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Real-estate race begins for Ontario pot shop locations

With the move to allow private businesses to operate cannabis stores in Ontario, the race is on to secure storefronts.

Actually, it began before the Conservative government announced Monday that it was abandoning plans to sell pot at stores run by a subsidiary of the LCBO.

Officials at four major cannabis companies contacted by this newspaper say they anticipated the possibility of a policy shift to privately run pot shops and had already begun scouting locations. The companies are now building cannabis stores in Western Canada and say they will be ready to jump into Ontario with multiple locations.

Three of the companies have Ottawa-area connections. Canopy Growth Corp. is in Smiths Falls, National Access Cannabis has headquarters in Ottawa and Fire & Flower is partly owned by Gatineau cannabis grower Hexo (formerly Hydropothecary). The fourth is Aurora Cannabis based in Western Canada, one of the country’s largest cannabis growers.

All four companies have a shot at becoming the “Starbuds” of Ontario pot.

But it’s still early. Industry experts expect there will be a huge demand to operate stores, from both from big companies and small entrepreneurs.

Ontario is the country’s largest market, said Jeffrey Lizotte, chief executive of Next Wave Brands, a cannabis consulting company.

“Ontario will become the premier target, the primary battleground for cannabis retail.”

Lizotte predicted that major retailers will also want to set up franchises in Ontario, noting that food giant Loblaw has already won the right to set up stores in Newfoundland and Calgary.

Which companies might dominate also depends on the rules — which haven’t been decided — governing the operation of private stores. The provincial government has promised wide consultations before introducing new legislation. Lizotte said he expects that will begin next week.

Ontario Finance Minister Vic Fedeli said the province will also learn from the experiences of Manitoba, Saskatchewan and Alberta, which have adopted private-store models.

Alberta plans to issue about 250 store licences in the first year of legalization but has limited the number that can be awarded to any one company to 15 per cent of the total to prevent market domination. Saskatchewan held lotteries to award licences.

In Ontario, municipalities will also have a key role. Councils elected during the fall municipal elections will have a one-time chance to opt out of having cannabis stores in their jurisdictions.

Municipalities will also probably have a say in where private stores are located. It’s likely that stores will not be welcome close to schools, parks, community centres or other places where young people gather. Depending on the municipality, that may also limit the possible locations.

That all creates multiple layers of uncertainty.

But entrepreneurs who want a piece of the retail market aren’t waiting to lock down locations.

Alcanna, a huge private liquor store operator in Western Canada and Alaska, has already identified more than 100 potential retail locations throughout Ontario, said a spokesperson for Aurora, which has a licensing deal with Alcanna. The stores would operate under the Aurora name.

Aurora’s chief corporate officer, Cam Battley, declined to say whether the company has signed any leases, saying he didn’t want to give his competitors an edge.

At Ottawa’s National Access Cannabis, CEO Mark Goliger said the company is working with a real estate broker but also declined to say whether any leases had been signed. His company plans to apply for the maximum number of stores allowed in Ontario.