First round of brick-and-mortar cannabis retailing licences neglects small cottage communities

marijuana-in-jars-retail-shop Photo by Shutterstock

Cannabis may now be a legal recreational drug in Canada, but good luck for now in trying to buy any from an outlet in Ontario’s cottage country. The retailing roll-out has been slowed—or in some cases, halted altogether—by two factors. One is that some municipalities (about thirty-five) have voted to opt out of recreational cannabis retailing. The other is the province’s decision to restrict outlets for the first round of brick-and-mortar retailing licences to municipalities with at least 50,000 residents in the 2016 census, which severely limits the number of cottage-country communities that can qualify for now.

Parry Sound-Muskoka, in the heart of cottage country, is one region affected by the population limit. David Grand, CEO of Muskoka Grown in Bracebridge, told the Bracebridge Examiner that his cannabis production facility had planned to include a retail operation, but that expansion is now on hold. With a population of 16,010, the town won’t qualify. “Job creation and economic investments are being impacted in rural communities where the cannabis industry has the ability to create the biggest impact,” he said.

Under the original retailing plan of the provincial Liberal government, forty government-owned stores would open by July 1, 2019, with the number of stores slated to increase to 150 by 2020. With the election of the Conservative government in July, plans changed. Online sales through the government-owned Ontario Cannabis Store were introduced, but brick-and-mortar retailing would be privately owned and run under provincial licences administered by the Alcohol and Gaming Commission of Ontario.

On December 13, 2018, Ontario announced it would cap the number of cannabis retail licences at twenty-five for the entire province, until “supplies stabilized.” The new government blamed a lack of supply under the regulatory oversight of the federal Liberals for ratcheting back the number of outlets, which would be allowed to open on April 1, 2019. No retailing in municipalities of less than 50,000 will be approved until after the first twenty-five outlets opened. Eligibility will be revisited on December 13 of this year, when Ontario Regulations 468/18 and 497/18, which govern the licensing process, are scheduled to be revoked. We’ll learn then what if anything will change for smaller communities in the province.

The Alcohol and Gaming Commission ran a lottery in January to award retail licences, which would be distributed in five zones. The East zone, which cuts a swath through cottage country from Simcoe County and Muskoka all the way to (and including) Ottawa, would get five outlets. Among cottage-country locales, beyond the large city centres, only Peterborough and the Kawartha Lakes could meet the 50,000 cut-off.

The North zone, which stretches clear from Parry Sound to the Ontario-Manitoba border, would get two. The number of North communities that could even qualify by population was limited to Sudbury, Sault Ste Marie, North Bay, and Thunder Bay. A long list of vacation-country municipalities for now are shut out of retailing, including Brockville, Collingwood, Cornwall, Huntsville, Lake of Bays, Midland, Muskoka Lakes, Orillia, Owen Sound, Parry Sound, Penetanguishene, and Prince Edward County.

The randomly selected retail licence winners had until January 18 to apply for the approval of specific licence locations. Much maneuvering to form investment and retail partnerships came out of the lottery process, as all of the big names in the cannabis biz were shut out. Beyond finding out which outlets actually open where on April 1, we have to wait and see if retailing is allowed to expand to smaller communities after December 13.

That’s if those communities didn’t exercise their right to opt out of local retailing, which they had to do, in writing, by January 22. They can always opt back in, but if they do, they can’t opt out again. About thirty-five have opted out, including the prime summer destination of Wasaga Beach. One community that took their option down to the wire was cottage-intensive Tiny Township on southeastern Georgian Bay. The municipality held a committee of the whole meeting on January 14, at which residents were invited to express their opinion. A recommendation to council to opt out failed because of a tie vote. But as Tiny township only has 11,787 residents, the decision whether or not to allow retailing, for now, is a moot point.

An outstanding issue is what will happen with retailing on First Nations reserves. The province has given band councils the powers of municipal governments in deciding whether to opt out of retailing (as well to prohibit online sales to a reserve), but band councils were not required to do report an opt-out decision by January 22. The alcohol and gaming commission has asked band councils to notify it of their decisions, but so far it has none to report.


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