Seven Ontario cannabis operators to have $50,000 letters of credit completely withdrawn
The Alcohol and Gaming Commission of Ontario has confirmed that seven of the province's 25 licensed pot operators will have their $50,000 letters of credit completely withdrawn.
However, they haven't been disqualified from opening their doors and the AGCO is still working with them to get open.
Two other stores in Ontario are also not open but are on different timelines.
Of the seven stores, two are in Toronto:
Colin Campbell (Tokyo Smoke 333 Yonge - Toronto)
Dana Michele Kendal (Canna Cabana Toronto - Toronto)
Guruveer Singh Sangha (Pioneer Cannabis - Burlington)
Alexander Altman (Smok e Ajax)
Lisa A Bigioni (Choom Cannabis - Niagara Falls)
2674253 Ontario Inc. (Tweed - London)
Anton Lucic (Highlife - Sudbury)
Two other stores also remain unopen and have seen withdrawals, but are on different timelines.
Ontario's lottery rules stated the letters of credit would be with drawn by $12,500 on April 1st if a store wasn't open, followed by another $12,500 by April 15th and the final $25,000 by April 30th.
"The Expression of Interest Lottery Rules were very clear about the objective of opening stores as of April 1, 2019," the AGCO said in a statement.
Jay Rosenthal, president of Business of Cannabis, said it doesn't come as a surprise.
"This was always a hyper-aggressive timeline between lottery at the beginning of the year to opening April 1st," he said, adding the complexity of being in uncharted territory. "It was actually more surprising that some folks actually opened up on April 1st."
Rosenthal added he sees the stores opening sooner rather than later.
"The province desperately wants to get these 25 shops open," he said. "It's better to work with the folks that are already somewhere along the process then to go to the next layer down."
As for the businesses losing $50,000, both Rosenthal and Professor Michael Armstrong of Brock University's Goodman School of Business, say the long-term benefits could make up for the loss quickly.
"How profitable will depend on how they're run, but they can expect sales, revenues of over $1 million a month once they're up and running," he said.
Armstrong notes big companies - or stores with big partners - are also looking well into the future, with the hopes of expanding their brand for potential chains, once the 25-store cap grows.
"Having to suffer a $50,000 loss up front, that's just a small price to pay for that long-term potential," he said.