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Disqualified Innisfil, Barrie cannabis store lottery winners lose in court

Posted October 4, 2019

Ontario's divisional court has dismissed a request for a judicial review of the decision that disqualified lottery picks for Cannabis Retail Store Authorizations and Retail Operator Licences because of their failure to provide original copies of a Letter of Credit by a deadline of August 28, 2019.

Included among the 11 applicants seeking the review of Registrar (Alcohol and Gaming Commission) were Ilim Uzunova, Olga German, Ronen Ackerman, each lottery picks for separate locations on Commerce Park Drive in Innisfil, and Sofia Kuliev on Collier St. in Barrie.

According to the decision released Sept. 27, the initial email notifications to the 11 applicants were immediately returned as undeliverable, setting off a series of notification attempts prior to the stated deadlines to fulfill the licensing obligations.

In the exercise of that power, the Registrar adopted Rules that require an EOI applicant to file a 'Letter of Confirmation - Cash or Cash Equivalents Capacity' from a bank or credit union stating that the applicant is in good standing and has the financial capacity necessary to obtain $250,000 in Cash or Cash Equivalents. As well, the applicant has to provide a 'Letter of Confirmation - Commitment to Provide Letter of Credit" from a bank or credit union confirming that the applicant has the financial capacity to obtain a Standby Letter of Credit in the amount of $50,000, and that the LC will be provided to the AGCO within five business days of the applicant being notified of their selection," according to Justice Swinton writing for the panel. "Once selected to apply for a Licence, the applicant must provide the $50,000 LC within 5 days of the notice of selection. The LC must remain in force until July 3, 2020. The Registrar submits that the LC is reasonably required pursuant to Rule 14(a)(i) as a way to demonstrate the applicant's financial capacity to operate a retail store, as required by s. 9(b) of the Regulation. He also submits that it has a second purpose: to ensure accountability on the part of the selected applicants, and to ensure that they are taking the necessary steps to open a cannabis retail store in a timely manner because they have 'skin in the game.'"

The court found the notification provisions were well advertised, and widely publicized, and the lottery winners posted on the AGCO's website. Also, none of the applicants made objections about the deadline date.

"The applicants were not denied a licence by the Registrar, and he had no obligation to issue a Notice of Proposal. Rather, the applicants were disqualified from the selection process, because they failed to comply with the Rules governing the process. Having failed to provide an original copy of the LC in a timely manner in accordance with the deadline, they were not entitled to proceed to make a licence application. In effect, their licence applications were incomplete, because a key element of the application package was missing on the key date."

Their request to delay the awarding of cannabis store licenses also failed to sway the Court because those moved up from the waiting list have complied with the lottery rules.

"They are truly innocent parties here. The applicants, in contrast, were the ones who provided contact information to the Registrar that was not operative. They have failed to provide any explanation respecting the failure of their emails, and they have filed no evidence of prejudice, either with respect to the time they learned of their selection or with respect to their losses suffered as a result of this process. There is no explanation as to why they did not provide an original LC by August 28, given that they had uploaded other documents and some of the applicants had obtained the LC as early as August 22."

The AGCO elevated 13 from the waiting list in the East Region (which includes Simcoe County) including Michael Hassey at 231 / 241 Essa Road in Barrie. Louis Laskovski was originally selected and qualified to open at 312 Hurontario Street in Collingwood.

The 42 new cannabis retail stores are expected to be open this month or they start facing financial penalties.

All stories, unless otherwise noted,
by Tony Veltri