Want to Open and Start a Dispensary? This is the Lawyer & Cannabis Consultant’s Guide on how to open a dispensary and start a cannabis retail store to sell recreational cannabis in Toronto or Ontario under the Cannabis Licence Act.
How Do You Get a Dispensary Licence in Ontario?
The Ontario government allows licensed, private retail stores to sell cannabis and cannabis accessories in brick and mortar stores. Toronto based Lawyer Harrison Jordan has experience assisting those who were selected by the AGCO to submit applications to sell cannabis in their proposed retail store.
What is the Retail Operator Licence and Retail Store Authorization?
The AGCO has held two lotteries to decide who will obtain the opportunity to apply for a Retail Operator Licence (ROL) and a Retail Store Authorization (RSA) under Ontario’s Cannabis Licence Act, and subsequently sell cannabis and cannabis accessories. These applications are required and will cost you around $10,000 total.
Premier Doug Ford announced in November 2019 that Ontario would move to scrap the pot shop lottery and move to allow an open allotment starting January 2020.
Now, applications for Retail Operator Licences will be accepted from January 6th 2020. Retail Store Authorizations will be accepted starting on March 2, 2020, and it is anticipated applications will be reviewed as they come in, starting at 12:01AM. 20 RSA licences are expected to be released every month. See the government’s announcement here.
Do You Need a Consultant to Obtain a Retail Operator Licence and Retail Store Authorization Application?
Unlike the first second lottery, there are no pre-qualification requirements. Regardless, Be prepared to show the AGCO that you have access to a significant amount of funds, as developing a cannabis store will inevitably reach into the mid 6-digits.
Harrison Jordan is a Toronto-based lawyer & cannabis consultant that focuses exclusively on cannabis matters. He holds multiple clients that have won opportunities from the AGCO to apply to open a store. He has a nuanced understanding of the entire process and can help you from point A to Z.
It can be exciting to start a legal retail cannabis store dispensary, but it’s not all fun and games. There are certain things you have to consider before you get started.
What are the requirements to obtain a Retail Operator Licence (ROL)?
Capital Requirements to Open – The most important thing to consider. It will cost a lot of money to open a cannabis store. Application fees on their own can top $10,000 from the AGCO, and in addition to that you will have to spend thousands on obtaining real estate, obtaining security systems, and building the store up to the province’s standards. I tell clients that at the very least they should have access to $250,000 in funds, with access to $350,000 to $500,000 enabling you to cut less corners and have a more fulsome inventory. Some stores even spend up to $1 million in initial costs! Can it be done for less? Maybe – but be aware it will be a challenge and you may not be able to offer that “Apple Store”-like experience you want your customers to experience.
Background Review – If you are an owner, part-owner, director or officer of the applicant, be prepared to file information related to your background and integrity. You will be asked whether you have been charged with any provincial or federal offences or whether you have ever declared bankruptcy, amongst other things. I can help determine whether the AGCO is likely to approve or deny your application for these reasons. The AGCO can refuse a Retail Operator Licence or Retail Store Authorization in the event that the applicant, or a person “interested in” the applicant has demonstrated that there are reasonable grounds to believe that they will not be financially responsible, having regard to their financial history, or that they will not carry on business in accordance with the law, with integrity, honesty or in the public interest, having regard to past or present conduct.
Security Requirements – You will need to adhere to intensive security requirements. The best thing to do for this is to hire a security consultant, who will put together a comprehensive security plan. Your store will need to have continuously monitoring video surveillance on some of the more important areas of your store.
TCV Number– You will need to obtain what is called a TCV number from the government when you apply for the Retail Operator Licence. Haven’t generated more than one TCV Number I can take care of that for you.
Corporate Documents – You will have to attach your company’s articles of incorporation and it is a good idea to attach any By-Laws, as well as Shareholders Agreements.
Details of Shares – Each shareholder holding 10% or more of the shares must be disclosed.
Financial Statements – There is a spot for financial statements. It is unclear if they are required to be uploaded.
What are the requirements to obtain a Retail Store Authorization (RSA) with the AGCO?
The following are some things that you must consider when applying for a Retail Store Authorization?
Location, location, location. You want to choose a location that has consistent traffic or that serves and under-served market. I can assist with the leasing process in reviewing any leasing agreements or proposed Offers to Lease. Special considerations need to be taken care of so that you can back out of the contract (called a “termination right”) if you are not able to secure the final authorizations required by provincial regulators.
