannabis retailers – likely by the end of the year – and has recommitted to eventually lifting the province’s “temporary” limit of 25 stores.
The prequalification criteria released by the government of Canada’s largest marijuana market is a glimpse into the medium-term future of Ontario’s brick-and-mortar cannabis industry, “where the number of stores is limited only by market demand,” according to the provincial budget.
The Ontario government says it will authorize more stores only after it has determined that a reliable supply exists for the regulated market.
The province blamed “severe supply shortages” for its curtailed approach to cannabis retail expansion last December. However, the federal government has disputed Ontario’s claim there is a shortage, saying Canada “has sufficient supply.”
“To enable the opening of additional licensed stores, the government will develop a process to allow the (Alcohol and Gaming Commission of Ontario) to prequalify operators that seek to enter the market and participate in future allocations of retail store authorizations,” the budget stipulated.
“The government is taking a market-oriented approach, which will allow private-sector businesses to build a safe and convenient retail system to combat the illegal market.”
Prequalification requirements may include:
- Payment of a fee or proof of a standby letter of credit.
- Financial details, including information about corporate structure and affiliates.
- Criminal and other background checks.
- Information confirming lease or ownership interests in potential retail store locations.
The first physical cannabis retailers opened their doors across Ontario earlier this month.
The province also disclosed medium-term, cannabis-related sales expectations for the next four years.
Ontario expects its portion of the federal government’s cannabis excise tax to be 17 million Canadian dollars ($12.7 million) in fiscal 2018-19.
Since Ontario receives 75% of the tax on all cannabis intended for sale in the region, the province is projecting total sales of CA$22.7 million this year.
The government expects sales to rise to about CA$94 million in the following fiscal year, then to approximately CA$100 million in 2020-21.
Matt Lamers can be reached at [email protected]