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New guide provides clarity for retail cannabis shops

Ontario’s cannabis retail store regulations are beginning to take shape, Toronto licensing and compliance lawyer Anar Dewshi tells AdvocateDaily.com.

Following the federal government’s recent legalization of cannabis for recreational use, the provincial government stepped up to unveil its own framework for regulating the drug’s sale, placing the Alcohol and Gaming Commission of Ontario (AGCO) in charge of the licensing regime for private retailers.

On Nov. 27, the AGCO unveiled the first sections of its Cannabis Retail Regulation Guide.

“The publication sets out comprehensive guidelines for the types of licences required to operate a retail store and eligibility requirements,” says Dewshi, principal of Dewshi Law Practice

She explains that the guide requires all store operators to source their supply via the Ontario Cannabis Store.

“This will ensure that legitimate sources of cannabis are sold at the retail store level,” Dewshi says. 

In addition, the new guide spells out more details on the licences and authorizations needed from the AGCO to get into the retail cannabis business.

  • Retail operator licence: The non-transferable $6,000 licence lasts for an initial two-year term, and allows for the operation of more than one retail store. According to AGCO’s guide, it can impose conditions on licences to address any specific risks or concerns the regulator identifies. Applicants may also be deemed ineligible if they are “not financially responsible” in running their cannabis business, have insufficient control over it, or if they operate in a way that runs contrary to the law, integrity, honesty or the public interest.

    “Definitions are not provided, so there will need to be further explanation to bring clarity,” Dewshi says.

  • Retail store authorization: Running for an initial two-year term, this authorization costs $4,000 and is required for every retail store operated by the holder, up to a maximum of 75 for each applicant and their affiliates.

    “This is a high number of stores per licensee, but not all municipalities will permit them, so applicants must check before applying,” Dewshi says. Holders must also undergo training courses or programs approved by AGCO, but the guide does not elaborate on them at this stage.

  • Cannabis retail manager licence: Every store requires a licensed manager unless the retail operator licence-holder is also performing management duties at a particular outlet. This person is responsible for the cannabis inventory, hiring and managing employees, as well as ensuring the store operates with honesty and integrity at all times.

In a statement announcing the measures, Attorney General Caroline Mulroney said the provincial government will start accepting licensing applications from prospective retailers on Dec. 17, with the system to ultimately kick into gear in April 2019.

The guide also provides new details on the renewal process for licences and authorization following the expiry of the initial two-year term.

“All applicants need to ensure that they have complied with the legislation, regulations, and guidelines to be granted renewal,” Dewshi says.

Denial of a licence will result in a two-year ban on further applications, she adds.

According to the guide, non-compliance can also result in the suspension or revocation of licences and authorizations, but holders may request a hearing before the Licence Appeal Tribunal (LAT) by filing a Notice of Appeal.

“The appeal process at the LAT is that holders have 15 days to file a notice of appeal after receiving a notice of proposal to revoke,” Dewshi says.

The guide says that no person is allowed to offer licence-holders or store employees a “material inducement or benefit.” In turn, retail operators are barred from giving away cannabis or drug accessories or from offering inducements to customers to buy cannabis.  

“Again, there are no definitions provided, so more information will be required as to how this will be determined, as well as the consequences for a breach,” Dewshi adds.

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