With recreational cannabis becoming legal this past October in 2018 and with at least 25 legal retail dispensaries opening up around the province since April 1, 2019, there now exists a new market for those wanting to invest in retail cannabis dispensaries, with the hopes of operating their own pot-shop.
For those who are interested in the cannabis retail market, it is important to have an understanding of the cannabis regulatory framework. The federal government has the authority to regulate production, permitted uses of cannabis, packaging, promotion and sale of medical marijuana.
The provincial government has the authority to regulate the distribution and sale, transportation and consumption of recreational marijuana. Lastly, the municipal governments have the authority to regulate the land use and permitted places of smoking marijuana.
In Canada there are 3 models of recreational cannabis available, public, hybrid and private. Most provinces have followed the public model, also known as the government model since the government controls all recreational sale, distribution and consumption.
In Ontario, we have a hybrid model. The physical retail stores are private and the online stores and overall distribution is government run. In Ontario, the regulator of cannabis is the Alcohol and Gaming Commission of Ontario.
The Cannabis Control Act, Cannabis License Act and the Smoke Free Ontario Act regulate the Ontario retail cannabis market. The CCA is legislation that is primarily used by the police to investigate and control the illegal operation of dispensaries in Ontario. The CLA is the legislation that establishes the licensing regime for the retail cannabis market and the Smoke Free Ontario Act, establishes where Ontarians can smoke/vape cannabis.
In order to operate a legal cannabis retail shop in Ontario, there are 3 licenses that one must obtain. Firstly, a retail operator license which focuses on the eligibility of the person operating the store.
Secondly, a retail store authorization license, this focuses on the eligibility of the store itself. For example, it is important to check if the municipality has opted out and does not allow any dispensaries to operate in the township/city or county.
To date, 77 municipalities have opted out in Ontario and will not allow any retail cannabis stores to operate. If the municipality has opted in, then it is important to check if the store location is zoned for commercial/retail zoning. The retail store must comply with the municipality by-laws and the building code. Furthermore, it is important to make sure the storefront is not within 150 meters of a public or private school.
Lastly, a retail manager license must be obtained, which is required by anyone conducting a management role at the store.
As mentioned above, currently 25 retail stores are to be operating since April 1, 2019. This restriction on a number of stores is set to expire December 13, 2019. Absent any other regulatory amendments, the market would open to anyone wanting to open up a cannabis store. However, no one operator can operate more than 75 stores.
The key question for anyone wanting to enter the retail cannabis market, should be what are the regulators really focused on when reviewing an application?
The regulators are focused on safe, lawful sale of cannabis, consistent with the legislation. They are focused on honesty, integrity and in the public interest. More importantly though, regulators are focused on from whom and where the source of the funds are coming from. Furthermore, regulators focus on an individual’s personal and business operation history.
Lastly, regulators are focused on the extent of the relationships held by the operator of the store. This is the due diligence process, the more people in the business relationship, the more people that have to be part of the process and that could effect the timing of when you can obtain a license.
Once you have obtained all the required licenses and complied with the municipality by-laws, it is important to note some of the prohibitions around marketing, branding, promotions and communications for the cannabis industry. Currently, it is illegal to induce the purchase of cannabis or cannabis accessories through a loyalty program. There is also no sampling of cannabis products or product giveaways and any on site consumption allowed at the store locations. Cannabis and cannabis accessories are also not allowed to be displayed or be visible from the exterior of the store.
If you or anyone you know is interested in investing in a retail cannabis store, contact Kesarwani Law Office to further discuss your rights and obligations and the process involved in becoming a legal owner of a cannabis retail store.
Visit us at 2121 Lakeshore Blvd W, Toronto ON, M8V 4E9 or at http://legal-solutions.ca/.
Call us or email us for a consult at 647-349-8300 or firstname.lastname@example.org
Please do not construe this blog post as legal advice.