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Ontario Cannabis Licensing Stalls as Dispensaries Sue Over Lottery System

September 19, 2019

Ever since Ontario announced they’d be conducting a lottery for cannabis licensing, the backlash was swift and ongoing. The Ontario Alcohol and Gaming Commission is now facing a class action lawsuit by eleven private marijuana dispensaries who won the lottery and received a license only to have it stripped away due to a technicality. A Judge in the Ontario Superior Court has suspended all cannabis licensing until the class action lawsuit by dispensaries is settled.

Bounced Emails to Blame

These dispensaries claim that their licenses have been unduly rescinded while the state is pointing to late submission of their standby letters of credit. Turns out the discrepancy has been traced back to an email that bounced for these eleven applicants. The email congratulated them on winning a license but also reminded them of the 5 day deadline that began from the time received the email.

The Ontario AGC was made aware of the situation and resent the email a few days later, however, the deadline was not adjusted accordingly leading to the loss of licenses. The plaintiffs affected hired a lawyer who recently explained their case to Justice David Corbett of the Superior Court of Ontario. Upon hearing the genesis of the licensing issue, Justice Corbett has suspended all licensing from the Alcohol and Gaming Commission until the case is resolved.

Dispensaries Unlikely to Open in October

Currently there are 25 private recreational marijuana dispensaries already approved, this second lottery was set to license an additional 42 new dispensaries in Ontario, including eight more on First Nations reserves. Now that the Judge has halted all cannabis licensing, marijuana retailers will not be able to open in October as originally anticipated. 

Justice David Corbett is expected to make his final determination on September 25th but all licensing has been halted until further notice. The Judge did consider restoring the disqualified applicants in the interim, however, he determined that this might cause even more problems than putting cannabis licensing on hold for a couple of weeks.

Judge Freezes Cannabis Licensing

Attorney Peter Brauti, legal council for the 11 dispensary license lottery winners, is encouraged by the decision to freeze the process pending a final decision and considers it a “huge win” and a “grand slam.” The plaintiffs will wait anxiously over the next few days to see if the Judge will reinstate their dispensary business licenses.

If the Judge does rule for the dispensaries, the Ontario Alcohol and Gaming Commission will be mandated to issue Retail Operator Licenses and Retail Store Authorizations so that they can open for business. It also means that cannabis licensing can resume for even more lottery winners. As more dispensaries that open, competition should increase driving down the price of recreational marijuana products.