Ottawa operators vying for cannabis retail lottery

Monday marked the start of Ontario's lottery to see who will run the province's cannabis retail stores. Twenty-five licences are up for grabs in a "pull-from-the-hat" kind of system that could potentially leave Ottawa out in the cold.  Of the 25 retail outlets opening in Ontario April 1st, five of them are guaranteed to be in Eastern Ontario.

There is huge interest in being one of those lucky lottery winners with some estimates that as many as 50-thousand people will apply over the coming days.

Koby Smytylo (pictured) has "stitched" together what he thinks is a sound business plan, hoping to turn former yarn and sewing shop on Bank Street in Ottawa into a cannabis retail store. 

“There’s a lot of money to be made,” says Smytylo, one of the founders of Ouid, “We were anticipating conservatively $3 to 5 million a year in revenue, but that was when there were expected to be an unlimited number of stores.”

And that's the key. After months of planning, and he says, hundreds of thousands of dollars invested, it comes down to a "luck of the draw" lottery system to see who will operate one of Eastern Ontario's 5 retail pot shops.

“It's going to be a great business,” says Smytylo, “I would love to win the lottery.”

He's not alone. There are wild estimates out there as to how many have applied for one of Ontario's 25 licenses.  

“I've been hearing estimates as high as 50,000,” says Ottawa lawyer Trina Fraser who specializes in cannabis law, “That sounds extreme to me.”

Fraser has done a handful of applications already today.  She says that’s the simple part; the hard work comes after that.

“There's a $12,500 fine if you don't open by April 1st, another $12,500 by April 15th,” she says, “and the remaining $25,000 if you don't open by April 30th.

The hope is that those fines will “weed” out the weak applications. The concern, among some though, is that it won’t be enough to keep out organized crime.

Gilles LeVasseur is a professor of law and business at the University of Ottawa, “We need better control of the companies entering market,” he says, “because they'll use legal means and hide behind these legal structures to create these opportunities.”

As to how many pot shops end up in Ottawa?  Koby Smytylo isn't a gambling man but he has to be these days.

“I wouldn't be surprised if we see all five in Ottawa,” he says.

People have until Wednesday to get their applications in and then five days after being selected to produce a $50,000 letter of credit.  The Alcohol and Gaming Commission will hold the lottery on Friday.  We should know within 24 hours whose pot has turned gold.