Court halts Ontario cannabis store licensing until judicial review takes place

A judge has paused the licensing process for Ontario Cannabis Stores across the province so a judicial review can take place to determine whether or not 11 would-be store owners were unfairly disqualified.

It's a move that lawyer Peter Brauti, who is representing the 11 people who were disqualified, says is "drastic" and "huge."

"If common sense prevails, they'll be reinstated," he told CBC News.

The crux of the challenge, according to court documents, is that the Alcohol and Gaming Commission of Ontario (AGCO) has said Brauti's clients didn't meet timelines laid out for submitting documents.

The province is allotting 75 licences to operate Cannabis Retail Stores in Ontario. Anyone who was interested in applying for a licence had to apply through a lottery system, which was conducted in two rounds.

To my mind, this is just absolutely crazy the way this thing transpired. - Peter Brauti, lawyer

Brauti's clients won the lottery when their names were drawn from among thousands who entered. But AGCO rules required winners to comply with several steps before they could be granted a full licence.

The winners had five business days to turn in their application for a licence, along with a $6,000 non-refundable fee and a $50,000 letter of credit.

Brauti told CBC news the province is trying to say they sent emails to his clients notifying them they had won the lottery — but they all bounced back.

Two days later, the recipients got a registered letter from the province saying they had won the lottery, Brauti said. They then assumed they had five days from that date to submit the documents.

"The government says the registered letter was meaningless — it was the bounced-back email that counted," Brauti said.

"To my mind, this is just absolutely crazy the way this thing transpired," he said.

Tijana Martin/Canadian Press

At a hearing Thursday, lawyers for the AGCO argued that putting licensing on hold would "impact the integrity of the process" and be unfair to the others seeking to apply.

Lawyer Judie Im said that after the group was disqualified, 11 others were selected from a waiting list and given the chance to apply. She noted a stay would affect those applicants.

"This whole thing is interconnected," she said.

Brauti says he is hoping the government will consider another remedy — to simply extend the number of licences by 11, giving his clients the ability to get into the industry as well.

The judicial review is scheduled for Sept. 25.