January 10, 2019 DOWNLOAD PDF

Roadmap to Cannabis Retail: The Three Canadian Models

Original Newsletter(s) this article was published in: Blaneys on Business: January 2019

Co-Author: Alex Fernet Brochu, Articling Student

Contributions by: Angela Smith, PhD, Catalyst Life Science Consulting

On October 17, 2018, Canada became the second country in the world, and the first G7 nation, to legalize recreational cannabis.[1] The Cannabis Act[2] and Regulations create a strict legal and regulatory framework for controlling the production, distribution, sale and possession of cannabis across Canada. Under the newly in force Cannabis Act, provinces and territories are responsible for determining how cannabis is distributed and sold within their jurisdictions. This means that each province and territory has been tasked to create its own set of rules governing the “how, where and when” of their individual cannabis distribution and retail system(s).[3] Since the Liberals officially announced on April 20, 2016 that the government would move forward in legalizing cannabis,[4] the provinces and territories have been working toward this goal for varying amounts of time. Post-legalization, each province and territory is at a different level of preparation and readiness.

To date, all provinces and territories appear to have delegated the regulating, licensing and distribution of cannabis to their existing alcohol and gaming authorities. There are predominantly three distinct distribution/retail models emerging: 1) Government-Run model, 2) Request-for-Proposals (RFP) model, and 3) Free Market model. Many provinces and territories have elected to have the aforementioned alcohol and gaming government agency be the sole authorized cannabis distributor and retailer for the province (Government-Run model). Others opted to send out RFPs ahead of legalization and to select a finite number of applicants as licensed private retailers (Request-for-Proposals model). Finally, select provinces opted for a licensing process where applications are submitted, reviewed and approved, with licences being granted on an ongoing basis (Free Market model).

The following table illustrates the retail models chosen by each respective province and territory:

Physical Retail Establishments

e-Commerce

Province/Territory

Government-Run

Request-for-Proposal

(Private)

Free Market

(Private)

Online Sales

(Government)

Online Sales

(Private)

Alberta

X

X[5]

British Columbia

X

X

X[6]

Manitoba

X

X[7]

New Brunswick

X

X

Newfoundland and Labrador

X

X[8]

Nova Scotia

X

X

Ontario

X

X[9]

Prince Edward Island

X

X

Quebec

X

X

Saskatchewan

X

X[10]

Northwest Territories

X

X

Nunavut

X

X[11]

Yukon

X

X[12]

Eight of the thirteen provinces and territories opted for a cannabis retail model allowing for private retailers, either under model 2 (RFP) or 3 (Free Market): Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Newfoundland and Labrador, Nunavut and Yukon. British Columbia is unique in its decision to open both government-run and privately-run physical retail stores in the province. Nunavut has yet to pass any regulations as to its final process for retail licensing, but passed a provincial Cannabis Act which allows the Nunavut Liquor and Cannabis Commission (NULC) to sell cannabis remotely (online and by phone) and allows the government of Nunavut to license establishments that sell cannabis, including stores and lounges.[13] NULC currently has a non-exclusive agreement with Canopy Growth Corporation (Tweed), allowing for the sale of cannabis products directly to individuals residing in Nunavut through the Tweed website.[14] At this time, Canopy Growth remains the only NULC approved agent.[15] Nunavut’s agent model most resembles model 2; although no RFPs were sent out, the NULC enters into contracts with retailers who then act as NULC’s agents.[16] Yukon also plans to enable private retail stores to operate under a licensing regime, but its regulations and policies are still being developed and have not yet been made public.[17]

Model 1: Government-Run Retailers

Under this model, the cannabis retailing market is entirely run by the provincial government, with legislation being passed which either creates a Crown corporation with the exclusive mandate of overseeing, managing and controlling the retail sales of cannabis, or enables the existing provincial alcohol and gaming authority to do same.

New Brunswick

In November 2017, New Brunswick introduced a new legislative framework which has now been proclaimed. Under that framework, the Cannabis Management Corporation Act establishes in legislation the Cannabis Management Corporation, the Crown Corporation charged with the oversight, organization, management and control of the retail sales of cannabis in New Brunswick. Amendments to the New Brunswick Liquor Corporation Act allow the New Brunswick Liquor Corporation, which operates under NB Liquor™, to operate cannabis retail operations through its subsidiary Cannabis NB™.[18] Cannabis NB is the only legal cannabis retailer in New Brunswick.[19]

Nova Scotia

In Nova Scotia, the Cannabis Control Act [20] provides for the regulation and sale of cannabis. The Act received royal assent on April 18, 2018, and restricts the sale and distribution of cannabis to one provider, the Nova Scotia Liquor Corporation (NSLC).[21] Cannabis can be purchased at designated NSLC physical stores or on the NSLC online store.[22] However, to access the website’s content customers must first visit a physical location with valid identification confirming they are 19 years of age and receive an online access code.[23]

Prince Edward Island

The Cannabis Management Corporation Act,[24] proclaimed August 11, 2018,[25] creates the Prince Edward Island Cannabis Management Corporation, which operates as PEI Cannabis™. PEI Cannabis has the exclusive right to purchase recreational cannabis from a licensed producer, and to conduct retail sales of cannabis in Prince Edward Island.[26] There are currently four government-owned retail locations for cannabis sales, as well as an online store.[27] Although the PEI Cannabis website indicates that distribution is to be effected through a partnership with the PEI Liquor Control Commission (PEILCC),[28] it also states that PEI Cannabis is the only retailer in the province, and that cannabis is exclusively sold through its four stand-alone stores.[29] It remains unclear what role, if any, will be played by the PEILCC in the distribution of cannabis.

