Opening and Operating a Cannabis Retail Store

 In Business Law

After a gradual initial rollout, the Ontario government is now aiming to approve dozens of cannabis retail stores each week, with the goal of approving 1,000 stores across the province by the fall of 2021. This blog summarizes the main requirements for opening and operating a cannabis retail store in Ontario.

Retail cannabis stores in Ontario are subject to the Registrar’s Standards for Cannabis Retail Stores and to the following Acts and their corresponding regulations: (i) the Cannabis Act (Canada); (ii) the Cannabis Control Act (Ontario); (iii) the Cannabis Licence Act (Ontario); (iv) and the Criminal Code.

To open a cannabis retail store, you will need:

  • To send a notice to the local government, local fire authority and local police force or Royal Canadian Mounted Police detachment responsible for providing policing services to the area;
  • Obtain a Retail Operator Licence;
  • Obtain a Store Authorization;
  • Obtain a Cannabis Retail Manager Licence;
  • Enter into a supply purchase contract with the Ontario Cannabis Retail Store (OCS); and
  • Obtain a security clearance.

Notice to the Local Government, Local Fire Authority and Local Police Force

The notice to the local government, fire authority and police force must be addressed to a senior official at each local authority and must contain the following information: (i) your name; (ii) the date on which you expect to submit an application for a Retail Operator Licence; (iii) the class of licence sought (i.e. licence for the sale of cannabis); (iv) the activity you expect to conduct under the licence (i.e. opening and operating a retail cannabis store); and (v) the address of the site where you will open and operate your store.

Retail Operator Licence

To apply for a Retail Operator Licence, you will need to create an iAGCO account and submit your application through the iAGCO portal. To apply, be approved for and maintain a Retail Operator licence, you must:

  • be at least 19 years of age (for a corporation, every director, officer and shareholder must be at least 19);
  • not have been charged with an offence under or be/have been carrying on activities not in compliance with the Cannabis Act, Cannabis Control Act or Cannabis Licence Act;
  • not have roles in or connections with any criminal organizations, as defined in s. 467.1(1) of the Criminal Code;
  • not make false statements or provide false information on your application;
  • not have defaulted in filing Ontario tax returns and must not have amounts owing in tax, penalty or interest (unless you have made payment arrangements);
  • have filed all corporate tax returns if you have a business number with the CRA;
  • if applying through a corporation, ensure that no more than 25% of the corporation is owned by licensed cannabis producers or their affiliates;
  • be financially responsible in operating your cannabis retail business;
  • operate your cannabis retail business in compliance with the law and with integrity, honesty and in the public interest; and
  • not have had a Retail Store Authorization revoked in the past.

You must wait two years to apply for a Retail Operator Licence if you (i) applied for a new Retail Operator Licence or renewal of a Retail Operator Licence in the past but were refused, or (ii) were issued a Retail Operator Licence in the past, but such licence was revoked.

Store Authorization

You will also need to submit your application for a Store Authorization through the iAGCO portal. To apply, be approved for and maintain a Store Authorization, you must:

  • have a Retail Operator Licence, either when you apply for a Store Authorization or when the Store Authorization would be issued;
  • not have a Retail Operator Licence that has conditions that do not allow you to apply for or receive a Store Authorization for that store;
  • not have been charged with an offence under or be/have been carrying on activities not in compliance with the Cannabis Act, Cannabis Control Act or Cannabis Licence Act;
  • not have roles in or connections with any criminal organizations, as defined in s. 467.1(1) of the Criminal Code;
  • not hire or plan to hire someone who does not have a Cannabis Retail Manager Licence but should have a Cannabis Retail Manager Licence because of the work they do;
  • ensure the store is in the public interest, based on the needs and wishes of the people who live in the municipality (the registrar will post a notice on the AGCO website and the municipality and local residents may send in submissions regarding health and safety, protecting youth and preventing illicit activities);
  • ensure the store, equipment and facilities complies with the Cannabis Licence Act and its regulations and the Registrar’s Standards for Cannabis Retail Stores;
  • have sufficient control over the store, equipment and facilities; and
  • not have made a false statement or provided false information in your application.

You must wait two years to apply for a Store Authorization if you (i) applied for a new Store Authorization or renewal of a Store Authorization in the past but were refused, or (ii) were issued a Store Authorization in the past, but such Store Authorization was revoked.

