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Jul 20, 2020

Province Restricts New Cannabis Retail Store Openings to Five Per Week

By Jeremy D. Burke

As some readers may know, at the direction of the Ontario government, the Alcohol and Gaming Commission of Ontario (“AGCO”) is limiting, to five, the number of cannabis retail stores that are permitted to open in Ontario in any single week. This limit applies whether or not a greater number of stores have been inspected by AGCO and are otherwise ready to open.

The industry’s initial understanding, based on provincial government and AGCO announcements, was that the AGCO’s target of five Retail Store Authorizations per week, or 20 per month, was a minimum goal for store openings, not a hard cap. Though the AGCO will not confirm, it has been suggested that the current cap is a consequence of Ontario Cannabis Store challenges in procuring sufficient cannabis from federal licensed producers to meet the demand of new retail store operators.

Our discussions with the AGCO have confirmed that once a new store has been successfully inspected and the applicant is otherwise qualified to open, the AGCO will add the applicant’s store to an opening queue.

The AGCO advises that they are currently scheduling store openings into March 2021 for applicants whose premises were successfully inspected this past week.

The provincial government has advised the AGCO that this limit of five store openings per week will be increased at some point between September and November. When the government provides such revised directive to the AGCO, the current store opening schedule will be updated to reflect the increased cap on weekly store openings. Accordingly, applicants that are in the opening queue at the date of such revised weekly limit will have their opening date brought forward. The AGCO advises that the ultimate objective continues to be no weekly cap at all, but it is unclear when this goal is likely to be achieved.

The AGCO acknowledges the serious implications this weekly cap has for operators, who will likely have just completed costly renovations and will have to continue to pay rent and incur other overhead expenses, potentially for many months, before they can begin generating revenues.

The AGCO has also advised that it continues to receive 25-30 new Retail Store Authorization applications per week, and that there are currently over 800 in the application queue.

Please reach out to the author or another member of the Cannabis Group if you would like to discuss any of the above or if we can otherwise provide assistance.

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