Whitehorse Daily Star

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Photo by Vince Fedoroff

SETTING OUT THE REGULATIONS – Shown left to right at Monday’s media briefing are Mayor Dan Curtis; Al Lucier, the assistant deputy minister of Justice; Matt King, the president of the Yukon Liquor Corp.; and Community Services Minister John Streicker.

Cannabis sellers will have two model options

Just under three months after recreational cannabis became legal in the country,

By Palak Mangat on January 15, 2019

Just under three months after recreational cannabis became legal in the country, the Yukon government has unveiled details on how it plans to do good on its promise to shift sales to the private sector.

During a Monday afternoon media briefing, however, officials were not able to say definitively when exactly that may happen – that is, beyond committing to begin accepting applications from interested retailers this spring.

Cannabis became legal last Oct. 17.

Part of the reason for the uncertainty is it may be difficult to say with clarity how consumers and clients will react to retailers, said Community Services Minister John Streicker.

“Once private retailers get established, we will back away – but it’s not like we’re handing over the keys,” he said. He was referencing the sole government-run retail store at 120B Industrial Rd. in the city’s Marwell area.

“There just needs to be a bit of time to let the market do its thing,” he added. The Yukon Liquor Corp. (YLC) currently oversees the recreational cannabis game on behalf of YG, he noted.

The YLC pegs cannabis sales at just over $1.1 million over the last three months through its online and retail store. That figure sat at just over $216,000 within the first week of sales.

“We don’t have a date in mind; we have a goal to support private retail to come into place and get well-established and then out we go,” Streicker said.

Before they can begin adjusting to private retailers, consumers will have to wait until these retailers themselves can hit the ground running.

That can only be done after they’re granted licences by YG.

Those licences will come in two types, the government explained: one will allow a store-within-store model, while the other will see a stand-alone store model.

Asked about the former, YLC president Matt King agreed it could allow grocery stores, for example, to carry cannabis products.

“Conceivably, the store-within-store model is fairly broad that a store can offer general goods in its non-cannabis area,” he said.

“As long as it has a separate designated area and it makes its case to the licensing board, the board could choose to issue a licence.”

The store-within-store model will allow for a main retail operations area separate from a dedicated cannabis area located within the overall licensed premises. That means there must be two sales area with two separate checkout counters, for example.

The licensed area can welcome those under 19, may sell any products, goods or services in the non-cannabis area while not selling tobacco nor alcohol in either area unless allowed by a municipal bylaw or ministerial order.

By contrast, the dedicated cannabis area may not allow entry to those below 19, only sell cannabis and cannabis accessories and no other goods or services, and allow cannabis purchases only to be done within that area.

Consumers should not be able to see nor access cannabis from the non-cannabis areas.

Within this model, the dedicated cannabis space should also have burglar alarms and video surveillance (with a notice). There should also be secure storage.

The non-cannabis retail area selling general goods does not have specific requirements for staff training.

The stand-alone store model sells only cannabis and cannabis accessories and no other goods or services.

It’s also subject to the age limit of 19, burglar alarms, video surveillance and secure storage.

When it came to those wishing to consume their products on-site, King explained, it would not be allowed for the time being.

“That’s something that may change in the future as edibles are contemplated at the federal level and flow into the territory,” he said. Edible products are expected to begin rolling out late this year, pending Ottawa’s regulations.

Streicker added that the store-within-store model was considered to improve accessibility.

“In our smaller communities, sometimes there’s a very small business area,” the minister said. “It isn’t always possible for them to bring another whole business or storefront; that’s why it exists as a possibility.”

Meanwhile, King’s earlier remarks were in reference to the cannabis licensing board, a five-member group that will have the authority to issue, refuse, cancel or suspend licences up to three years. (Members will also serve up to three years on the board.)

Streicker explained the application timeline to be on that board is now closed. Names will go to the cabinet “shortly,” with the government planning to train the new board in February.

“I don’t want to say we’ve got an exact date for when the board will be established, but it will be established over the next several weeks.”

The group is to be at arm’s-length from the minister and has the power to hold hearings and such, with the corporation’s role to help in the application process, King added.

Meanwhile, those wishing to apply for a licence in the Yukon must be 19 years of age or older, be a Canadian resident, and not work for the YLC nor be a member of the board.

Applicants must submit a satisfactory criminal record check and personal history report to show they are not ineligible based on past prescribed offences, and prove financial responsibility, a release noted.

People convicted of some criminal acts like organized crime, illegal drug trade or convictions relating to fraud, drug trafficking or violent crime are not able to apply, it added.

As for licensing fees: the initial application fee is $2,050 and a renewal fee is set at $1,550. A 12-month licence fee is about $2,150 per year.

“These fees are set out in the regulation,” King said, noting that the corporation itself will do public notification with advertising and the relevant actions.

