How Cannabis Laws in Ontario Affect Businesses
Current Legal State Of The Province
In August 2018, Doug Ford’s conservative government changed the rules for Ontario’s retail cannabis program. Private dispensaries / retail cannabis outlets will be legal in April 2019..
The Ontario government’s Ontario Cannabis Store (OCS) will wholesale cannabis to retail outlets and will be the only legal online retailer for cannabis products.
Minimum Age: Who Can Legally Access Marijuana in Ontario?
Once the cannabis Ontario laws take effect, 19 years is the minimum age for people to buy, sell, possess, and share recreational cannabis. 19 is the same as the minimum age for the sale of tobacco and alcohol in Ontario.
How is Cannabis Accessed? Private/Public Retail Stores
As of April 1 2019, Ontarians that want to buy marijuana will be able to buy it from private licensed retailers / dispensaries.
What about the nearly 6 months between October 17 2018 and April 1 2019? You’ll be able to buy cannabis online through the OCS…the only legal online retailer.
The OCS online system will be handled by Shopify, and should be delivered safely and securely. There will be age verification on delivery and packages will not be left unattended at the door.
You will be able to purchase up to 30 grams (about one ounce) of dried recreational cannabis at one time for personal use.
As of October 17, 2018, the OCS website will be the only legal option for purchasing recreational cannabis in Ontario. .
Online/ Website Sales
Canadian commerce platform Shopify will be powering the online sales channels for the Ontario Cannabis Store.
Ontario residents are prohibited from operating an online business within the province.
If you want to start a legal online cannabis business, consider opening a retail cannabis store in Saskatchewan or Manitoba, then open a website for that store. Only cannabis retail store licensees will be able to have online sales and only in Saskatchewan and Manitoba.
Non-Cannabis Products & Edibles
Initially, all retailers will sell dried marijuana, cannabis oil and accessories. Edible products and concentrates may be added at a later date, when they are legalized federally. The Federal Government has indicated that they will be available within one year of the legalization of recreational cannabis.
If you are an entrepreneur interested in how to open a dispensary in Ontario, unfortunately, you’re out of luck! The new law gives the Legislative Assembly of Ontario a monopoly on recreational cannabis once the federal government’s legalization takes effect; in other words, residents are prohibited to open cannabis dispensaries in Ontario.
Illicit cannabis dispensaries, including those representing themselves as legal retailers of medical cannabis, are now and will continue to be illegal under the new rules. Ontario will work with and support law enforcement to shut down these illegal operations. Illegal storefront “dispensaries” still operating will be forced out of business under threat of cash fines of up to $1 million and jail terms as long as two years less a day.
Where Can Cannabis be Consumed?
To protect the health and well-being of all people in Ontario — particularly children and youth — the province is restricting the use of recreational cannabis in a similar way to alcohol.
Under the cannabis Ontario legislation, it will only be legal to use recreational cannabis in private residences. People will not be allowed to use any form of recreational cannabis in public places, workplaces or when inside a motor vehicle.
Under the cannabis Ontario regulations, usage will be restricted to private homes and consumption will continue to be outlawed in all parks and other public places as well as in vehicles.
Ontarians of legal age will, however, be permitted to grow up to four cannabis plants for personal use. They will be able to purchase cannabis seeds from the OCS after October 17, 2018.
Top 5 Common Problems Faced With Cannabis Business Plans
1. Using a Template
As with many other industries, there are many templates available. Some are free, and some you pay for. Reality is that using a template is really going to cost you.
- Is the template Canadian or American?
- Does the template assume that you’ll be able to sell all cannabis products? You’ll only be able to sell flower and non-concentrated oil for the first year.
- Is your business going to be the same as every other business?
Garbage in – garbage out. Your final plan will only be as good as the template. If you are uncertain about the feasibility of your basic concept, how to research the market opportunity, or where to find your startup costs, you need expert help from a business plan consultant. If you don’t know what you are doing with the company, a template will only help you write a plan faster, but can’t make your launch successful or improve your chances of raising funds.
2. What’s The Point?
One of the first questions you should ask before writing a business plan is “Why am I writing this plan?”
- Are you looking for financing?
- Do you want to see if the business will actually work?
- Are you trying to obtain a license?
A successful business plan should always be targeted to your audience. Most business plans that we see are generic. Sure, they follow a format, but it is hard to understand the actual purpose of the plan.
3. Not Focusing on The Competition
- Playing down the competition
- “We have no competition”
- No competitive analysis
Competition is almost always an issue with every business. You want your customers to spend their money with you rather than with your competition. Don’t dismiss your competitors. Unless you really do “know it all,” you have to do your market research to write a good business plan. Check out the competition. What’s their niche? Why do their customers choose them? How do you know that your competition won’t get in your way? Even if you believe that you have a unique business, there will still be other businesses competing for your customers’ money.
4. Inadequate Market Research
- How large is the total market for your products?
- What share of the market can you expect?
- How do your products and service compare to the competition?
- How does your pricing compare to your competition?
Good market research can help you define and refine your value proposition. Not dissimilar to your USP (Unique Selling Proposition) your value proposition answers the question: What is the compelling reason for customers to buy your product? This question can also be rephrased as: Why should a customer choose your product/service over every other option available to them?
5. Unrealistic Financial Projections
- Financials do not make sense
- A “hockey stick” growth curve
- No cash flow or break-even analysis
- Assumptions not listed
- Essential expenses omitted
Let’s face it. Opening a business is going to cost you money. Not just to open and equip the store and buy inventory, but also to pay the rent, meet the payroll and take care of operating expenses until you make decent profits. You’d better have a solid Financial Model so that you KNOW “what it’s going to take and what it’s going to make.”
Summary of Article
- Wholesaling will be run by the Ontario government through the Ontario Cannabis Store (OCS)
- Federally licensed cannabis sales organizations may also be permitted
- Licensed producers may be able to sell directly to retailers
Online Cannabis Sales
- Ontario Cannabis Store only
Dispensary/Retail Cannabis Outlets
- Regulated by the Provincial Government
- Municipalities may be able to ban cannabis retail stores / dispensaries from their jurisdiction
- Opening hours and locations will probably be regulated by individual municipalities
- Staff will have to be properly trained
In Ontario, private cannabis retailers have a great once in a lifetime opportunity. If you can get a license, you’ll be able to open a dispensary, and that looks like you’ll be able to make a lot of money.
How Sharp Business Plans Can Help You
- We are business plan experts. We’ve been writing business plans for over 30 years and helped hundreds of people realize their dreams of owning and operating a successful business.
- All of our business plans are reviewed by a professional accountant to make sure that the financial statements and financial information make sense.
- We are experts at writing business plans for the cannabis industry in Canada, Australia and the U.S.
- We have written over 40 business plans for licensed producers and potential licensed producers under the ACMPR. Some of our clients have already received their licenses. We have also written ovewr 20 business plans for dispensaries.
- We understand the Canadian provincial regulations have not yet been finalized, so we can prepare business plans targeting the politicians that will help smooth the way for your license.
- You need to know how much you’ll have to invest in a cannabis business and how much you should make in profits. You’ll also need to know the cash flow information…especially for the first couple of years, when you won’t be able to sell concentrates or edibles.
If you have any questions about Ontario’s cannabis private retail licensing, the Cannabis Act (C-45), or Access to Cannabis for Medical Purposes Regulations (ACMPR) or want more information on how we can help prepare a cannabis business plan for you, call us toll-free at 1 (800) 661-9842 and contact us today for a free consultation.