Québec

In Québec, the Loi constituant la Société Québécoise du cannabis (LCSQC)[30] was sanctioned on June 12, 2018 and establishes the Société Québécoise du cannabis (SQDC), a subsidiary of the Société des alcools du Québec (SAQ), Québec’s Liquor Commission.[31] The SDQC is the only authorized retailer of recreational cannabis in the province.[32] All profits made from the sale of cannabis will be placed in a fund to be reinvested towards cannabis prevention and research.[33] Although Québec’s original legislation allowed for a legal age of 18 years old for cannabis consumption, the Québec government tabled new legislation on December 5, 2018 which will raise the legal age to 21 and prohibit cannabis consumption in all public places, including parks and streets.[34]

Northwest Territories

On June 1, 2018, the Legislative Assembly of the Northwest Territories enacted the Cannabis Legalization and Regulation Implementation Act (CLRIA),[35] which legalizes the sale and use of cannabis in the Northwest Territories.The CLRIA states that the Northwest Territories Liquor and Cannabis Commission (NTLCC) is responsible for the purchase, sale, classification and distribution of cannabis in the Northwest Territories.[36] The NTLCC regulates the distribution of alcohol and cannabis, and residents can buy legal cannabis products online from the NTLCC or from NWT Liquor Stores.[37] The money received in respect of the sale of cannabis is deposited in a “Liquor Revolving Fund”, and money necessary for the purchase and sale of cannabis, or for the operations of the NTLCC must be paid out of said fund.[38] Notably, communities will be able to hold a plebiscite on whether to restrict or ban the sale and use of cannabis, as they presently can for alcohol.[39]

Model 2: Request-for-Proposals Licensing

Provinces and territories which opted for the RFP model likely did so under a concern that a free market model would lead to too many retailers in an industry which is still in its infancy. Under that model, a call for applications is sent out for a set period of time. Once the call-for-applications process closes, all submissions are reviewed and only a finite number of licences is granted.

Manitoba

Manitoba has a private sector retail model regulated through the Manitoba Liquor and Gaming Authority (LGA), with wholesale distribution through the Manitoba Liquor and Lotteries Corporation (MBLL).[40] The LGA regulates, licenses, inspects and audits the industry while the MBLL administers central order processing and manages distribution to licensed private sector retailers. The private sector operates all retail locations.[41] Growth, Enterprise and Trade Minister Blaine Pedersen has described this framework as a hybrid model, a combination of government oversight and privately-run stores, with a goal to eliminate the illicit market.[42] On November 7, 2017, an RFP was released seeking four initial retailers. The provincial government announced the successful retailers on February 16, 2018:[43] 10552763 Canada Corporation; Consortium of Delta 9 Cannabis Inc. and Canopy Growth Corporation; National Access Cannabis; and Tokyo Smoke in partnership with BOBHQ. 10552763 Canada Corporation is a new entity featuring Avana Canada Inc. of Ontario, Fisher River Cree Nation of Manitoba, Chippewas of the Thames of Ontario, MediPharm Labs of Ontario, and US-based retailer Native Roots Dispensary.[44]

The department of Growth, Enterprise and Trade will monitor the sector for expansion opportunities as the industry establishes and matures. On July 23, 2018, Manitoba released a Request for Pre-Qualification (RFPQ) seeking retailers interested in pre-qualifying for future opportunities to operate new retail stores in Manitoba. Pre-qualified potential retailers will be selected through a lottery process based on geographic preference, and timing for the lottery has not been determined. Manitoba is no longer accepting proposals for the RFPQ. The RFP and the RFPQ are still available for public viewing.[45] Manitoba places limits on the number of cannabis retailers out of concern there may not be enough supply available from Health Canada-licensed cultivators and processors to serve an open marketplace at the date of legalization.[46] Manitoba’s goal is for 90% of Manitobans to have access to legal cannabis within a 30-minute drive within two years of legalization.[47]

Newfoundland and Labrador

On November 23, 2017, the Government of Newfoundland and Labrador authorized the Newfoundland Labrador Liquor Corporation (NLC) to regulate the possession, sale and delivery of recreational cannabis.[48]

The NLC issued an RFP for Licensed Cannabis Retailers in February 2018, with another RFP issued in May 2018 for specific regions. The proposals were focused on geographic areas throughout the province, with qualified proponents moving to the next step of application. Most of these applicants have since received their licences, while a few others continue to work on satisfying some of the requirements. Currently, over 67% of the population are within 50km of their nearest retail store. The NLC has announced that it will monitor the retail environment and will advise the general public if more retail opportunities are warranted.[49] Currently there seems to be 25 retailers open for business.[50]

The RFP provided four different tiers of service to allow for flexibility and to give applicants a number of options for their proposed business model.[51] Those four tiers of service reflect the four classes of licences established by Newfoundland and Labrador through its Cannabis Licensing and Operations Regulation. Two classes of licences may be issued for a cannabis store (tier 1 and tier 2), and two may be issued for a cannabis retail location (tier 3 and tier 4). Cannabis stores are stand-alone stores whereas cannabis retail locations are points of sales within a retail establishment which is not dedicated to cannabis. A stand-alone store can be the sole occupant of the premises (Tier 1) or located within a retail establishment while still constituting its own separate store (Tier 2). A retail location can be a separate point of sale within a retail establishment but with its own sales counter dedicated to the sale and supply of cannabis (Tier 3), or the sale and supply of cannabis can occur at the same counter used by the retail establishment where the point of sale is located (Tier 4). For tier 2, 3, and 4 licences, where the store or retail location is located within a retail establishment, such establishment may not include a pharmacy or have been issued a lounge licence under the Liquor Licensing Regulations.[52]

Saskatchewan

In Saskatchewan, both wholesaling and retailing is conducted by the private sector and regulated by the Saskatchewan Liquor and Gaming Authority (SLGA). The SLGA initially planned on issuing approximately 60 cannabis retail permits to private operators in as many as 40 Saskatchewan municipalities and First Nations communities. The Minister responsible for SLGA, Gene Makowsky, stated on January 8, 2018 that the municipalities and First Nations communities selected for retail locations would have the opportunity to decide whether they wanted cannabis retail stores in their community.[53] The initial allocation of retail store permits was to be in municipalities and First Nations communities with populations of at least 2,500, with larger communities being allocated additional permits.[54] Cannabis retail stores must be standalone operations, selling only cannabis, cannabis accessories and ancillary items. Cannabis retail locations are subject to local municipal zoning bylaws.[55]

