Business Law

Upcoming Changes for Ontario Cannabis Retailers

Ontario recently announced a dramatic change in the process of obtaining a licence to operate as a cannabis retailer in the province, which should make the process much easier for those seeking to enter the cannabis retail business. Since the legal retail sale of cannabis was announced, there has been a lottery system in place which limits the number of retail locations in the province and places a notable list of restrictions on those seeking to obtain a licence in Ontario.

In a news release dated December 12th, the provincial government announced that it will be eliminating the temporary cap on the number of locations as well as removing the pre-qualification requirements for those seeking to become licenced retailers. This is being done in an effort to make more legal brick-and-mortar locations available across the province in an effort to curb the cannabis black market and better ensure the safety of Ontario’s communities.

Other amendments to the current process include:

  • Increasing the ability of licensed producers to participate directly in the retail market by allowing them to open a store at one of their production facilities.
  • Phasing in limits on the number of authorized stores a licence holder can have, to ensure fair access for retailers while creating medium and long-term market certainty. The limits will be 10 stores per retailer until August of 2020, increasing to 30 in September and then 75 in September of 2021.
  • Prospective retailers will be required to post a public notice of the planned retail location, and the Alcohol and Gaming Commission of Ontario will hear public input from those in the affected community for a 15-day period.
  • Enabling retailers to sell additional cannabis-related items such as cannabis-related magazines and cookbooks.
  • Authorized retailers will be allowed to offer a ‘click and collect’ service, which enables customers to place and pay for orders online and then pick them up in person.

The changes are aimed at creating more options for physical retail locations for cannabis producers quickly, in addition to creating an open market in this new area of retail. These amendments seem likely to pave the way for many more peopel to join the cannabis retail market and usher in a new retail landscape in the province.

New Forms of Cannabis Expected for Sale in Early 2020

In addition to the changes outlined above to the process of opening a retail cannabis location, Ontarians can also expect new forms of cannabis to become available for sale early in the new year. Currently, consumers can legally purchase dried flowers, oils and capsules through legal retail outlets. However, in October of this year, the federal government amended the Cannabis Regulations to allow for the sale of edibles, extracts and topicals. These items won’t actually be available in stores until 2020, because producers are required to notify Health Canada that they intend to provide such products to retailers. Health Canada, in turn, then has 60 days to review the products the producer intends to make available for sale.

The new forms of cannabis are defined as follows:

Edibles: Products made either from dried cannabis flowers or concentrates that are meant to be consumed by eating or drinking.

Extracts: Also knowns as concentrates, extracts are a concentrated form of the cannabis flower.

Topicals: These take the form of lotions or creams infused with cannabis extracts and are intended to be applied to the skin, hair or nails.

Those Seeking to Enter the Cannabis Retail or Production Market Should Seek the Advice of a Skilled Business Lawyer

While 2020 looks to be a boon to those wishing to enter the cannabis open market, it is still a complex process with many regulations and rules such as the Cannabis Licence Act and the Registrar’s Standards for Cannabis Retail Stores. Anyone looking to begin a business venture in the cannabis field should sit down with an experienced business lawyer who will advise them of their obligations, and guide them through the process while helping them to mitigate risk along the way.

The skilled business lawyers at GLG LLP in Toronto regularly assist organizations of all sizes and structures with a variety of issues, including configuration and structure of the venture as well as drafting comprehensive and carefully considered business agreements. Call 416-272-7557 or complete the online form to arrange a consultation with one of our lawyers today.