Later this week, Ontario will be conducting a lottery to determine the recipients of one of the province’s 25 available cannabis store licences.
However, while the set-up might provide the fairest chance for those vying for the coveted spots, independent companies and retailers – which account for a large portion of the province’s commercial tenants – will almost certainly take on much of the risks and possible penalties, whereas larger organizations won’t have too much trouble.
“[The lottery is] definitely designed for larger operators who are prepared to go out on a limb and go ahead and spend significant amounts of money without knowing whether they’re one of the 25,” Brazeau Seller partner Trina Fraser told BNN Bloomberg.
“We’re not thinking through all the possible things that could go wrong here.”
Read more: This asset class remains Toronto’s powerhouse segment
Among the heavier penalties are tens of thousands of dollars – even as much as $50,000 in the worst-case scenarios – should a licence recipient fail to begin operations by the end of April.
“It’s not been ideal, obviously, but it’s difficult to criticize too strongly, either, because we do have a supply issue,” Fraser said.
“I understand that the provincial government has made a commitment to stores opening as of April 1… but really they’re doing so kind of ass-backwards, as far as I’m concerned, by threatening them with pretty onerous penalties if they don’t.”