Cannabis licence lottery plans go up in smoke for local businesses

Airways General Store has been exploring the possibility of getting into the cannabis retail industry, but owner and operator Rhonda Reid says that her Prince Township-based convenience store on Second Line West and Airport Road probably won’t enter this week’s lottery for cannabis retail licences.

Applications for the lottery - which will hand out 25 licences across Ontario - are being accepted by the Alcohol and Gaming Commission of Ontario (AGCO) until noon Wednesday.

The application process kicked off Monday. 

“I’m looking into it right now, but I don’t feel there’s an urgency given that there’s only going to be 25 [licences],” Reid said.

Prince Township has opted into allowing cannabis retail, and has also approved Airways General Store to sell cannabis.

Given that just two cannabis retail licences will be allotted in northern Ontario following Friday’s lottery, Reid says that now may not be the time to throw her hat in the ring.

“The chances are very, very slim,” she told SooToday. “I’d rather get all my ducks in a row, make sure I’ve got everything in order.”

Meanwhile, The Other Guys - a downtown head shop - also have no intentions of entering into the lottery.

But it’s not because the City of Sault Ste. Marie has yet to decide whether it will opt in or out of allowing cannabis retail within its municipality.

“It’s not fair,” said owner Julie Kerhanovich. “We thought it was going to be open for everybody, and then they [AGCO] changed it last minute.”

“It was a blow.”

Ontario deemed the firm cap on the number of licences allotted necessary in order to address a serious shortage in cannabis supply. 

"We know that putting out 25 stores, which is the amount of cannabis that we can guarantee receiving, is the right way to go," Finance Minister Vic Fedeli recently told The Canadian Press. "This is only temporary. Once the federal government can guarantee a better supply then we know we'll begin to issue more licences as we go along."

But Kerhanovich believes the lottery is weeding out small businesses with its criteria - a $50,000 letter of credit, $6,000 for a licence and a number of monetary penalties if a business can’t deliver a fully functional cannabis retail outlet when the first wave of 25 stores open province wide in April.

If a lottery winner fails to sell cannabis April 1, $12,500 will be drawn from the $50,000 letter of credit, with another $12,500 being drawn if the business fails to sell cannabis by April 15.

If the business still isn’t selling cannabis by the end of April, an additional $25,000 will be drawn from the letter of credit.

“Anybody that’s a mom and pop shop, you’re risking it all for this,” said Kerhanovich. “The way that they did it, it seems to me like it’s more for people that have an excess amount of money to play with.”

“They turned it around so it’s not really an equal playing field for everybody.”

The Other Guys were planning on opening a cannabis retail store beside its Queen Street East location, even going as far as signing a lease.

“We had big plans, we were going to open this store next door to our head shop - now we can’t even do that,” Kerhanovich said.

The lottery is slated to take place Jan. 11.

Winners will be notified by AGCO within 24 hours of the lottery.

Rules and criteria for the lottery process can be found on the AGCO website.

- with files from The Canadian Press