75 Cannabis Shops Still Not Enough to Eliminate Black Market, Expert Says

Article by Barrie Today

75 pot shops still not enough to eliminate black market, expert says Cannabis consultant also says the random nature of the lottery may create problems for communities when it comes to the location of their pot shops

Ontario has selected 42 operators who can apply to run the next wave of cannabis shops in the province but some analysts say the new stores still won’t be enough to combat pot sold on the black market.

The Alcohol and Gaming Commission of Ontario — which regulates the sector — held the province’s second cannabis store lottery Tuesday and announced the results Wednesday. The new stores, when approved, will more than double the number of marijuana outlets in the province.

“The AGCO will only licence applicants and authorize stores that meet all legal and regulatory requirements,” the agency said in a statement, noting that the aim was to have new stores open in October.

Unlike the first lottery for 25 stores, applicants in the latest draw had to show they had secured retail space that could be used as a store if they were selected, and that they had enough capital — $250,000 on-hand — to open it.

Those selected now have until Aug. 28 to pay licensing fees, and provide a letter of credit for an additional $50,000 to the regulator.

Another eight stores will be located on First Nations reserves and are being approved through a separate process. Applicants for those licences were selected last month and are currently being greenlit, the AGCO said.

The latest lottery and the on-reserve stores mean the number of pot shops in Ontario will eventually rise to 75, but some observers said that still wasn’t enough.

“Fifty more licences is a good step, but it’s nowhere near what they need to do to actually deal with the illicit market,” said Omar Khan, a vice president at strategy firm Hill+Knowlton who advises cannabis sector clients.

“What that means is that the small business person whose taken out a line of credit and put money down for the lease is facing some stiff competition from those who aren’t necessarily following the legal framework. To me, that’s quite unfair.”

David Phillips, a principal at consulting firm Navigator who is a former executive at the Ontario Cannabis Retail Corporation, also said the black market continued to be an issue.

“Every additional store in Ontario will help towards eliminating the illicit market, but the province still has a long way to go,” he said.

Read the full article here.

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