The Ontario government is moving with speed to combat the illicit cannabis trade. The government has since approved the tripling of the number of provincially licensed pot shops with the addition of 50 new cannabis retail stores. Some of the stocks poised to benefit from the new regulatory change include Fire & Flower Holdings Corp. (TSXV:FAF, Alcanna Inc. (TSX:CLIQ) and VIVO Cannabis Inc. (TSXV:VIVO).
Cannabis Store Licensing
The licensing of additional retail stores comes at a time of ongoing federal cannabis shortages that has forced most people to seek supplies from the black market. However, the Ontario government is moving with speed to protect young people and keep communities safe by ensuring only legalized operators address the needs of the population.
The Alcohol and Gaming Commission of Ontario is to conduct a second lottery as a way of awarding 42 new private cannabis retail store authorizations. First Nation communities seeking to operate safe and secure retail outlets will have to battle it out for eight stores allocations.
The East region in Ontario is to get seven stores allocation while the GTA region will end up with the six-cannabis store. The Toronto region is to get 13 stores while the West region will get 11 stores allocation. Kenora, North Bay Sault Ste. Marie Thunder Bay and Timmins cities will each end up with one retail cannabis store.
In addition, the Ontario government is increasingly engaging First Nations as it seeks to support efforts that will help promote legal access to cannabis and combat the black market.
“Our government is continuing to take a responsible approach to opening cannabis stores across Ontario, allowing private sector businesses to build a safe and convenient retail system to combat the illegal market. With marginal improvements in national supply, we are proceeding to issue up to 50 new cannabis store licenses,” said Rod Phillips, Minister of Finance.
A new set of pre-qualification requirements have been tabled that will help streamline the licensing process to prepare potential cannabis retail operator license applicants. Potential licensees must demonstrate that they have appropriate retail space for hosting the cannabis retail store.
The prospects must also show that they have enough capital for running such an operation. In addition, licensed operators will be able to open retail stores in any municipality regardless of population size
Cannabis Stocks To Watch
The race to combat illicit cannabis sales should benefit Alcanna, which is one of the largest cannabis retailers in North America. The Company currently operates more than 230 cannabis locations in Ontario, Alberta, Alaska and British Columbia. With a market cap of $217.2 million, the stock boasts of a 36% year to date return.
Vivo Cannabis is another company poised to benefit a great deal from the regulatory change. The company is engaged in the manufacturing and distribution of medical cannabis. In an effort to take advantage of the growing cannabis demand and address supply challenges, the company has entered into supply and distribution agreement s with the likes of Choom Holdings and Westleaf Cannabis Inc.
Fire & Flower Holdings is another company that could apply for new cannabis retail locations to supplement its 17 branded stores in Alberta, Saskatchewan, and Ontario. The company has so far centered its operations in western Canada due to the friendly regulatory framework.
