Summary of AGCO’s Ontario Retail Cannabis Lottery Rules

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Yesterday, the AGCO released the rules that will govern the lottery process. The complete release from the AGCO can be read here. Below we provide a summary of the highlights:

  • The Expression of Interest Lottery covers a period from January 2, 2019 to December 13, 2019. At this time, and subject to the provincial government making further changes to the lottery and licensing process, it is contemplated that only 25 retail store authorizations will be handed out during this time period.
  • Expression of Interest Applications will be accepted from 12:01 AM EST on January 7th until 12:00 PM on January 9th. The government has indicated that all applications submitted during this window will be treated equally, irrespective of when they are submitted during the open window.
  • The AGCO intends to publish the lottery results within 24 hours of the lottery selection which will take place on January 11.
  • There is a non-refundable expression of interest fee of $75.
  • Within 5 business days of AGCO publishing the lottery results, the 25 selected applicants will need to:

(a) Submit a Retail Operator Licence Application including a non-refundable $6,000 fee payment; and

(b) Provide a $50,000 Letter of Credit in a form provided by the AGCO. The Letter of Credit must remain open until December 13, 2019. There are certain situations in which the AGCO will draw on the Letter of Credit – set out in Section 18 of the lottery rules. For example, if the applicant is not selling cannabis on April 1, 2019, $12,500 will be drawn. If the applicant is not selling cannabis on April 15, 2019, an additional $12,500 will be drawn.

  • Those applicants who are selected to apply for a licence:

(a) Must use the same legal name and applicant type identified on the Expression of Interest Application in their Retail Operator Licence Application; and

(b) Are not permitted to change their applicant type, ownership and/or corporate structure in such a way that would result in a change of control of the Expression of Interest Applicant or licensee during the Lottery Process.

  • Prospective Expression of Interest Applicants or their representatives must create an iAGCO account prior to filling out an Expression of Interest Application.

  • Within one Expression of Interest Application, the Applicant may identify up to five of the regions (as defined in the regulations) for a total of five separate entries in the lottery (i.e. one per region). However, an Applicant and its Affiliate(s) (as defined in the regulations) will be disqualified if they submit separate applications for the same region(s).

  • There will be a “selected list” and a “wait list” for each region. Section 17 of the lottery rules sets out the four situations in which an Expression of Interest Applicant that is first on a wait list for a region will be moved to the selected list for that region.

  • An Expression of Interest Applicant and its Affiliate(s) may all submit separate applications as long as they are for different Regions. If Affiliates of each other are placed on the Selected List for different regions, only the first drawn Expression of Interest entry will be notified that they can proceed with the application process and the second drawn Affiliate entry becomes ineligible.

Above are the highlights of the rules that were provided. The complete version of the rules contains a number of additional items such as identifying certain groups of people who are ineligible to enter the lottery and the process for withdrawing an application.

It is clear that only those who are positioned to be operating by April 1, 2019 should consider entering the lottery process. For those who are interested, the complete set of rules should be consulted prior to submitting an Expression of Interest entry.

The Torkin Manes Cannabis Law Group would be pleased to answer questions that potential applicants may have and assist in the retail application process.

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