New Cannabis Retail Licenses Up for Grabs in Ontario

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Aug. 20 2019, Published 5:45 p.m. ET

Earlier today, the AGCO (Alcohol and Gaming Commission of Ontario) announced that it would be holding a second lottery to issue licenses for retail cannabis in the province. AGCO plans to issue 50 new licenses as part of the second lottery.

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The breakdown

Out of the 50 licenses, AGCO will issue 42 retail store licenses for the legal sale of marijuana. Of the 42 stores, 13 will be in the Toronto area, and six will be in the Greater Toronto Area. In addition to these 42 licenses, AGCO will reserve licenses for First Nations reserves. It will issue these licenses on a first-come-first-serve basis. Applicants will need to provide a bank letter stating access to 250,000 Canadian dollars in cash and an additional 50,000 Canadian dollars in a letter of credit.

Cannabis retail off to a slow start

Cannabis retail in Ontario is off to a slow start. AGCO issued only 25 retail licenses in its first lottery. Premier Doug Ford’s government shelved its plan to have government-owned cannabis stores. Instead, it’s allowing private retailers to run these stores.

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Phased approach to cannabis retail

Issuing licenses in parts through a lottery is part of the Ford government’s “phased approach” to cannabis retail. It’s doing the lotteries in phases to manage supply shortages.

According to Rod Phillips, Ontario’s finance minister, “Our government is continuing to take a responsible approach to opening cannabis stories screws Ontario, allowing private sector businesses to build a safe and convenient retail system to combat the illegal market.”

Retail strategy

Cannabis players who are looking to increase their retail presences are doing so through strategic partnerships and acquisitions. For example, Aurora Cannabis (ACB) increased its exposure to retail through its investment in High Tide.

Canopy Growth (WEED) (CGC), one of the biggest cannabis producers in the world, acquired 30% of Hiku Brands as part of its retail strategy.

The retail locations will also play a key role when other edibles and value-added products become legal in Canada. Just yesterday, MedMen (MMNFF) announced the launch of delivery services in the US market.

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