Recently licensed recreational cannabis retailers in Ontario are facing a draw down on letters of credit (L/Cs) for failing to open bricks-and-mortar stores in the Canadian province.

Ontario's government has issued licences for 25 stores, but several had not opened by the date required by the licence.

Escalating penalties

Retailers face escalating penalties for delays. Failure to open a store on 1 April means the Alcohol and Gaming Commission of Ontario may call for payment of C$12,500 (US$9,400).

On 15 April, if the retailer is not selling cannabis under its retail store authorisation, an additional C$12,500 will be drawn.

Not opening a store by the end of April means licensees risk losing their entire C$50,000 standby L/C that would-be retailers had to put up to obtain a licence.

Legalisation process

Canada announced that recreational use of cannabis would no longer violate criminal law as of 17 October 2018.

Since then, recreational cannabis has only been available for purchase legally in Ontario from a government-run website.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.