The SLGA selected retail operators using a two-phase process: a first phase of initial screening for financial capacity and the ability to properly track and report inventory, and a second phase randomly selecting qualified applicants through a lottery.[56] An RFP took place and closed on April 10, 2018.[57] On June 1st, 2018, it was announced that the operators for the province’s 51 cannabis retail store permits had been selected. Based on municipalities and First Nations communities electing to proceed with all or a percentage of the allowable number of retail establishments, those permits are available in 32 communities.[58] Those proponents then had 45 days to begin the permitting process.[59] There are currently 17 businesses which have been issued a retail licence permit, though to date, some may not yet be open for business.[60]

Model 3: Free Market Licensing

Under this model, any individual or business can apply for and potentially receive a licence for cannabis retail activities, as long as numerous requirements are satisfied. The process can appear grueling, in view of the numerous hurdles to pass before obtaining a licence. However, this is the only model allowing for ongoing applications for licensing without a limit on the number of retailers. Which of those stores survive and thrive, and which are drowned by a sea of competition remains to be seen.

Alberta

The Alberta Gaming, Liquor and Cannabis Commission (AGLC) is responsible for regulating private retail cannabis licensing, the distribution of cannabis, and the operation of the online cannabis store on behalf of the Alberta government. Cannabis can only be sold in specialized retail outlets which are not allowed to sell alcohol, tobacco, or pharmaceuticals on the same premises.[61] A business, organization or individual wanting to open such a specialized retail outlet must have a retail cannabis licence, and the licensing process is also governed by the AGLC.[62] Retailers must only purchase cannabis from AGLC, who buys product from federally licensed producers and distributes it to licensed private retailers and to the public through the online store. [63] There are currently 65 licensed retailers in Alberta[64] and the application processing time is assessed at approximately two to four months. The AGLC has announced that as a result of the national cannabis supply shortage, it will temporarily stop accepting applications and issuing additional cannabis retail licences until further notice.[65]

The AGLC website provides potential applicants and members of the public with access to a detailed application package which includes all required forms, and information as to how to complete them.[66] AGLC will conduct a thorough personal and financial background check on applicants, associates, and key employees of the applicant.[67] An applicant that is or was a participant in the unlawful cannabis trade, including illegal retail or medical sales, or has criminal convictions for serious violence offences, possession for the purpose of trafficking, trafficking, manufacturing or production of a controlled drug or substance under the Controlled Drug and Substance Act (CDSA)[68 will not be eligible for a retail cannabis licence.

A business applying for a cannabis licence must be incorporated in Alberta or extra-provincially registered in Alberta, be separate from any other business, must only operate for the purpose of a retail cannabis store, and must have a signed lease or certificate of title.[69] A corporate entity applying for a retail cannabis store licence completes the Applicant disclosure form, and any corporate entity having an interest of 10% or more in the applicant entity must complete the Associated Applicant disclosure form.[70] Through an Order in Council dated February 15, 2018, the Lieutenant Governor in Council made the Gaming and Liquor Amendment Regulation. Under s. 106, a licence will not be issued if its issuance would result in more than 15% of the total number of issued cannabis licences being held by one person or by a group of persons where more than 15% would likely be subject to common control. [71]

British Columbia

In British Columbia, cannabis will be sold at government-run stores, licensed private retailers, and the British Columbia government online store. The Liquor and Cannabis Regulation Branch (LCRB) is responsible for licensing and monitoring private retail stores.[72] The LCRB is currently accepting applications for retail store licences through its online application portal, the cannabis licensing application portal.[73] The following schema illustrates the application process, which involves review, screening and assessment steps from two provincial ministries, as well as recommendations from the local government or Indigenous Nation:[74

Source: Non-Medical Cannabis Private Retail Store Licensing Update, Government of British Columbia

Applicants can answer questions about their proposed business to receive a customized to-do list to prepare an application, but a list of 12 general steps is included on the British Columbia government’s website. Applicants must own, lease or have an agreement to lease the proposed retail store location before applying, and a separate licence must be obtained for each store.[75]

Once an application has been submitted with the proposed location, consent for security screening, fees, and information about the applicant and associates, and once the recommendation has been received from the local government or Indigenous Nation, conditional approval is granted. The applicant can then secure ownership or a lease, and make changes to the store to match the floor plan, exterior signage and window covering submitted with the application. LCRB inspectors will assess whether the store meets provincial regulation and the applicant will not be authorized to possess cannabis until the licence application is fully approved.[76]

As part of the application process, all applicants must undergo a security screening including a criminal and police record check and a financial integrity check. A criminal record will not be an automatic bar to obtaining a licence. The province will evaluate criminal records on a case-by-case basis, but if the application process reveals an association with organized crime, that applicant will not receive a licence. Finally, operators of cannabis dispensaries currently operating illegally are not barred from obtaining a cannabis retail store licence and may apply through the same application process.[77]

Under the British Columbia Cannabis Licensing Regulations, an applicant for a retail store licence or group of related persons must not hold more than eight retail store licences. Moreover, one or more corporations must not hold more than eight retail store licences if the same person or corporation holds or beneficially owns 20% or more of any class of shares that confer the right to vote for the election of directors in each of the licence-holding corporations.[78]

As of January 4, 2019, there were 394 applications where the application fee had been paid, 154 paid but incomplete applications, 232 applications referred to local government or Indigenous Nation, 2 applications approved with conditions and 6 licences issued.[79]

Ontario

The Ontario government created the Ontario Cannabis Retail Corporation (OCRC), a Crown Corporation with the exclusive right to sell cannabis in Ontario to private retailers and online.[80] While the OCRC acts as the provider for cannabis, the Alcohol and Gaming Commission of Ontario (AGCO) will be the regulator for privately-run cannabis stores.[81]

The Cannabis Licence Act, 2018 (CLA), proclaimed on November 16, 2018,[82] sets out the general framework for retail licensing in Ontario. In all, two licences and one authorization under the CLA are required to operate and manage a private retail store: The Retail Operator Licence (ROL), the Retail Store Authorization (RSA), and the Cannabis Retail Manager Licence (CRML):

Licence

Attributes

Retail Operator Licence (ROL)

Allows the holder to operate one or more retail stores in Ontario.

