Second Pot Lottery Closes, Fewer Applicants Expected

Article by Dale Carruthers, Woodstock Sentinel-Review

Second pot lottery closes, fewer applicants expected Dale CarruthersDale Carruthers There will be a lot more sales associates, like Matthew Reid at Central Cannabis in London,when 50 new legal cannabis retailers open across Ontario. The province is holding another licence lottery in August to expand the industry. (Free Press file photo)

Cities and towns in Southwestern Ontario will soon find out whether they’ll be home to the any of the second wave of cannabis retail stores opening in the fall.

Applicants vying for a shot at one of 42 marijuana retail licences had until Friday to submit an application to the Alcohol and Gaming Commission of Ontario (AGCO), the province’s pot regulator, with the winners to be announced on Aug. 20.

But one leading cannabis lawyer says the financial requirements placed on applicants may be problematic, because many financial institutions remain skeptical of the marijuana industry.

“Last go-around, the big question was, ‘How many entries are there going to be?’ ” Ottawa-based lawyer Trina Fraser said of the January lottery that drew more than 17,000 expressions of interest.

“And I think the more relevant question this go-around is, ‘How many qualified entries are there going to be?’ ”

Lottery applicants were required to, among other things, get confirmation from a bank or credit union that they have the access to $250,000 in cash or short-term investments and the ability to quickly obtain a $50,000 letter of credit.

Some hopeful retailers couldn’t get the necessary documents from their bank or credit union, while others received paperwork that’s unlikely to meet the AGCO’s requirements, Fraser said.

“And I’m concerned that’s going to lead to those entries being disqualified,” she said Friday.

While most financial institutions have shunned the cannabis industry, Ontario-based credit union Alterna has moved in to fill the void.

“It has been in the industry pretty hard core for years now and is been very friendly to the industry when other banks and credit unions have not been,” Fraser said of Alterna.

The AGCO announced in July it would license an additional 50 pot shops, including eight reserved for First Nations communities, to open as early as October.

Unlike the January lottery for the first 25 licences, this one required applicants to provide confirmation they’d secured a lease.

That demand, along with the financial requirements, will weed out applicants like the ones who entered the first lottery without doing any preparations, Fraser said.

“The cost to enter this lottery became much higher than $75,” Fraser said, referring to the entry fee for the last lottery.

Eleven of the next 42 licences are allocated to the west region, an area stretching from Windsor to Niagara.

Read the full article here.

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