After cannabis was legalized in Canada, each province was given full power over making laws on the production and distribution of cannabis. Most provinces allow private persons to run dispensaries and even sell cannabis online. However, Ontario chose a government-run monopoly until it changed the decision and allowed private persons to run dispensaries. The Liquor Control Board was made to oversee the opening of about 80 stores by 2019.
Even though private businesses can open dispensaries, the process isn’t as simple as it looks. If you want to open a cannabis dispensary in Ontario, you need to follow the set rules. This guide will give you a few tips to help you make the process seamless.
What You Should Consider before Opening a Cannabis Dispensary in Ontario
Some important considerations include a good business corporate structure. It is advisable to work with a lawyer because you need to do a lot of paperwork. The first is picking a company name and considering the best financing options for the business.
If you want a partner, you will need to discuss this as well as co-founder agreements. Your lawyer will help you to prepare the corporate bylaws and get a federal tax ID number. You also need a corporate bank account and a trade name.
This list may not be suitable for all cannabis dispensaries. There may be extra documents required for compliance with province laws. Be sure to understand the guidelines for Ontario fully.
Create a Retail Store Business Plan
It is not wise to start a cannabis dispensary without a business plan. It is the most important part of the process asides licensing. It is also crucial if you need extra financing. The plan should contain opening cost, sales as well as reasonable estimates for profits.
This process is necessary for all provinces in Canada. And as well as in other provinces you should also get licensed in Ontario to operate a dispensary. Ontario initially restricted sales of cannabis through stores run by the province. Later, the province changed to permit dispensaries owned by private individuals. It issued only 25 licenses but increased this number later on.
Ontario requires an applicant for a license to demonstrate a clean financial and criminal record. This rule helps ensure that criminals and their criminal organizations are not allowed to enter the legal cannabis business. Before licenses are granted, the provincial governments, as well as the federal government, conducts security and background checks on individuals applying for licenses. Associates such as corporate directors of such businesses are subjected to checks as well.
At the moment, the only body that is permitted to grant licenses for retail cannabis stores is the Alcohol and Gaming Commission. However, producers of cannabis must get licenses from Health Canada.
To open a cannabis dispensary in Ontario, you need three licenses. They include the retail operator license, the retail store authorization, and the cannabis retail manager license. The first license is for entities or people that want to run a cannabis dispensary or retail store. The retail store authorization is for operating a physical storefront. Each location needs a different authorization.
The cannabis retail manager’s license is required for staff with management responsibilities in cannabis retail stores. Such people include supervisory or management roles where the sale of cannabis is overseen. Such people also manage compliance problems in relation to cannabis sales. They may also have the authority to buy cannabis, enter contracts or offer employment to others.
Are All Three Licenses Necessary to Open a Cannabis Dispensary in Ontario?
In many cases, you need all licenses. The first is to apply for the retail operator license. The next step is the retail store authorization followed by the cannabis retail manager license. The application must follow the format above. You cannot apply for the license for retail store authorization without sending in one for the retail operator license.
There is an exception for sole proprietors who choose to act as the manager and owner of a particular store. In this case, you may not need to get a cannabis retail manager license.
The Cost of Each License
The retail operator license costs about $6,000 and covers a 2 year validity period. It has a renewal fee of $4,000 for another four years. The retail store authorization license costs $4,000 for a term of two years and a $3,500 renewal fee for another four years.
The cannabis retail manager license costs $750 for a term of two years and it has a $500 renewal fee or $1,000 fee for four-year term renewal.
You may also require documentation for a retail operator license. Some documentation includes constituting documents, shareholder details, schematic diagram, tax assessment and tax return, financial statements, and personal history.
These documents may not be required upon submission of the application initially. But it is ideal to submit it upfront or else it could slow down the entire licensing process.
Location Requirements for Cannabis Dispensaries
There are some other guidelines to consider or you could risk rejection from the licensing authority. The Cannabis License Act of 2018 states that retail cannabis locations must meet certain requirements. They include:
- The dispensary must be located in a reserve or municipality that is a part of the retail cannabis program.
- Operates between 9 am and 11 pm from nonday to Sunday. Municipalities can also set hours of operation.
- Not located within 150 meters of a private or public school.
- The dispensary must only be used to sell approved cannabis products as well as cannabis accessories such as rolling papers and pipes. It must not be used for any other purpose.
Are There Advertisement Restrictions You Should Know About?
In Ontario, there are advertisement restrictions as it is in other provinces. The Cannabis Act which governs the entire country provides strict advertising and marketing restrictions. There are five main restrictions on cannabis advertisement and they include:
- No personal endorsements or testimonials from customers, clients, celebrities or employees
- Cannot include pricing information of cannabis except at the point of sale
- Cannot appeal to kids or be located close to a minor audience
- Cannot make cannabis appear glamorous, cool or exciting
- Cannot use a depiction of characters, people or animals whether fictitious or real