Retail Store Authorization (RSA)

A separate authorization must be obtained for each separate store, linked to the location.

Cannabis Retail Manager Licence (CRML)

Every retail store must have one licensed retail manager, with the exception of a licensed retail operator who is a sole proprietor, or in a partnership with other individuals and will be both the licensed operator and performing the duties of the retail store manager of a particular store.

To obtain an RSA, one must already be the holder of or an applicant for an ROL.[83] The RSA is also available to authorize licensed producers of cannabis under the federal Cannabis Act who cultivate and/or process cannabis for commercial purposes, but this authorization is limited to one single retail store located on or within the site set out in their federal licence.[84] Public notice of an application for an RSA will be given by displaying a notice at the location of the proposed store, by posting a notice on the AGCO website, and by any other manner considered appropriate.[85] The public notice given will include a request for the municipality and its residents to make written submissions within 15 days after the notice is first given as to whether the issuance of a licence would be in the public interest.[86] Public interest feedback is limited to aspects defined by the CLA and associated regulations, which are related aspects of public health and safety, protecting youth and restricting their access to cannabis, and preventing illegal activities in relation to cannabis. In the case of a store that would be located on a reserve, the council of the band must approve the location for the licence to be issued.[87] Until January 22, 2019, a municipality can opt-out of the regulatory system by passing a resolution prohibiting cannabis retail stores from being located in the municipality.[88] The AGCO has made available a list of the municipalities having officially opted in or out of the regulatory system, which will be updated as municipalities provide this information. As of January 2, 2019, 22 municipalities have opted-out (including the cities of Markham and Mississauga), 39 municipalities have opted-in and 353 are recorded as ‘unknown’.[89]

At the moment, the online Ontario Cannabis Store (OCS) managed by the OCRC is the only legal option for purchasing recreational cannabis in the province of Ontario.[90] Although the AGCO originally aimed to start accepting applications by December 17, 2018,[91] the Government of Ontario announced changes to the allocation of cannabis retail licences on December 13, 2018. In view of the shortage of legal cannabis supply from federally licensed producers, Ontario’s original Free Market licensing plan will be put on hold and a ‘phased in’ approach adopted. In the meantime, 25 ROLs and RSAs will be allocated under an initial phase of the licensing. In a process similar to the RFPs model 2 structure, AGCO will receive Expressions of Interest (EOI) online, from January 7 to 9, 2019, and will select 25 applicants through a lottery process which will be overseen by a third-party fairness monitor.[92] On December 24, 2018, the AGCO announced that KPMG has been retained to act as said monitor and to oversee the lottery process.[93] The draw will take place on January 11, 2019, after which the 25 selected applicants will apply for one ROL and one RSA per applicant, with the original 25 stores scheduled to be open for business by April 1, 2019. The lottery process is meant to be a temporary model for issuing private retail licences.[94] Until more than 25 RSAs may be issued, none of the RSAs may be allocated to a federal licensed producer or an affiliate of a licensed producer, and one person or organization cannot hold more than one RSA. Moreover, no cannabis retail store can be located in a municipality with a population of less than 50,000.[95] These amendments to the original Ontario regulations under the Cannabis Licence Act, 2018 will be revoked on December 13, 2019, at which point Ontario will revert to the Free Market model as originally planned.[96] This adapted approach is aligned with the Federal government’s 2018 year-end insights that cannabis supply issues and constraints will be mainly alleviated within one year of legalization.[97]

The AGCO is currently developing a comprehensive Cannabis Retail Regulation Guide that will include all the information necessary to apply for licences. As the guide is still in development, new chapters are published as they become ready. There are currently five chapters available.[98] Additionally, the AGCO has published The Registrar’s Standards for the Private Retail Sale of Cannabis which establish requirements for licensees in numerous areas, including standards for store premises, equipment and facilities; surveillance, security, protection of assets and prevention of unlawful activities; staff training for responsible use and sale of cannabis; and compliance with the federal cannabis tracking system and secure and confidential record-keeping.[99]

Under the CLA, an applicant is not eligible to be issued a licence if there are reasonable grounds to believe that the applicant will not be financially responsible in the conduct of the retail business, will not carry on business in accordance with the law, or with integrity, honesty or in the public interest, or if that person has been convicted of or charged with an offence under the Cannabis Control Act, 2017, the federal Cannabis Act. If an applicant has been convicted of or charged with a prescribed offence under the Controlled Drugs and Substance Act in relation to cannabis, this will not prevent the issuance of a retail operator licence.[100]

A corporation is not eligible to be issued an ROL if more than 9.9% of the corporation is owned or controlled, directly or indirectly, by one or more federal licensed producers or their affiliates. Moreover, the Registrar will refuse to issue an RSA to an applicant who already holds, either alone or with its affiliates, 75 RSAs.[101]

Common Aspects of Private Provincial Retail Systems

Specific aspects of the cannabis retail store licensing systems, such as municipality involvement, restrictions on store location, and mandatory training, are addressed by nearly all provinces and territories which opted for the licensing of private stores.

