Jan 23, 2019

Expression of Interest Applicants, both on the Selected and Wait lists are encouraged to continue to review the Expression of Interest Lottery Rules together with Ontario Regulation 468/18, the Cannabis Licence Act, 2018 and the Registrar’s Standards for Cannabis Retail Stores so that they are fully aware of all applicable legislative provisions, regulatory requirements and Lottery Rules.

For example,  s. 8.1(4)(a) and (b) of O. Reg. 468/18 provides the following:

8.1 (4) Until such time as more than 25 retail store authorizations may be issued, none of the retail store authorizations that may be issued in accordance with subsection (3) may be allocated,

(a)  to the holder of a retail store authorization or a person whose affiliate holds a retail store authorization; or

(b) to a licensed producer or affiliate of a licensed producer.

Accordingly, where an affiliate relationship exists among Expression of Interest Applicants, only one of those Applicants may hold a retail operator licence.  The definition of affiliate is located in O. Reg. 468/18 at s. 2. Also review our Lottery FAQs.

The Expression of Interest Lottery Rules, which were released on January 2, 2019, were established to encourage the opening of cannabis retail stores on April 1, 2019, in line with Government direction to provide a safe, legal alternative to the illegal recreational cannabis market.  Potential applicants were made aware of this objective and the AGCO encouraged only those who were in a realistic position to meet those timelines to apply.

Expression of Interest Applicants who have been selected and received a Notification Letter from the Registrar, must use the same legal name and applicant type (Lottery Rules 2 & 16) when they make their Retail Operator Licence application and throughout the Licensing Process (January 2 to December 13, 2019). Once an EOI Applicant has been issued a Retail Operator Licence, should they change their applicant type, ownership and /or corporate structure in a manner that does not result in a change of control of the licensee during the lottery process, they may be required to re-apply for their operator licence and any retail store authorization, if applicable.

The AGCO will not provide legal opinions or legal advice to Expression of Interest Applicants with respect to hypothetical situations related to Lottery Rule 2 and change of ownership control. However, once a selected Applicant submits an application for a Retail Operator Licence, the AGCO will request and review any agreement or contract to determine if a change of control has occurred or an affiliate relationship exists which may restrict entitlement to a Retail Operator Licence or a Retail Store Authorization.

Any exercise of the Registrar’s discretion with respect to Lottery Rule 16a (i.e. extension of period within which an Applicant must provide the required Standby Letter of Credit) will be on a case-by-case basis. 

Wait List EOI Applicants will be moved onto the Selected List for a Region consistent with Lottery Rule 17.  Additionally, EOI Applicants who move onto the Selected List for a Region from a Wait List will be required to provide the required documents and information within five (5) business days as described in Lottery Rule 16.

 

Jan 25, 2019

The Expression of Interest Lottery Rules, which were released on January 2, 2019, were established to encourage the opening of cannabis retail stores on April 1, 2019, in line with Government direction to provide a safe, legal alternative to the illegal recreational cannabis market. 

Potential applicants were made aware of this objective and the AGCO encouraged only those who were in a realistic position to meet those timelines to apply.  Excerpt from the Expression of Interest Lottery Rules Preamble:

Potential applicants who are not committed to opening a cannabis retail store on April 1, 2019 should not participate in this lottery.  

For example, the intent of Lottery Rules 2, 13d, 16a.b.c, 18 and 19a, is that selected Expression of Interest Applicants are prepared at the outset, following the Lottery on January 11, 2019, to make a licensing application and to operate the store.  Additionally, Lottery Rule 2b provides selected Applicants with some ability to evolve their business after the initial licensing application process and during the Lottery Process, however; changes in business structure cannot result in a change in control. The Cannabis License Act indicates that an Applicant is not eligible to be issued a Retail Operator Licence if the Registrar is not satisfied that the applicant will exercise sufficient control, either directly, or indirectly, over the applicant’s cannabis retail business.    

The AGCO is unable to provide legal advice to Applicants, including with respect to hypothetical situations, such as those in relation to Lottery Rule 2 or a possible change in control. As part of its assessment process, the AGCO will review all signed agreements that an Applicant has entered into regarding another party’s interests in the Applicant or the operations or proposed operations of the Applicant. 

To help ensure that the AGCO has a complete understanding of the Applicant’s ownership and/or corporate structure a full review of the agreements will not be completed until such time as all signed agreements have been provided. In some cases, AGCO’s review of draft agreements may assist in speeding up review of final agreements. Where Applicants wish, they may submit their draft agreements, though, as noted above, the AGCO will not provide any legal opinions or legal advice to Applicants and any unsigned agreements that are submitted will not be reviewed for acceptability.

AGCO also wants to remind selected Expression of Interest Applicants of Lottery Rule 13d that states:

  1. An Expression of Interest Applicant may withdraw from the Lottery Process as follows:
    1. Between publication of the lottery results on the AGCO website and January 25, 2019 at 5:00 PM EST, any of the 25 selected Expression of Interest Applicants may provide written email notification of withdrawal to the Registrar at connect@agco.ca. If an Applicant withdraws from the Lottery Process pursuant to this rule, the non-refundable licence and authorization fee payments if incurred will also pursuant to this rule, be refunded and the Letter of Credit will be returned.

 

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