Ontario Tracks New Course for Retail Cannabis Sales

Earlier today, Attorney General Caroline Mulroney and Finance Minister Vic Fedeli laid out the Ontario government’s new plans with respect to the use and retail sale of cannabis in Ontario. The government announced that legislative amendments will be introduced tomorrow to allow the Ontario Cannabis Retail Corporation and stores under the Cannabis Licence Act, 2018 to sell recreational cannabis privately in Ontario.

Under these proposed amendments, the Alcohol and Gaming Commission of Ontario (AGCO) will issue licenses to and regulate all cannabis retail stores, gaining the authority to grant and revoke such licences. Retail stores require two licences to operate privately; the Retail Operator Licence (ROL) and the Retail Store Authorization (RSA). The AGCO must release RSA applications to the general public with notice for written submissions on whether the RSA is in the public’s interest.

The Ford government appears to be serious about ensuring a truly competitive retail landscape. This is likely why they will be restricting licensed producers (LP’s) to only one retail license limited to point of production. As well, the government is exploring individual caps to limit the percentage of market share that can be allotted to any one entity. Minister Fedeli indicated that this will be further hashed out in the regulations that will flow from tomorrows legislative amendments.

Both Fedeli and Mulroney also served notice to black market operators stating that no entity involved in illegal sales as of October 17th will be allowed to gain a licence in Ontario.

The Ford government is also moving to liberalise places of use restrictions with respect to cannabis. The Smoke-Free Ontario Act, 2017 and the Cannabis Act, 2017 will be further amended to clarify the legality of smoking and vaping in public places and will mirror current laws with respect to tobacco consumption. Fines for consumption of cannabis in prohibited areas will also mirror those currently in place for tobacco.

Importantly, the proposed amendments will provide exemptions for long-term care homes, hospices, and guest rooms in hotels, motels and inns. What this means is that Long-Term Care Homes, hospices and hotels can make consumption rooms available to residents and guests.

Municipalities have until January 22, 2019 to opt out of retail sales. This decision can be lifted through a later resolution passed by the municipality, but once lifted, the municipality cannot again opt out. First Nations Band Councils may decide whether a cannabis retail store will be located within their communities. These requests can be rescinded or amended at any point in the future and the Registrar must comply. Importantly the proposed amendments do not envisage any role for municipalities in terms of licensing or zoning.

The Ontario Cannabis Retail Corporation (OCRC) continues to maintain exclusive rights to the online sale of cannabis but will not operate any physical stores. The OCRC will also maintain its position as the exclusive wholesaler of cannabis to authorized cannabis retail stores. This means that LP’s will continue to deal with the OCRC with respect to supply agreements.

Regarding the governance of the OCRC, the Board will no longer be appointed by the LCBO but will instead be appointed by the Ontario Cabinet. The new OCRC board will report directly to the Minister of Finance.

Finally, the OPP will be authorized to use oral fluid screening devices at the roadside to enforce laws regarding driving under the influence of cannabis.

Some questions remain and are likely to be flushed out as the text of the legislation becomes available tomorrow and accompanying regulations are made public in the coming weeks.

H+K continues to monitor the situation closely.

For more information, please contact:

Omar Khan – Vice President, Public Affairs – Omar.khan@hkstrategies.ca

Melissa Lantsman – Vice President, Public Affairs – Melissa.lantsman@hkstrategies.ca

Vivek Prabhu – Account Director, Public Affairs – Vivek.prabhu@hkstrategies.ca

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