Prospective Cannabis Retailers Put Off By Ontario's Licensing Cap

When Ontario announced last week that they would be capping the number of marijuana businesses licenses at 25, it left a lot of entrepreneurs out in the cold.

The province had announced they would begin accepting applications for private cannabis shops in mid-December, so prospective business owners from across the province got to work setting up their applications. But after last week's announcement that, due to the continuing cannabis stock shortages in Canada, the province would be limiting the number of licenses they hand out to 25, some would-be shop owners were justifiably upset.

Not only is there a small amount of licenses to go around, but those licenses will now be awarded by lottery, not merit. For people like Koby Smutylo - who has already leased two store fronts and hired staff - this could mean a big financial hit if they don't make the cut.

"It's amazing how much work went into each application, and here we are ready and…the government decides that the rules are completely different,"  Smutylo told CBC News. "We don't believe that's very fair."

Small businesses are likely to be hardest hit by the change, says Trina Fraser, a partner with the law firm Brazeau Sellers. Larger companies looking to set up shop will be able to simply buy out any businesses that do end up with licenses.

"If you don't have those very deep pockets of a large, corporate retail venture, you could be in a tough spot right now," Fraser said. "At the very least, you're sitting on your thumbs…while 25 other retailers are establishing their brands and getting a head start on you."

The legal cannabis market has been plagued with issues in recent months, as the province's sole retailer The Ontario Cannabis Store has been highly criticized.

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In the past few months, the stream of alarming news about the dangers of vaporizer cartridges has put some cannabis consumers on high alert. Since March, more than 2,000 people have gotten sick, and 40 people have died from illnesses related to vaping (VAPI, or vaping associated pulmonary injury). It is believed that the large majority of those who had become ill had used THC oil carts bought from illicit markets.

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