Architecture and Interior Design
I am not an architect but can put you in touch with one who has cannabis architecture experience. I have established relationships with experts in their fields. Explore partnerships with companies that can provide you with a boost to your menu signage and other customer features.
POS and other systems
I have a great relationship with third party vendors that service cannabis retail store owners, such as Point of Sale systems or menu boards. We can determine what we can do within your budget to ensure you have happy customers that keep coming back.
Standard Operating Procedures
I have developed a set of 55 Standard Operating Procedures that go through everything from cash management to curb-side pickup to delivery). These are important so that you can adequately train your staff and demonstrate to the AGCO that you have a set of protocols in place for all workers at the store. The SOPs are now standard in the flat fee package that I charge clients, but if you looking for the cannabis retail SOPs on their own you can always reach out to me.
Keeping out minors
Minors cannot be allowed inside the premises. As a best practice, you should always have at least one security guard stationed outside or just inside your store to check identification of ALL patrons and to keep the peace.
15-Day Notice Period
After submitting your Retail Store Authorization (RSA) application, your application will proceed to the 15-day notice period. During this period you will have to post a certain notice on the property in which you are establishing your retail store
Under the Cannabis Licence Act, you can have your licence or authorization refused or revoked. It is important you hire a lawyer to ensure that you can challenge any determinations that are adverse to your interests.
How much does it cost to open a dispensary?
Expect to spend an initial $250,000 to $500,000 as the total initial investment for a retail store if you are starting from scratch (that includes rent). Can it be done for less? Maybe – but be aware it will be a challenge and you may not be able to offer that “Apple Store”-like experience you want your customers to experience. You will want to have as much extra working capital as possible – as a cushion for your other ongoing expenses like employees as well as ensuring cash flow for future inventory orders.
How much money does a dispensary in Ontario make per year?
Profit can vary, but I tell clients to expect an average gross sales of $1 million per store. Some clients have had annualized sales closer to $10 million, however that should be viewed as the exception – particularly as every day there is more and more saturation and competition at every corner. Note that I cannot guarantee that you will make a certain amount of money with your cannabis shop business but I will assist in any way I can.
What is the Pre-Authorization Inspection and the Pre-Opening Inspection and how do I pass them?
After your 15-day public notice period commences you will have what is called a pre-authorization inspection that is conducted by an AGCO compliance official (aka an inspector). They will arrive and ensure that the location matches the address, ensure the placard is still up appropriately (if still within the 15 days of the notice period), that products cannot be seen from the outside from any vantage point even when the front door is open, that a video camera system has been installed capturing 24/7 video in major store areas, that you have a locked and secure storage room, and that the store is enclosed by walls and separated from any other commercial establishment or activity and from any outdoor area.
In addition, the store cannot be entered from or passed through in order to access any other commercial establishment, other than a common area of an enclosed shopping mall. Entry points, such as doors and windows, must be secure.
After a successful Pre-Authorization Inspection, you will be in queue to receive your Retail Store Authorization, which could take months.
Once you receive your RSA, you will have your second/final inspection called the Pre-Opening Inspection. You’ll. need to have proper outdoor signage, post the seal, ensure the proper storage of cannabis until the point of sale, ensure record-keeping and display the AGCO authorization in a visible place.
Why hire a lawyer?
I’m a Toronto-based lawyer assisting small businesses on how to set up a dispensary, including applying for Retail Operator Licence (ROL) and Retail Store Authorization Applications under the Cannabis Licence Act, from start to Pre-Authorization Inspection to OPEN. Call me at 1-855-542-0529 or email me. One reason to call Harrison Jordan? I only focus on cannabis-related matters. You want someone on your side that understands the cannabis-related dimensions to your legal issues.
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Whether you are thinking of applying to open a cannabis store in the Greater Toronto Area or not, we can assist. Here are some prime, under-served areas where we think cannabis retail stores would do best: (Note that some municipalities may have not not “opted-in” to cannabis retail stores yet).
• Toronto, Ontario
• Guelph, Ontario
• Kitchener, Ontario
• Waterloo, Ontario
• Barrie, Ontario
• Muskoka, Ontario
• Hamilton, Ontario
• Mississauga, Ontario
• Brampton, Ontario
• Dundas, Ontario
• Oshawa, Ontario
• Scarborough, Ontario
• East York, Ontario
• North York, Ontario
• Markham, Ontario
Is there an Ontario-based location that we’re missing? Let us know during your consultation and we can let you know if the municipality has “opted in” at this time to allow recreational cannabis sales