On September 27, 2018, the Government of Ontario introduced Bill 36, which became the Cannabis Statute Law Amendment Act, 20181 (the “SLAA”) once it received Royal Assent on October 17, 2018. Schedule 2 of the SLLA established the Cannabis Licence Act, 20182 (the “CLA”), which will regulate privately-run cannabis retail stores in Ontario.
The CLA will come into force on a date proclaimed by the Lieutenant Governor. Although it is not known exactly when this will occur, it will happen sometime before April 1, 2019, the proposed start date for the opening of privately-run cannabis retail stores in Ontario.
So how will the Government of Ontario regulate these privately-run cannabis retail stores? A detailed summary of its proposed regulatory framework appears below.
Overview of the Licencing Process
The Alcohol and Gaming Commission of Ontario (the “Commission”) will be the entity responsible for licencing privately-run cannabis retail stores in the Province of Ontario. According to the CLA, the Commission will be responsible for three different types of licences/authorizations: (1) a Retail Operator Licence, (2) a Retail Store Authorization, and (3) a Cannabis Retail Manager Licence. It is expected that the Commission will begin accepting applications for these licences/authorizations in December 2018.
Retail Operator Licence (“ROL”)
In order to operate a cannabis retail store, an interested individual or entity must first apply for an ROL. The CLA does not limit the total number of ROLs that the Registrar of Alcohol, Gaming and Racing (the “Registrar”) may issue. Once issued, ROLs are not transferable.
In order to apply for an ROL, the following requirements must be satisfied:
- An individual applicant for a ROL must be at least 19 years of age. In the case of a corporate applicant, every director, officer, and shareholder must be at least 19 years of age.
- An applicant who has been previously refused an ROL, a renewal of their ROL, or had their ROL revoked is ineligible to reapply for a period of two years from the date of refusal or revocation, unless the Registrar is satisfied that there has been a significant change in circumstances.
- An applicant is not eligible for an ROL if any of the following apply:
- There are reasonable grounds to believe that the applicant will not be financially responsible in the conduct of the cannabis retail business, having regard to the financial history of: (i) the applicant; (ii) persons interested in the application; and (iii) any directors, officers, or shareholders of the applicant, or persons interested in those individuals (collectively, the “Relevant Individuals”);
- There are reasonable grounds to believe that the applicant will not carry on business in accordance with the law, or with integrity, honesty, or in the public interest, having regard to the past or present conduct of the Relevant Individuals;
- A Relevant Individual has been convicted or charged with an offence under the CLA, the Cannabis Control Act, 2017 (formerly known as the Cannabis Act, 20173), the federal Cannabis Act4, or the regulations made under any of these statutes;
- There are reasonable grounds to believe that the applicant is carrying on activities that are, or would be, in contravention of any provision of the CLA, the Cannabis Control Act, 2017, the federal Cannabis Act, or the regulations made under any of these statutes;
- The Registrar is not satisfied that the applicant will exercise sufficient control over the cannabis retail business;
- The applicant (or their employees or agent) makes a false statement or provides false information in the application; or
- Any other circumstances prescribed by regulation (draft regulations have not been published yet).
The CLA also makes clear that an ROL may still be issued even if a Relevant Individual was previously convicted or charged with a prescribed offence under the federal Controlled Drugs and Substances Act5 in relation to cannabis. Although no offences have been prescribed by regulation yet, it is likely that simple possession of 30 grams or less of cannabis will be on the list.
Retail Store Authorization (“RSA”)
In addition to an ROL, an applicant must also apply for an RSA for each cannabis retail store that they intend to operate. Once issued, an RSA is not transferable and only authorizes the applicant to operate the specific store that was described in the initial application. The CLA does not limit the total number of RSAs that the Registrar may issue.