Ontario Retail Cannabis Licence Structure Taking Shape

Nova Cannabis Sets Up Licensing Agreement with Toronto-Based Retailer

The rules around Ontario’s retail cannabis licence structure are beginning to take shape. There have been some clear regulations, including the fact that licensed producers (LPs) cannot own more than 9.9 per cent of a retail cannabis operation. So how would the retail cannabis system work with independent licensees?

One of the winners of the Alcohol and Gaming Commission of Ontario (AGCO) retail cannabis lottery, Heather Conlon, has signed a licensing agreement with Nova Cannabis to use their name at the retail cannabis location. She plans to open a cannabis storefront in Toronto, pending public consultation.

Nova Cannabis is a brand of Alcanna Inc, an Alberta-based company that is a private alcohol retailer. Aurora Cannabis purchased 25 per cent of the company in 2018 as a way to enter the retail cannabis market.

“She has a licence agreement to use our name, and we’ll help her out with some of the construction, training… but it’s her store,” said James Burns, chief executive of Alcanna Inc .

Burn underlined that this wasn’t a franchise agreement. Conlon would be the sole proprietor and would own 100 per cent of the store. This statement is presumably to ensure an arm’s length from the store owner to ensure it meets Ontario retail cannabis laws.

It seems to be working. AGCO has allowed Conlon to proceed to the next step of the process, a sign that AGCO will allow this type of licensing agreement under its regulations.

“Everything has been declared, we tried to make sure everything is above board,” Burns said.

Not the First Retail Cannabis Agreement in Ontario

This isn’t the first announcement of partnerships, though it is one of the few that has made a clear-cut announcement. Last week, the Tragically Hip-backed Up Cannabis announced plans for an “experiential hub” in a Kingston, Ont. store. That store will be operated by Spirit Leaf, Inc., another Alberta-based company that has partnered with a cannabis lottery winner. The Up Cannabis retail operation will be a “store within a store”.

These particular partnerships may also be a sign that Alberta is well ahead of Canada in terms of retail cannabis as Alberta Premier Rachel Notley said at the beginning of the year.

We’ve also seen the other side of AGCO’s regulations at work. Earlier in February, one cannabis lottery winner was disqualified, apparently in breach of the stipulation that the lottery winner cannot change the name on the application or the company structure after winning.

This regulation will likely see the creation of many similar partnerships between retail cannabis store owners and many layers of companies all trying to keep an arm’s length between LPs and retail cannabis storefronts.

Earlier this month, the AGCO announced that all retail cannabis owners, operators, and employees would have to take the CannSell certification. The program is similar to the province’s Smart Serve program for bartenders and staff serving alcohol.

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