Most provinces provide or have provided an opportunity for municipalities and Indigenous Nations communities to contribute to the outcome of the cannabis retail regulatory system. In Manitoba, a municipality can hold a plebiscite to prohibit the local sale of cannabis. If approved, no retail cannabis licence authorizing the operation of a store can be issued and any such licences in effect in the municipality are cancelled effective six months after the plebiscite.[102] In Alberta[103] and in Newfoundland and Labrador,[104] municipal approval is required before the licensing authority issues a retail cannabis store licence. In Saskatchewan, the approximately 40 municipalities and Indigenous Nations communities selected for retail locations had the opportunity to decide whether they wanted cannabis retail stores in their community, and 32 elected to proceed.[105] In British Columbia, there is a positive requirement for a recommendation from the municipality or Indigenous Nations community where the proposed store would be located. Although the British Columbia government’s webpage on cannabis licensing states that the LCRB is not bound by said recommendation,[106] its page on Indigenous Nations states that the LCRB cannot consider a licence application unless the relevant Indigenous Nation gives a positive recommendation.[107] It may be that the recommendation is binding for Indigenous Nations but not for local governments. In Ontario, municipalities have a one-time option to opt-out of having cannabis retail stores in their communities. If they wish to opt-out, municipalities must inform the AGCO by January 22, 2019. However, cannabis stores can only be located on First Nations Reserve with the approval of the Band Council.[108]

While some provinces specified buffer zones in their regulations where cannabis retail stores cannot be located, others left this responsibility to the individual municipalities. In British Columbia,[109] Manitoba,[110] and Saskatchewan,[111] municipalities may designate locations where cannabis activities are not permitted, and establish minimum separation distance between cannabis retail stores and certain types of properties. In Alberta, a retail cannabis store may not be located within 100 metres of a provincial health care facility, a school, or a parcel of land designated as school reserve.[112] In Newfoundland and Labrador, a licence shall not be issued if its location would cause inconvenience to a place of worship, school or hospital.[113] In Ontario, a retail cannabis store may not be located less than 150 metres from a school or a private school.[114]

Manitoba,[115] Alberta,[116] Saskatchewan[117] and Newfoundland and Labrador[118] each have a provincial certification program approved by their respective alcohol and gaming authorities to ensure individuals working in the cannabis retail industry have the knowledge to do so in a responsible manner. British Columbia,[119] Ontario[120] and Yukon[121] have planned for similar programs, the details of which have not yet been released. The Newfoundland and Labrador training program is the only one which appears to be voluntary, as opposed to mandatory.[122]

All provinces and territories which opted for the licensing of private stores, with the exception of Saskatchewan, chose a government-run supplier system where private retail stores can only obtain their inventory from a provincial entity such as the gaming and alcohol authority or a Crown corporation.[123] Saskatchewan has a licensing system for provincial wholesalers, who can sell to retailers and other permitted wholesalers but not the general public. Their operations must be physically located in Saskatchewan and their product can only be sold and distributed within the province.[124]

Despite these common features, and although the various retail frameworks adopted by the different provinces and territories can be grouped in three distinct models (Government-Run, RFP and Free Market), certain aspects are unique to each system. Of note is the attitude of the provinces towards previous illicit cannabis activities. At various points on that spectrum, Alberta specifically prohibits those previously involved in the illicit market from obtaining a licence, Ontario will allow those convicted of a cannabis-related offence under the CDSA to obtain a licence as long as they have not been in breach of the current Cannabis Act, and British Columbia does not bar individuals currently operating illicit dispensaries from obtaining licences.

Conclusion

For those living in jurisdictions which adopted the Free Market model, the level of financial risk and difficulty in attempting to obtain a licence will vary greatly based on which of those three provinces they live in (i.e. Alberta, British Columbia, Ontario). With requirements such as an offer to lease or a signed lease, the processing time could have a devastating effect on smaller businesses paying monthly rent while waiting on their approval, especially since, in British Columbia and Alberta, the application will not be granted until a written approval or recommendation from the proposed municipality is received. With Manitoba and Saskatchewan having completed their licensing for the foreseeable future and Alberta not currently accepting applications, the only provinces where one can currently apply for a cannabis retail store licence are Ontario and British Columbia. However, for the time being, access to the licence application process in Ontario will be limited to those 25 applicants selected through the AGCO lottery on January 11, 2019.

The Canadian recreational cannabis industry remains in its infancy, and in the next number of months and even years, this industry is expected to grow exponentially. The Canadian retail market itself will see its first expansion in the coming months with the proposed legalization of edibles, extracts and topicals,[125] which is currently open for public consultation (until February 20, 2019)[126] to come into force by October 17, 2019 at the latest.[127] As every province and territory attempts to meet the Federal government’s legalization objectives, and move this industry forward to “get it right”, eligible and interested individuals and businesses alike will benefit from expert legal and regulatory guidance to navigate the intricate and complex retail framework, and minimize the financial risk and challenges in obtaining a private retail licence.

Listen to the latest episode of Blaney’s Podcast: A Panel Discussion on the New and Evolving Cannabis Industry in Canada here.

Blaneys has a dedicated team of lawyers who are part of our multi-disciplinary Cannabis Group to handle all aspects of legalization. To learn more click here.


[1] What you need to know about cannabis, Government of Canada: https://www.canada.ca/en/services/health/campaigns/cannabis/canadians.html; Canada becomes second nation in the world to legalize marijuana, CNN: https://www.cnn.com/2018/06/20/health/canada-legalizes-marijuana/index.html.

[2] Cannabis Act, S.C. 2018, c. 16.

[4] Canada to introduce pot legalization legislation in 2017, Global News: https://globalnews.ca/news/2650706/canada-to-introduce-pot-legalization-legislation-in-2017/; Liberals' choice of 4/20 for recreational marijuana update demonstrates commitment, Financial Post: https://business.financialpost.com/midas-letter/liberals-choice-of-420-for-recreational-marijuana-update-demonstrates-commitment.

[5] Buying Cannabis, Government of Alberta: https://www.alberta.ca/cannabis-framework.aspx#p6241s3.

[6] Get Cannabis Clarity, Government of British Columbia: https://cannabis.gov.bc.ca/.

[7] Buying Cannabis in Manitoba, Liquor, Gaming, & Cannabis Authority of Manitoba: https://lgcamb.ca/cannabis/store-list/.

