Fwd: Ontario retail cannabis lottery sparks feeding frenzy: "Most people who put their hat in the ring just wanted a golden ticket"

-----Original Message-----
From: Financial Post & The Growth Op <newsletters@lists.financialpost.com>
To: rightbuy18 <rightbuy18@aol.com>
Sent: Mon, Jan 21, 2019 1:05 pm
Subject: Ontario retail cannabis lottery sparks feeding frenzy: "Most people who put their hat in the ring just wanted a golden ticket"

View this email in your browser

What you need to know for the week of Jan. 21, 2019

A live webinar on the Cannabis Act including the proposed edible, extracts and topicals amendments will be held on Jan. 24 by Academy of Applied Pharmaceutical Sciences.
Van der Pop will organize a 'Women & Weed' summit in Toronto on Jan. 26.
Ellementa will host a meet-up discussing cannabis as a wellness tool on Jan. 26 in Alberta.

Deal makers scramble to woo the winners of

Ontario's retail cannabis lottery

BY VANMALA SUBRAMANIAM

A web of lawyers, consultants, investors and entrepreneurs are working around the clock to design and facilitate complex deals between many of the 25 largely unknown winners of the Ontario retail cannabis lottery and entities that consider themselves veterans of the cannabis industry who are intent on participating in the province's cannabis retail system.

But structuring these deals is proving to be more complicated than first believed, given stringent ownership requirements laid out by the Alcohol and Gaming Commission of Ontario (AGCO) that prevent lottery holders from ceding any kind of control over the future ownership of a cannabis retail store at least until the lottery period is over in December 2019.

"There are lawyers that are contacting us saying they have clients looking to do a deal, and if we might know a lottery winner. And then you have lottery winners who want to sell their licence, but now realize they can't just do that, they have to have a role in running the business," said Rami Chalabi, a partner at McCarthy Tétrault's cannabis group.

"So we are trying to figure out ways to help where we are onside with regulations," Chalabi explained.

On Jan. 12, Ontario announced the 25 winners of its cannabis retail lottery, who had until Jan. 18 to submit an application for a retail licence, which upon receipt would allow them to begin setting up a bricks-and-mortar store in a designated region of the province.

A vast majority of the lottery winners were sole proprietors, but the AGCO's rule of ownership effectively means that these individuals will not be allowed to either sell their licences (once received), enter into a franchise agreement that would see someone else run the cannabis shop, or enter into any kind of partnership that would see them share or hand over control to another entity.

"The AGCO has specified three things that I think many people were not prepared for: you cannot change the name of your business, the structure of your business and who controls your business," explained Brenna Boonstra, who oversees the retail licensing group at Cannabis Compliance Inc., a cannabis consultancy. "If you're a sole proprietor, no one can buy equity in your business, so you cannot take on partners."