Judge puts two-week hold on new cannabis licenses in Ontario

Published on September 13, 2019 · Last updated July 28, 2020
Jesse Milns/Leafly

A Toronto judge has put a two-week stop to Ontario’s entire cannabis retail lottery system, after a group of 11 would-be retailers took the Alcohol and Gaming Commission of Ontario to court alleging that they had complied with the lottery rules despite being disqualified by the agency following their lottery wins.

With 25 stores already approved, this second lottery was supposed to facilitate the opening of 42 new stores in the province, with an additional eight on First Nations reserves.Join the Leafly Canada CommunityThe decision by Justice David Corbett of the Superior Court of Ontario on Thursday suspends the province’s lottery process for two weeks, meaning it is not likely any of the retail stores would open as of October 2019 as planned.

On Sept. 25, Justice Corbett will decide whether to go ahead.

Cannabis lawyer Caryma Sa’d was in the downtown courtroom while the action played out. According to her, the crux of the case revolved around initial emails that were sent to all lottery winners, which had “bounced” when the AGCO sent them out.

Emails were successfully re-sent to the litigants, as much as a handful of days later, and their legal counsel argued that the clock for the five business day deadline—where applicants were to submit their standby letters of credit—should have started at that point.

When they were later disqualified, the AGCO replaced them on the selected list with entrants that were previously placed on each region’s waitlist.

The judge considered a number of other routes, such as injunctive relief restoring the disqualified applicants, but Sa’d tweeted that the judge believed it might cause more havoc than freezing the entire process for a two-week period.

Leafly has obtained a copy of the notice of application for judicial review drafted by the 11 litigants, which requests the “quashing” of the AGCO’s decision as well as an order of mandamus, which would compel the AGCO to issue Retail Operator Licenses and Retail Store Authorizations to the 11 litigants.

In the alternative, they argued that the agency had no right to impose a letter of credit requirement on them.

In the end, they got more than they had asked for.

Peter Brauti, lawyer for the 11 disqualified lottery winners, called the Thursday decision to freeze the process pending a final decision a “huge win” and a “grand slam.”

This is just a temporary pause, so all eyes will be on the Superior Court on Sept. 25 to find out what Justice Corbett decides.

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Harrison Jordan
Harrison Jordan
Harrison Jordan is a graduate of Osgoode Hall Law School in Toronto and enjoys reading and writing about the regulatory affairs of cannabis in Canada and around the world.
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