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Ontario to issue 50 new licences for cannabis stores | The Star

Ontario is launching a second round of cannabis stores, planning for 50 to start opening as early as October but with tougher screening requirements aimed at weeding out operators less likely to make the grade.

In addition to the previous requirement of a $50,000 line of credit from a bank or financial institution, prospective pot shop owners must now prove they have $250,000 in capital to finance their store and a solid line on renting a location, Attorney General Doug Downey said Wednesday.

Hopefuls can submit applications to the Alcohol and Gaming Commission of Ontario from Aug. 7 to 9, with winners to be drawn in a lottery on Aug. 20 and announced within 24 hours.

“We want people to be in a position to execute on it when they win the draw,” Downey told the Star in an interview. “We do have some examples of people who won in the draw last time and then had to go find partners to make it happen.”

That led to openings delayed until after the original April 1 deadline, with fewer than half of the first round of 25 stores able to open on time. So far, 22 are in operation.

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“My impression is the government learned a little bit from the first round,” said Michael Armstrong, an associate professor in the Goodman School of Business at Brock University in St. Catharines, who closely watches the cannabis industry and teaches operations management.

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“They’re not actually trying to look at qualifications to run the business — which would be tricky for a government to judge anyway — but they’re put some extra hurdles in place which presumably are going to rule out a lot of smaller or less serious applicants. It’s going to be a more exclusive club.”

Deputy NDP Leader Sara Singh said the Progressive Conservatives have “failed Ontarians at every stage of their embarrassing rollout of legal recreational cannabis” with no brick-and-mortar stores until last spring, three of the first 25 given approvals still not in operation, and many areas without shops “allowing the criminal market to thrive.”

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Downey said the new stores will start opening on a “rolling basis” with no hard deadline this time and decisions made based on local circumstances.

The government is holding back on its original plan to allow as many private stores as the market can bear because there is not enough product to supply them at this point, he added.

“We’re ramping up, but we’d like to be further along,” said Downey, a lawyer who was promoted to cabinet in Premier Doug Ford’s shuffle last month.

“While the federal supply issues exist, we cannot in good conscience issue and unlimited number of licences to businesses. A phased-in approach remains necessary.”

Finance Minister Rod Phillips said there have been “marginal improvements” in supply.

Thirteen of the new stores will be in the Toronto region, with another six in the GTA, seven in eastern Ontario, 11 in western Ontario and five in the north in Timmins, Thunder Bay, Sault Ste. Marie, Kenora and North Bay.

Another eight stores will be allotted for First Nations reserves through a separate application process.

Recreational cannabis became legal across Canada last Oct. 17, with only the government-owned Ontario Cannabis Store selling online and operating as the authorized wholesale supplier to the privately owned brick-and-mortar shops.

Armstrong said October is a “tight timeline” for store operators to sign firm leases, do renovations, hire employees and arrange shipments from the Ontario Cannabis Store. “It’s still going to be truck to actually get the stores open.”

He said the cash-strapped government could have raised millions of dollars by putting the licences up for auction to the highest bidder.

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Rob Ferguson is a Toronto-based reporter covering Ontario politics. Follow him on Twitter: @robferguson1

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