Highlights From Ontario’s New Proposed Cannabis Legislation

Last week the Ontario government announced a radical change to the manner in which cannabis will be sold and consumed in the Province of Ontario.

Highlights of the announcement, which was initially made by Ontario Finance Minister Vic Fedeli and Attorney General Caroline Mulroney, and followed by the introduction of Bill 36, An Act to enact a new Act and make amendments to various other Acts respecting the use and sale of cannabis and vapour products in Ontario (or the “Cannabis Statute Law Amendment Act, 2018” for short), include the following:

Timeline for Implementation

The government confirmed that when legalization takes effect on October 17, 2018, the only legal place to purchase adult-use cannabis will be online through the Ontario government. The government reiterated that the private retail system will take effect on April 1, 2019, at which time consumers will be able to make purchases through privately-licensed bricks and mortar stores.

New Governing Framework

The Ontario government indicated that will be introducing legislation tomorrow which will modify the previous cannabis legislation which was enacted by the Wynne Government. The licensing process will be overseen by the Alcohol and Gaming Commission of Ontario (“AGCO”). The AGCO will develop a formal application process, the details of which will be provided in due course.

The governance of the existing Ontario Cannabis Store will be changed to reflect its new role as online retailer and exclusive wholesale distributor in the province. The Ontario Cannabis Retail Corporation (“OCRC”) will cease to operate as a subsidiary of the LCBO and instead will have a separate board and senior management structure and will report directly to the Minister of Finance.

No Private Online Retail

The government confirmed that the OCRC will remain the exclusive online retailer even after privately-owned bricks and mortar stores open on April 1, 2019. The OCRC will also operate as the exclusive wholesaler for retailers in the province.

Two Licenses Required

Retailers will be required to apply for a “retail operator license” in addition to a “retail store authorization” for each location they wish to operate.

Limit on Number of Retail Licenses Any Entity Can Hold

The legislation will include regulation making authority which will allow the government to set limits via regulation as to how many retail licenses a single entity can hold. The cap on the number of licenses that can be held has not been determined.

Licensed Producers Only Permitted One (Onsite?) License

The government indicated that federally licensed producers will only be able to hold a single retail license in the province. During the announcement this was referred as an “operator license” which raises the question of whether the retail location must be situated at one of the LP’s production sites.

Local Issues

The government indicated that it will be setting a distance buffer between retail stores and schools. Additionally, when an application is submitted the AGCO will undertake a 15 day period to obtain public input on a proposed application, which would include input from local governments.

As previously mentioned, municipalities will be given the opportunity to opt-out of having bricks and mortar stores. The opt-out deadline will be January 22, 2019, being three months after the conclusion of the municipal elections. Additionally, First Nations communities will be provided with the opportunity to prohibit cannabis within their communities.

Consumption Rules Loosened

Under the existing legislation, consumption of cannabis would be restricted to private residences, hotels and motels. However, the government announced that the consumption rules will be loosened via amendments to the Smoke Free Ontario Act to prohibit the smoking and vaping of cannabis in places where tobacco is also prohibited, such as enclosed public places. Put differently, it appears as though people will be able to smoke and vape cannabis anywhere that it is also permitted to consume tobacco (except for in vehicles).

Grey Market In, Black Market Out

The government explicitly indicated that any person who continues to operate an illegal dispensary after October 17, 2018 will be ineligible to obtain a retail sales license. However, they also went out of their way to indicate that dispensary owners who shut their doors prior to October 17, 2018, will not be barred from obtaining a license solely by virtue of the fact that they previously owned or operated a dispensary.

Any record or engagement with organized crime or prior selling of cannabis to youth will act as a complete bar to receiving a sales license.

Store Requirements

The government mentioned that the stores will need to be standalone stores, that persons will not be permitted to see into the store from the outside and that persons under the age of 19 will not be permitted to enter the store.

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