[8] Frequently Asked Questions, Cannabis NL: https://shopcannabisnl.com/pages/faq.

[9] Ontario Cannabis Retail Corporation Act, 2017, SO 2017, c 26, Sched 2, s 2(1).

[10] Cannabis Retailing, Saskatchewan Liquor and Gaming Authority: https://www.slga.com/permits-and-licences/cannabis-permits/cannabis-retailing.

[11] Currently, the only authorized agent is Canopy (Tweed) and its website does not allow for online sales. Cannabis Purchasing, Nunavut Liquor and Cannabis Commission: https://www.nulc.ca/news/?id=addf6310-40ce-e811-a979-000d3af49637.

[12] More options may be available at a later date once the private retail stores licensing regime is in place. Non-medical cannabis, Yukon Liquor Corporation: http://www.ylc.yk.ca/cannabis.html#where%20buy.

[13] Cannabis, Government of Nunavut Department of Finance: https://www.gov.nu.ca/finance/information/cannabis.

[14] GN ready for cannabis legalization, Government of Nunavut Department of Finance: https://www.gov.nu.ca/finance/news/gn-ready-cannabis-legalization.

[15] Cannabis Purchasing, Nunavut Liquor and Cannabis Commission: https://www.nulc.ca/news/?id=addf6310-40ce-e811-a979-000d3af49637.

[16] Bill 7, Cannabis Act, s 5, assent received June 13, 2018.

[17] Non-medical cannabis, Yukon Liquor Corporation: http://www.ylc.yk.ca/cannabis.html#where%20buy.

[18] Cannabis – Information on Legislative Framework, Government of New Brunswick: https://www2.gnb.ca/content/dam/gnb/Departments/eco-bce/Promo/cannabis_info/info_on_legislative_framework.pdf.

[19] Cannabis in New Brunswick, Government of New Brunswick: https://www2.gnb.ca/content/gnb/en/corporate/promo/cannabis.html.

[21] Cannabis Control Act, Ch 3 of the Acts of 2018, s 10.

[22] Nova Scotia’s Cannabis laws, Government of Nova Scotia: https://novascotia.ca/cannabis/laws/.

[23] Nova Scotia Liquor Corporation, Cannabis Need to Know: https://cannabis.mynslc.com/skins/Cannabis/pages/VerifyAge.aspx.

[24] Cannabis Management Corporation Act, 2018 c20 RSPEI 1988, C-1.3.

[25] Table of Public Acts, Updated October 2018, Government of Prince Edward Island: https://www.princeedwardisland.ca/sites/default/files/publications/leg_table_acts.pdf.

[26] Cannabis Management Corporation Act, 2018 c20 RSPEI 1988, C-1.3.

[27] Cannabis Policy and Legislation, Government of Prince Edward Island: https://www.princeedwardisland.ca/en/information/finance/cannabis-policy-and-legislation.

[28] Frequently Asked Questions, PEI Cannabis: https://peicannabiscorp.com/pages/general-faq.

[29] Frequently Asked Questions, PEI Cannabis: https://peicannabiscorp.com/pages/general-faq.

[30] In English, Law establishing the Quebec Cannabis Society.

[31] Loi no 57 (2018, ch 19), Loi constituant la Société québécoise du cannabis, édictant la Loi encadrant le cannabis et modifiant diverses dispositions en matière de sécurité routière, sanctioned and adopted June 12, 2018 at 23.1.

[32] Cadre Légal en bref, Gouvernement du Québec: https://encadrementcannabis.gouv.qc.ca/loi/cadre-legal-en-bref/.

[33] Mandat, Société Québécoise du cannabis: https://www.sqdc.ca/fr-CA/a-propos/la-sqdc.

[34] Quebec moves to raise legal age to consume cannabis to 21, Global News: https://globalnews.ca/news/4731893/quebec-cannabis-bill-21/.

[35] Cannabis Legalization and Regulation Implementation Act, Government of Northwest Territories: https://www.eia.gov.nt.ca/en/cannabis/cannabis-legalization-and-regulation-implementation-act.

[36] Cannabis Legalization and Regulation Implementation Act, Bill 6, s 21: https://www.assembly.gov.nt.ca/sites/default/files/bill_6_0_0.pdf.

[37] Cannabis in the NWT, Government of Northwest Territories: https://www.eia.gov.nt.ca/en/cannabis.

[38] Cannabis Legalization and Regulation Implementation Act, Bill 6, s 22.

[39] Legalizing Recreational Cannabis in the Northwest Territories - What is included in the GNWT’s proposed cannabis laws February 28, 2018, p 1: https://www.eia.gov.nt.ca/sites/eia/files/cannabis_legislative_summary-180228.pdf.

[40] Cannabis Retail Framework, Government of Manitoba: https://www.gov.mb.ca/jec/busdev/cannabis/index.html.

[41] Frequently Asked Questions, Government of Manitoba: https://www.gov.mb.ca/jec/busdev/cannabis/faq.html.

[42] Manitoba prepares for federal cannabis legalization - Provinces launches “know the risks” campaign to educate Manitobans, news release October 10 2018: https://www.gov.mb.ca/jec/busdev/cannabis/index.html.

[43] Cannabis Retail Framework Frequently Asked Questions, Government of Manitoba: https://www.gov.mb.ca/jec/busdev/cannabis/faq.html.

[44] Province Announces Conditional Acceptance of Proposals to Operate Retail Cannabis Locations, news release February 16, 2018: https://news.gov.mb.ca/news/index.html?item=43132&posted=2018-02-16.

[45] Request for Proposals for Retail Cannabis Stores, Government of Manitoba: https://www.gov.mb.ca/jec/busdev/cannabis/files/cannabis_rfp-20180319.pdf; Requset for Pre-Qualitifcations for Cannabis Retail Stores - Phase 2, Government of Manitoba: https://www.gov.mb.ca/jec/busdev/cannabis/files/cannabis_rfpq-201807.pdf.

