Ontario Set to Add 50 New Marijuana Shops

Ontario is preparing for the second round of its marijuana retail lottery, which will add 42 new storefronts.

The Alcohol and Gaming Commission of Ontario (AGCO) received approval on Wednesday (July 3) from the provincial government to conduct a second lottery for retail applicants to open a total of 50 new stores, while still wording concern for the supply issues of legal marijuana.

In a statement, the government announced that retailers will be able to submit an application for the lottery to the AGCO sometime this summer.

While Ontario is planning for 50 new stores, only 42 will be selected through the lottery. The remaining eight stores are being designated to open on a First Nations reserve. These stores will be selected through a separate process from the lottery and via a first come, first served basis.

In the breakdown from the province, Toronto will see the highest number of new stores from the second lottery, with 13 being allocated to the city. The remaining stores will be split between what the AGCO denominates as the East region, West region, North region and GTA region.

The second lottery will also ask for new standards from its applicants. The province indicated that participants must already have a retail space secured for the store and must also show proof of access to enough capital for the store to open.

After the first lottery round was completed, Ontario sought to open 25 stores on April 1. However, delays caused it to only 10 stores opened initially.

Statistics Canada showed Ontario cannabis sales quickly rose after the opening of its stores. In April, sales of recreational cannabis in Ontario resulted in C$19.6 million.

Following the legalization of recreational marijuana in 2018, consumers were only capable of buying product from the Ontario Cannabis Store online.

Ontario claims supply issues are a concern, but moves forward with new stores

Previously, the Ontario government had announced that it would reverse course from an immediate privatization opening for stores and instead put a lottery system in place to determine the first round of stores. At the time, the government cited supply shortages as the main concern for the open system.

While the new stores’ roll-out could indicate that these issues have been addressed for the province, in its statement Ontario made it clear there are still concerns looming.

“While the federal supply issues persist, we cannot in good conscience issue an unlimited number of licences to businesses,” said Ontario attorney general Doug Downey. “A phased-in approach remains necessary.”

Ontario consumers will see more stores thanks in part to what the province described as marginal improvements in the supply of legal cannabis product.

Marijuana investors were able to gain a stake in the Ontario retail market thanks to the deal-making that took place, allowing a variety of public players to gain a piece of the market.

In the lead-up to the opening of the stores, the Ontario government asked its municipalities to conduct a one-time vote to determine whether or not the cannabis stores would be allowed in these communities at first.

The AGCO indicates that the municipalities that voted against the stores still have a chance to opt-in to the stores. However, once that opt-in is agreed upon, there is no way for the municipality to opt-out again.

Click here for the full list of towns and municipalities that opted-out of getting cannabis shops.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.