What’s Up in Weed

November 15, 2018

By: Andrea Hill

I am pleased to bring you this instalment of my blog, rounding up what’s currently happening in the cannabis industry in Canada and abroad.

Ontario Dispensary Update: Details on Regulations Released

• Yesterday evening, the Ontario government released new details about the regulations to the Cannabis Licence Act, 2018, which received royal assent on October 17, 2018 but is not yet in force.  The actual text of the regulations has not yet been released, however, so some important questions remain to be answered.
• One answer still anxiously awaited by the cannabis industry is the definition of “affiliate”.  This definition is important because the Cannabis Licence Act states that a licensed producer and its affiliates may not between them hold more than one retail store authorization, and the store must be located at the licensed producer’s site (few of which are in urban settings).  If, for example, an “affiliate” is defined as an entity in which a licensed producer holds at least 51% of the shares, then a corporation which was only 50% owned by a licensed producer would not be an “affiliate” and could possibly open up multiple other stores, allowing LPs more access to the retail market.
• Anyone who wants to open a retail cannabis store in Ontario will require a cannabis retail operator licence for the operating entity and a retail store authorization for each specific store location. Individuals who carry out management functions at each store will require a cannabis retail manager licence.
• New information announced by the government includes:
  • A market concentration limit of 75 stores per operator has been set to prevent a high degree of market consolidation. It’s not clear, however, whether the same shareholders, or majority shareholders, of one corporate operator could establish and licence other operators to capture another 75 stores each.
  • A minimum distance of 150 metres (about 500 feet) from schools, including private and federally-funded First Nation schools.  The definition of where a “school” begins is still not clear, however (some schools have grounds extending well beyond the building itself).  The government has not mentioned any difference in distances between urban and rural settings; this distance requirement could pose a problem in dense cities like Toronto, especially when you through private schools into the mix.
  • As we previously reported, the application process is expected to open on December 17, 2018 through the website of the Alcohol and Gaming Commission of Ontario.  The government reiterated its previously announced goal of retail businesses open their doors by April 1, 2019.
  • Retailers will not be permitted to allow anyone under the age of 19 to enter their stores.  While perhaps politically correct on the surface, this kind of rule in practice leads to people who have their kids with them being unable to shop in the store, or forced to leave children outside.  It also perpetuates some of the mystery around cannabis when the whole point of the Cannabis Act is to bring the drug into the light.
  • Applicants will need to demonstrate tax compliance status and will not be licensed if they have associations with organized crime, or if they were operating an illegal dispensary after October 17, 2018 (the day the federal Cannabis Act took effect).
  • Maximum permitted operating hours for any retail store will be 9:00 am to 11:00 pm on any day.
  • All retail cannabis stores must be “stand-alone stores only”.  It’s not clear what this phrase means, but it could prevent cannabis retail stores from being established within other stores or shopping centres.
  • All individuals with a store authorization, cannabis retail managers, and retail employees of a store will need to complete approved training to ensure that they can sell cannabis responsibly (at first glance, this sounds similar to the “Smart Serve Certification” that is required for Ontario alcohol servers).

What’s Up in Weed is not legal or financial advice. It is a blog by SkyLaw which is made available for informational purposes only and should not be used as a substitute for professional advice from a lawyer. This blog is subject to copyright and may not be reproduced without our permission. 

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