As Ontario cannabis lottery starts, why it's been referred to as 'disingenuous' and a 'hot mess'

The Alcohol & Gaming Commission of Ontario began accepting 'expressions of interest' from hopeful cannabis retailers Monday and while the cost to get in is relatively low, the conditions and regulations after the lottery are hefty. 

The lottery goes until Wednesday at noon, requiring some basic information and a $75 fee, with 25 selections being made on Friday, along with waiting lists for each region. 

However, winning applicants must be prepared to open their location by April 1st, submit an application fee of $6,000 and provide a $50,000 letter of credit within five days. 

"It's kind of a hot mess," said Abi Roach, the founder of Toronto cannabis lounge HotBox. "There's no differentiation between people who are actually ready to be open on April 1st and people who think that if they throw their name in the ring and get picked, they'll be ready." 

"There's so many factors to owning a cannabis store that are bigger than just, I can write my name on a piece of paper and pay $75."

Ottawa-based lawyer Trina Fraser who specializes in cannabis said she's heard from various clients that some will take a chance and submit their name, while for others, the later requirements are too much of a risk. 

"It almost feels a little disingenuous," she said. "Realistically, if you haven't signed a lease at this point, is there any chance that you're going to meet this April 1st deadline? Probably not." 

"In any conceivable universe, are you capable of doing these things, because if the answer is no, there's just no way, then do you even bother?" 

The lottery is a short-term measure due to the cannabis shortage in Canada, although it's unclear when the supply market will eventually open up. 

Some have also argued the requirements don't go far enough, including National Access Cannabis CEO Mark Goliger, telling BNN Bloomberg they ensure winning retailers have what it takes to be successful. 

"I think you should have your license revoked," he told BNN Bloomberg if a location is not open by April 30th. 

Winning applicants could face $50,000 in fines if their location is not open by that date. 

The AGCO will not release any information about its expressions of interest until Friday or potentially Saturday.

Then it will disclose the winning 25 individuals or entities and the order in which they were drawn and the waiting lists for the different Ontario regions. 

A spokesperson says it will also release every submission that didn't win. 

Jonathon Hirsh, cannabis educator with The Education Station, says another problem with the heavy financial demands is the effect on smaller hopeful operators.

"On some hands, they've eliminated the little guy and taken the black market wind out of their sails in the hopes that they might get themselves a license," he said. 

"I think there's a lot of people who are going to lose their shirts because they've held onto real estate for a long period of time, with a hope that there would be unlimited licenses which was stated before." 

And Fraser said another reason this favours larger operations is because they have the opportunity to still try and collaborate with smaller entrepreneurs. 

"If it does tend to be some smaller players (that win) that are still in a position where they need to raise money and they need to raise it very quickly, then it'll interesting to see how the other entities that maybe were well capitalized but didn't win, come to the plate and try to participate with those winners in creative ways," she said. 

"It doesn't matter who wins these lotteries, there are a handful of players, well-capitalized, well-organized, ready to go, who if they don't win themselves, they'll find a way to participate."

With files from Siobhan Morris