Cannabis Retail Manager Licence

Every cannabis retail store must have a licenced retail manager, save and except for a situation in which the holder of the Retail Operator Licence is a sole proprietor or is in a partnership between two or more individuals and will perform the duties of the retail store manager for that store. Personnel who perform the following duties must obtain a Cannabis Retail Manager Licence: (i) supervising or managing employees; (ii) managing the sale of cannabis; (iii) managing compliance issues relating to the sale of cannabis; (iv) buying cannabis for the store; and/or (v) entering into contracts for the store.

To obtain a Cannabis Retail Manager Licence, you must:

  • be at least 19 years of age;
  • as a licenced retail manager, act in compliance with the law and with integrity, honesty and in the public interest;
  • not be convicted or charged with certain offences or be/have carried on activities not in compliance with the Cannabis Licence Act, Cannabis Control Act and Cannabis Act;
  • not have had roles or connections with a criminal organization, as defined in s. 467.1(1) of the Criminal Code of Canada; and
  • not have made a false statement or provided false information in your application.

You must wait two years to apply for a Cannabis Retail Manager Licence if you (i) applied for a new Cannabis Retail Manager Licence or a renewal of a Cannabis Retail Manager Licence in the past but were refused, or (ii) were issued a Cannabis Retail Manager Licence in the past, but such licence was revoked.

Supply Purchase Contract with the Ontario Cannabis Retail Store (OCS)

A cannabis retail store may only sell cannabis obtained through the OCS. For more information on entering into a wholesale supply agreement with the OCS, visit learn@ocswholesale.ca or call 1-888-910-0627.

Security Clearance

A security clearance must be obtained by:

  • The Retail Operator Licence holder;
  • The responsible person designated by the Retail Operator Licence holder to bind the Retail Operator Licence holder responsible for activities conducted under the Retail Operator Licence. Such responsible person must have sufficient knowledge of the provisions of the Cannabis Act and its regulations that apply to the Retail Operator Licence holder. The Retail Operator Licence holder may also designate an alternative responsible person to replace the responsible person, if need be. The alternative responsible person must also obtain a security clearance;
  • The Head of Security who is responsible for ensuring that the applicable physical security measures set out in the Cannabis Act regulations and the organizational security plan of the Retail Operator Licence holder are in place;
  • If a corporation holds the Retail Operator Licence, all directors and officers of the corporation, partners in a partnership, and any other individuals who do/can exercise control over the corporation;
  • If a cooperative holds the Retail Operator Licence, all directors and officers of the cooperative, partners in a partnership, and any other individuals who do/can exercise control over the cooperative; and
  • If a partnership holds the Retail Operator Licence, all directors and officers of a corporation or cooperative, partners of a partnership, and any other individuals who do/can exercise control over the partnership.

Other Rules and Regulations

There are a number of other rules and regulations with respect to owning and operating a cannabis retail store. Anyone who works in a cannabis retail store must successfully complete a mandatory AGCO Board- approved training program before their first day of work. This includes holders of authorizations, managers and employees.

Owners and operators of cannabis retail stores must also remain compliant with rules related to a variety of subjects, such as (i) regular reporting and disclosure; (ii) the location of the store; (iii) timing for beginning to sell cannabis; (iv) business hours; (v) retail seals; (vi) posting a Retail Store Authorization; (vii) keeping records of sales; (viii) making information available to patrons; (ix) requesting ID from patrons; (x) hiring employees; (xi) displays; (xii) storage of cannabis and edibles; (xiii) building filtration; (xiv) cannabis packaging/labelling; (xv) contamination and sanitation; (xvi) quality assurance; (xvii) ingredients in edibles; (xviii) cannabis accessories; (xix) dispensing limits; (xx) promotion and advertising; and (xxi) retention of documents and information.

For a more comprehensive look at the rules and regulations, visit the Cannabis Retail Regulation Guide.

Certain applicants and store operators and owners may also be subject to other Acts and their corresponding regulations, depending on the business activities in which they are engaged, such as the Food and Drugs Act (FDA), the Pest Control Products Act (PCPA), the Canada Consumer Product Safety Act (CCPSA), the Tobacco and Vaping Products Act (TVPA) and the Fertilizers Act, among others.

Stay tuned for the release of a future blog summarizing the legal requirements surrounding medical marijuana dispensaries and cultivating/producing cannabis.

This blog post was written by Jade Renaud, a member of the Business Law team. Jade can be reached at 613-369-0373 or at jade.renaud@mannlawyers.com.

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