[46] Cannabis Retail Framework Frequently Asked Questions, Government of Manitoba: https://www.gov.mb.ca/jec/busdev/cannabis/faq.html.

[47] Province Announces Further Opportunities for Cannabis Retail in Manitoba, news release July 23, 2018: https://news.gov.mb.ca/news/index.html?item=44469&posted=2018-07-23.

[49] Frequently Asked Questions, Cannabis NL: https://www.shopcannabisnl.com/pages/faq.

[50] Cannabis Retail Locations, Cannabis NL: https://www.shopcannabisnl.com/pages/cannabis-retail-locations.

[52] Cannabis Licensing and Operations Regulations, Regulation 94/18, s 4.

[53] Cannabis to Be Sold by Private Retailers, Regulated by SLGA, Government of Saskatchewan: http://www.saskatchewan.ca/government/news-and-media/2018/january/08/cannabis-retail-stores.

[54] Cannabis to Be Sold by Private Retailers, Regulated by SLGA, Government of Saskatchewan: http://www.saskatchewan.ca/government/news-and-media/2018/january/08/cannabis-retail-stores.

[55] Cannabis Retail Stores Selected, Government of Saskatchewan: http://www.saskatchewan.ca/government/news-and-media/2018/june/01/cannabis-retailers-selected.

[56] Cannabis to Be Sold by Private Retailers, Regulated by SLGA, Government of Saskatchewan: http://www.saskatchewan.ca/government/news-and-media/2018/january/08/cannabis-retail-stores.

[57] Saskatchewan Cannabis Framework Released, Government of Saskatchewan: http://www.saskatchewan.ca/government/news-and-media/2018/march/14/framework-for-cannabis-legalization.

[58] Saskatchewan Cannabis Framework Released, Government of Saskatchewan: http://www.saskatchewan.ca/government/news-and-media/2018/march/14/framework-for-cannabis-legalization.

[60] Cannabis Retailers in Saskatchewan, Saskatchewan Liquor and Gaming Authority: https://www.slga.com/permits-and-licences/cannabis-permits/cannabis-retailing/cannabis-retailers-in-saskatchewan.

[61] AGLC's role in legalization, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/aglcs-role-legalization.

[62] Retail Cannabis, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/retail-cannabis.

[63] Licensed Producers, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/licensed-producers.

[64] Cannabis Licensee Search, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/retail-cannabis/cannabis-licensee-search.

[65] Apply for a retail cannabis store licence, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/retail-cannabis/apply-retail-cannabis-store-licence.

[66] Apply for a retail cannabis store licence, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/retail-cannabis-licences/apply-retail-cannabis-store-licence.

[67] Retail Cannabis, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/retail-cannabis.

[68] Controlled Drugs and Substances Act, SC 1996, c 19

[69] Apply for a retail cannabis store licence, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/retail-cannabis-licences/apply-retail-cannabis-store-licence.

[70] Retail Cannabis, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/retail-cannabis.

[71] Gaming and Liquor Amendment Regulation, Alberta Regulation 13/2018 at s 106.

[72] Get Cannabis Clarity, Government of British Columbia: https://cannabis.gov.bc.ca/#.

[75] Cannabis Licensing, Government of British Columbia: https://justice.gov.bc.ca/cannabislicensing/.

[76] Cannabis Licensing, Government of British Columbia: https://justice.gov.bc.ca/cannabislicensing/.

[77] Security Screening and Financial Integrity Checks, Cannabis Licensing, Government of British Columbia: https://justice.gov.bc.ca/cannabislicensing/policy-document/security-screening-financial-integrity-checks.

[78] Cannabis Licensing Regulation, BC Reg 202/2018 at s 6.

[79] Application Statistics, Cannabis Licensing, Government of British Columbia: https://justice.gov.bc.ca/cannabislicensing/policy-document/application-stats.

[80] Ontario Cannabis Retail Corporation Act, 2017, SO 2017, c 26, Sched 2, ss 2-3, 6.

[81] Cannabis: Retail Regulation Facts, Alcohol and Gaming Commission of Ontario: https://www.agco.ca/cannabis-retail-regulation-facts.

[82] Cannabis Licence Act, 2018, SO 2018, c 12, Sched 2 https://www.ontario.ca/laws/statute/18c12.

[83] Cannabis Licence Act, 2018, SO 2018, c 12, Sched 2, s 4.

[84] Cannabis Licence Act, 2018, SO 2018, c 12, Sched 2, s 4(4).

[85] Cannabis Licence Act, 2018, SO 2018, c 12, Sched 2, s 4(7).

[86] Cannabis Licence Act, 2018, SO 2018, c 12, Sched 2, s 4(9).

[87] Cannabis Licence Act, 2018, SO 2018, c 12, Sched 2, s 4(6).

[88] Cannabis Licence Act, 2018, SO 2018, c 12, Sched 2, s 41.

[89] List of Ontario municipalities prohibiting or allowing cannabis retail stores, Alcohol and Gaming Commission of Ontario: http://agco.ca/cannabis/list-ontario-municipalities-prohibiting-or-allowing-cannabis-retail-stores?utm_medium=email&utm_campaign=Cannabis-.

[90] Cannabis Legalization, Government of Ontario: https://www.ontario.ca/page/cannabis-legalization.

[91] Cannabis: Retail Regulation Facts, Alcohol and Gaming Commission of Ontario: https://www.agco.ca/cannabis-retail-regulation-facts.

[92] Cannabis: Retail Regulation Facts, Alcohol and Gaming Commission of Ontario: https://www.agco.ca/cannabis/regulation/cannabis-retail-regulation-facts.

[93] Release: KPMG will be the independent fairness monitor for Ontario’s cannabis retail store lottery, Alcohol and Gaming Commission of Ontario: https://www.agco.ca/kpmg-will-be-independent-fairness-monitor-ontarios-cannabis-retail-store-lottery.

