Ontario is Officially Ditching the Cannabis Retail Lottery in Favour of Open Market

Transition to Open Market To Remove Barriers for Aspiring Ganjapreneurs

Danielle Poirier
Dec 5, 2019 · 3 min read

The Alcohol and Gaming Commission of Ontario (AGCO) released a statement late-night December 12, 2019, stating the move toward an open market for Ontario.

Here’s the Gist:

With a gruelling luck-based model that used to rule Ontario’s retail cannabis licensing market, the province sought out a new ‘open-allocation’ model to make the process of issuing cannabis retail licenses more simple and streamlined for prospective cannabis business owners. The goal to create an open market will help progress the scalability of the cannabis industry toward becoming a mature market in Ontario.

weed makes a splash as open-allocation model will remove barriers for aspiring cannabis business owners
weed makes a splash as open-allocation model will remove barriers for aspiring cannabis business owners
Weed makes a splash as the open-allocation model will remove barriers for aspiring cannabis business owners

In comparison to Ontario’s previous lottery model, where prospective cannabis business owners submit an online application form and wait until the random lottery draw occurred with the hope that they’re selected, ‘open-allocation’ simplifies the process by allowing candidates to simply apply online, pass background checks, and then they’ll be able to open-shop, just like that.

Early November, the Ontario Cannabis Policy Council (OCPC) issued a statement noting that the government needed to “make the necessary changes” to launch more legal cannabis retail stores through the open-allocation of licenses.

The Council noted that they look forward to addressing the barriers for carrying out “a merit-based, open allocation system and a competitive, efficient retail market that can compete with the illegal market.”

As cannabis was federally legalized for the purpose of eradicating the illicit market, the government aims to progress the legal cannabis space toward a mature market stance, as well as ease the process and remove barriers for ambitious future cannabis retail entrepreneurs.

Impact:

Ontario is the country’s most populated province with over 14 million residents and currently has only 24 legal retail cannabis dispensaries open to-date with an additional 50 license-holders aimed to begin business by the end of 2019.

Premier Doug Ford acknowledged in the past that the Ontario government needed to ramp up their efforts to open additional legal cannabis dispensaries in the province to eradicate the still-thriving illicit market.

With a goal to establish the Ontario cannabis market toward maturity, the number of legal dispensaries is projected to launch from 75 in 2019’s year-end to a whopping 750–1000 after making the switch toward an open-allocation model.

Reasoning:

Today, with only 75 licenses divvied out province-wide, it’s impossible to be able to cater to the entire market. Research by The Cannalysts Inc., states that Ontario lost out on over $375 million in economic activity and tax revenue by not ramping up their brick-and-mortar stores upon legalization. Whereas, Alberta, the most successful province post-legalization launched with over 300 legal dispensaries and saw total cannabis sales upwards of $185 million just within its first year, according to Statistics Canada.

“The inability of the Ontario government to license retail stores right off the bat has resulted in half of the expected market in Canada simply not existing,” said Canopy Growth Chief Executive Officer Mark Zekulin.

Now that the Government of Ontario decided to lift the prior lottery model for an ‘open-allocation’ model, the province will be able to better deliver legal cannabis to the residents outside of the lottery winning service areas, as well as reap the benefits that tax revenues can bring into the economy.

Key Takeaways:

Now that the open market concept will take effect, it will lay the groundwork for the future of cannabis retail in the province.

Ontario’s Finance Minister Rod Phillips noted that their priority, “is to make sure that we have safe distribution and that we tackle the [illicit] market… Our government has been clear that private-sector delivery and private sector retailers are going to be an important part of that.”


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Danielle Poirier

Written by

Content Marketing Manager at Verda Innovations Inc. Sharing my knowledge and learnings within the cannabis space. Always looking for ways to grow!

Verda.ca

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Verda’s Blog

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