Ontario removing cap on number of pot shops, opening up market for retailers

Ontario is removing the cap on the number of pot shops in the province and nixing some qualification requirements for would-be retailers in a bid to clamp down on the number of illegal stores, sources tell CBC News.

Attorney General Doug Downey announced details of the changes weeks after the government first signalled its intention to open the cannabis market.

Downey said the lottery system, first implemented to help the emerging retail market contend with a major supply shortage, and since criticized as a cumbersome process preventing the province from staying competitive, will be eliminated on Jan. 1.

As part of the move, the province says it will be issuing approximately 20 new cannabis store authorizations starting in April 2020.

"In response to the federal government's decision to legalize cannabis, our government is determined to open the cannabis market as responsibly as possible," said Downey in a news release. "We have said all along that opening more legal stores is the most effective way to combat the illicit market, protect our kids and keep our communities safe."

Until now, prospective retailers were required to demonstrate having a $50,000 letter of credit and pay a $6,000 non-refundable fee as part of their application, which had to be submitted within five days of being picked through a lottery system.

Lawyers for several disqualified shops had disputed whether the qualifications were fair.

Anyone with criminal convictions on certain cannabis-related offences or those who have ties to organized crime will still be barred from getting a licence. Managers and employees at licensed retailers will also be required to complete approved training. 

Individual companies will also be allowed to own up to 75 retail stores by September 2021. 

The Alcohol and Gaming Commission of Ontario will begin accepting applications from prospective retailers on Jan. 6. 

The new rules will also allow legal cannabis producers to enter the retail market by opening shops on their premises.

Downey said the primary issue that made the lottery necessary no longer applies. 

"The supply issue has been resolved," he said. "We have some really good fundamentals in terms of rules and regulations, and we've seen them work." 

The supply shortfall and the lottery system kept the government well shy of its stated goal of having as many as 1,000 cannabis retailers throughout the province. The first lottery saw just 25 licenses issued province-wide, with a further 50 awarded in a second round.

Critics have described the system as excessively slow, arguing the lack of private retail options has prevented the province from making inroads against the illegal weed market.

A group of rejected pot-shop applicants spoke out against the lottery system in court, critiquing the application process in a legal challenge that was ultimately dismissed. 

Ontario's opposition parties did not immediately respond to request for comment.

Cannabis consultant Omar Khan hailed the move as a positive step. He said it will help eradicate the illegal market and provide consumers with access to safe and regulated products.

Khan said the price of legal pot will be a key factor. 

"As the government moves forward with this new licensing system it should also look at ways to enhance the online consumer experience and find ways to empower retailers to be better able to compete with illegal operators on price," he said in a statement.