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LFP LONGFORM: Jackpot! London biggest winner in Ontario’s retail-marijuana lottery

London defied the odds by landing three of Ontario’s first 25 cannabis Stores

From link to article by DALE CARRUTHERS March 29, 2019

Jon Conquergood, chief executive of Ontario Cannabis Holdings, is certain this marijuana store will be set to open as expected on April 1. The new shop he is helping to finish is at 666 Wonderland Road, just north of Oxford Street, in the site of the former Oarhouse pub. (Mike Hensen/The London Free Press)


Ontario’s legal marijuana retailers are allowed to open brick-and-mortar pot shops as of this Monday, April 1. London has landed an unusually large number of the lottery-selected stores, but will they be ready to open when the smokers come knocking? Dale Carruthers reports:

London defied the odds by landing three of Ontario’s first 25 cannabis stores.

The Forest City will have as many brick-and-mortar marijuana stores as Ottawa, a city with more than double its population, and just two fewer than Toronto, the seventh-largest city by population in North America.

The city’s three-store tally also matches that of both Montreal and Vancouver, considered to be Canada’s cannabis mecca, where the operations have been running for months.

Ontario will finally catch up to most other provinces Monday when cannabis retail stores that have cleared all the regulatory hurdles are allowed to open. Only one store in London is expected to be able to open for Day 1.

So how did the city score so many pot shops?

“Part of it’s just luck,” said Michael Armstrong, a professor at Brock University’s Goodman School of Business who studies the cannabis industry.

The Alcohol and Gaming Commission of Ontario (AGCO), the province’s pot regulator, chose companies and individuals who have the right to apply for the first 25 licences through a lottery system that attracted nearly 17,000 expressions of interest in January.

Seven of those licences are allocated to the west region, an area stretching from Windsor to Waterloo to Niagara Falls. Only cities with more than 50,000 people are eligible for the first stores.

Experts predicted the bulk of the lottery winners would set up shop in Hamilton, a growing city within the Greater Toronto Area’s orbit that once was home to more than 80 illegal dispensaries, the most per capita in Ontario.

But Steeltown is getting just two stores, while St. Catharines and Niagara Falls are each getting one. Other mid-sized cities such as Windsor, Kitchener-Waterloo and Brantford didn’t land any outlets.

“With that randomness you wouldn’t expect a nice even distribution,” Armstrong said of the AGCO’s lottery system. “The fact that you’ve got three in London is probably pushing the odds a bit. The more interesting question is, why?”

There are multiple factors that make London an ideal location for the province’s first wave of cannabis retail stores.

Located along Highway 401, North America’s busiest highway, midway between the United States border and Toronto, London is nestled in a region with roughly 1.5 million residents.

The city is home to more than 50,000 post-secondary school students between Western University and Fanshawe College. Canadians between 18 and 24 are the most likely cannabis users, according to a February report from Statistics Canada that found one-third of that age group had used marijuana in the past three months.

Finally, the demand for brick-and-mortar marijuana stores has been proven in London, where six of the black market businesses once operated at the same time before repeated police raids eliminated nearly all of them. A handful of weed delivery services have since popped up to fill the void.

“Your actual location is the paramount consideration in retail,” said Nick Pateras, vice-president of strategy for Lift and Co., a cannabis technology and training company.

Retail outlets opening in April have the opportunity to command a disproportionate share of the market by setting up in high-traffic areas and then maintaining customer loyalty as more stores open in the future, he said.

“For now, the market is relatively unsaturated,” Pateras said, noting the lottery winners selected cities to open without knowing where the competition would go.

Citing a nationwide supply shortage of cannabis, the province says it issued the first 25 retail licences as a temporary measure and will re-evaluate the situation in December. Premier Doug Ford has vowed to authorize an unlimited number of cannabis stores to open.

“When Ontario has determined that the federal government has provided for enough reliable supply, Ontario will issue further retail store licences,” Ministry of Finance spokesperson Scott Blodgett said in an email.

Ontario is the second-last province or territory to roll out legal cannabis retail stores. Nunavut is the only territory without the brick-and-mortar businesses.Will you be buying pot from a London retail store next week?AbsolutelyPossiblyI don’t think soVoteView

Since Canada legalized recreational marijuana on Oct. 17, 2018, adults in Ontario can only legally buy the drug from the Ontario Cannabis Store (OCS), the government-run delivery service.

Critics have questioned whether any of Ontario’s first 25 stores will be able to open by Monday’s deadline. Retailers that fail to open will be fined $12,500, while those still not in business by the end of the month get dinged $50,000.

Pateras, whose company’s CannSell training program is mandatory for Ontario marijuana retailers and staff, predicts just a handful of stores will be up and running Monday.

“They’ll open their doors in a way that will be purely for that purpose,” he said.

“For the stores that are open on Day 1, you’ll probably have a different store experience when you visit on April 1 first than if you visit (it) on May 1.”

Just one of London’s three stores, Central Cannabis, is on track to begin serving customers Monday. The Wonderland Road outlet, owned by Chris Comrie, is just one of 10 lottery winners from across the province to receive a retail store authorization from the AGCO. All that remains is for the northwest London outlet – in a space formerly home to the Oar House pub – to pass a series of compliance inspections.

The AGCO will only license operators and authorize stores once the regulator is satisfied that all the legal requirements are met, spokesperson Raymond Kahnert said.

“That is why the AGCO will not predict how many stores in Ontario will be ready to open right as of April 1,” Kahnert wrote in an email.

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