[94] Ontario Takes a Phased Approach to Cannabis Retail Licensing Due to National Supply Shortages, Government of Ontario: https://news.ontario.ca/mof/en/2018/12/ontario-takes-a-phased-approach-to-cannabis-retail-licensing-due-to-national-supply-shortages.html.

[95] Ontario Regulation, 497/18, s 8.1(4)

[96] Ontario Regulation, 497/18, s 8.3

[97] Trudeau says cannabis shortage likely to be resolved within a year, Global News: https://globalnews.ca/news/4765051/justin-trudeau-cannabis-supply-shortage/.

[98] Cannabis Retail Regulation Guide, Alcohol and Gaming Commission of Ontario: http://agco.ca/cannabis/guides/cannabis-retail-regulation-guide.

[99] Registrar's Standards for the Private Retail Sale of Cannabis, Alcohol and Gaming Commission of Ontario: https://www.agco.ca/content/registrars-standards-private-retail-sale-cannabis.

[100] Cannabis Licence Act, 2018, SO 2018, c 12, Sched 2, s 3(4)

[101] Ontario Regulation, 468/18, ss. 2, 7 and 12.

[102] Liquor, Gaming and Cannabis Control Act, CCSM c L153, 160.1 and 167(4): http://web2.gov.mb.ca/laws/statutes/ccsm/l153e.php.

[103] Apply for a retail cannabis store licence, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/retail-cannabis/apply-retail-cannabis-store-licence.

[104] Cannabis Licensing and Operations Regulations, 94/18, s 5(1).

[105] Cannabis To Be Sold by Private Retailers, Regulated by SLGA, Government of Saskatchewan: http://www.saskatchewan.ca/government/news-and-media/2018/january/08/cannabis-retail-stores; Saskatchewan Cannabis Framework Released, Government of Saskatchewan: http://www.saskatchewan.ca/government/news-and-media/2018/march/14/framework-for-cannabis-legalization.

[106] Cannabis Licensing, Government of British Columbia: https://justice.gov.bc.ca/cannabislicensing/.

[107] Indigenous Nations, Cannabis Licensing, Government of British Columbia:  https://justice.gov.bc.ca/cannabislicensing/policy-document/indigenous-nations.

[108] Ontario's Cannabis Retail Regulation Landscape, Alcohol and Gaming Commission of Ontario:  http://www.agco.ca/content/ontarios-cannabis-retail-regulation-landscape.

[109] Location Requirements, Cannabis Licensing, Government of British Columbia: https://justice.gov.bc.ca/cannabislicensing/policy-document/location-requirements

[110] Zoning for Cannabis: A Guide for Manitoba Municipalities - Manitoba Municipal Relations Community and Regional Planning manitoba.ca October 2018:

[111] The Cannabis Control (Saskatchewan) Act, Chapter C-2.111 of the Statutes of Saskatchewan, 2018, s 3-3.

[112] Apply for a retail cannabis store licence, Alberta Gaming, Liquor and Cannabis Commission:  https://aglc.ca/cannabis/retail-cannabis/apply-retail-cannabis-store-licence.

[113] Newfoundland and Labrador, Bill 20, an act respecting the control and sale of cannabis, s 18: https://codifyupdates.com/current_bill_status/1527604086724x484436835777118200.

[114] Ontario Regulation, 468/18, s 11.

[115] Smart Choices, Liquor, Gaming and Cannabis Authority of Manitoba: https://lgcamb.ca/smart-choices-certification/

[116] Requirements for Retail Staff, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/working-cannabis-industry/requirements-retail-staff.

[117] CannaSell SK Responsible Cannabis Sales, Tourism Saskatchewan Canada: https://industry.tourismsaskatchewan.com/education-and-training/cannasell-sk.

[118] Skills Pass, Cannabis NL: https://myskillspass.com/client/msp/cannabisnl/.

[119] Worker Qualification Training, Cannabis Licensing, Government of British Columbia: https://justice.gov.bc.ca/cannabislicensing/policy-document/worker-qualification-training.

[120] Training, Alcohol and Gaming Commission of Ontario:  http://www.agco.ca/content/training.

[121] Non-medical cannabis, Yukon Liquor Corporation: http://www.ylc.yk.ca/cannabis.html#training.

[122] Skills Pass, Cannabis NL: https://myskillspass.com/client/msp/cannabisnl/.

[123] BC LDB Cannabis Updates, BC Liquor Distribution Branch: https://www.bcldbcannabisupdates.com/; Licensed Producers, Alberta Gaming, Liquor and Cannabis Commission: https://aglc.ca/cannabis/licensed-producers; Cannabis Retail Framework Frequently Asked Questions, Government of Manitoba: https://www.gov.mb.ca/jec/busdev/cannabis/faq.html; About Us, Cannabis NL: https://shopcannabisnl.com/pages/about-cannabisnl; Yukon Liquor Corporation: http://www.ylc.yk.ca/ ; Cannabis Act, Nunavut, Assented to June 13, 2018, ss 22 and 23 http://www.assembly.nu.ca/sites/default/files/Bill-7-Cannabis-Act-ENG-FRE.pdf.

[124] Wholesale/Licensed Producer Information, Saskatchewan Liquor and Gaming Authority: https://www.slga.com/permits-and-licences/cannabis-permits/wholesale-cannabis-permits

[125] Canada Gazette Part I. Regulations Amending the Cannabis Regulations (New Classes of Cannabis). 2018 Dec 22; Vol 152, No. 1: http://gazette.gc.ca/rp-pr/p1/2018/2018-12-22/pdf/g1-15251.pdf;  Infographic: Proposed regulations for additional cannabis products, Published 20 Dec 2018: https://www.canada.ca/content/dam/hc-sc/documents/services/drugs-medication/cannabis/resources/proposed-regulations-edible-cannabis-extracts-topical-eng.pdf.

[127] Legalizing and strictly regulating cannabis: the facts, Government of Canada: https://www.canada.ca/en/services/health/campaigns/legalizing-strictly-regulating-cannabis-facts.html.