“The cost of advertising is born by the corporation and incorporated into the fee.”

By comparison: a YLC webpage notes that liquor licences can vary depending on the seating capacity of a site and the liquor being sold, but annual fees can climb as high as $630. King noted that liquor licence applicants are responsible for doing public notification.

As for the carrying of products themselves: all cannabis items must be purchased from the YLC with the licencee to arrange his or her own transportation of the product from the corporation to the licenced area.

No bulk bins nor self-serve is allowed, as products must be in their original and sealed package – but displayed containers like smell jars are allowed as long as they are secure.

Retailers will need to do regular monthly reporting on their financial and product inventory to the YLC, to fulfill their obligation to Health Canada to track seed-to-sale.

Once applications have been submitted to YG, they can take from eight to 12 weeks to process.

The corporation must notify the public once apps are “deemed complete” for a period of four weeks. Once that is done, the YLC will prepare the board package with all comments for the board to review and host a hearing as quickly as possible.

Mayor Dan Curtis explained that the city is expected to go through the bylaw process in February.

“I believe there’s definitely a desire to have retail downtown, and I think that’s one of the things council will be considering with the citizens of Whitehorse to weigh into,” Curtis told the news briefing.

The city’s bylaw can change the setback of 150 metres from elementary or secondary schools, among other things like hours of operations (currently set at a maximum of 9 a.m. to 2 a.m.).

Currently, there are no limits on the number of licences allowed within an area. That may change based on the board’s discretion, King said.

As for any job losses once the closure of the Cannabis Yukon physical store takes place, King explained that would likely not be the case.

“We went into this knowing the physical retail store would be a transitional offering, so we used temporary assignments.”

Any hires were limited to a year, he said, adding that was part of the planning process from the beginning.

Streicker agreed, noting that there were efforts to make the furnishing in the store modular, for instance, to allow for flexibility.

The physical site is currently being repurposed from an existing lease to a different YG department, with it expiring in December 2019.

Streicker also clarified that while the physical location in Marwell will close, the plan is to keep the online site active until a decision is made otherwise.

Nodding, King said that will allow for accessibility to communities where retailers may not have as much immediate interest off the hop in setting up shop.

Meanwhile, the unveiling of the regulations come against the backdrop of a national cannabis shortage.

Acknowledging that “there was tremendous pressure on the supply chain,” Streicker said the territory fared “quite well” in the overall picture.

“We didn’t run out compared to other jurisdictions, but we never got the supply we tried to order completely,” he said. The corporation hasn’t received its full order of value products, he added.

“That’s one of those issues; it’s a supply issue and we are waiting to see that catch up.”

On the federal stage, Prime Minister Justin Trudeau, whose Liberals are gearing up October’s election, has also acknowledged the shortage but expects it could be relieved within a year.

Asked how many interested parties there are in the territory, King explained it’s all informal at this point.

“Until we have applications in hand, it’s hard to speculate,” he said.

See related coverage.

Comments (9)

Up 0 Down 0

Always Questions on Jan 21, 2019 at 7:53 pm

Yukon Cannabis Store -
The website shows only packaging (which does seems excessive imo), how about showing the product?

Why can you only purchase 3.5 gram packages? If you want an ounce, 8 x 3.5 x 41.71 whooee$ that's just one example (probably paid ~ $260 on the black market, in a baggie) ... maybe price does 'scale down' with quantity? 30 gram limit of course. Pretty sure I'm a criminal already based on that 30 grams, but then I've always been one I guess, lol.

100% agree that government needs to get out of retail, but I don't expect any improvement in product or pricing from private retailers acting as the storefront for the Govy.

Come spring, let the growing (and trading) begin!! Can't wait!

Up 6 Down 0

Jim Carey on Jan 18, 2019 at 5:26 pm

Dumb, Very-Dumb, Extremely Dumb and Even-Dumber...

Up 14 Down 3

Groucho d'North on Jan 16, 2019 at 11:35 am

I never imagined that cannabis would be a loss-leader product given its large popularity. However, the structure of the government’s private sector sales model does not inspire me with any hope that the business people will do anything other than replace expensive government operations with limited opportunity for themselves.

Consider, retailers will be obliged to buy all their product from the government similar to hotels and bars who must buy all their product from the government who just a couple weeks ago adopted a wholesale- retail pricing strategy of a sort for liquor merchants, I wonder how long before this business model becomes available for the herb sellers?

The merchants will be stuck with the ridiculous product packaging adopted by government complete with single use plastics and excessive packaging,

The public is still waiting to hear how much profit government made on its first million in sales. What kind of margin will these new private sector retailers expect to make on pot products? To be fair, I anticipate the net profit on the first million in government sales to be weak considering the ramp up government had to invest in lease hold improvements, the hiring and training of staff, security costs and transportation of the product and numerous other expenses to get their outlet open for business to meet the Oct 17 deadline, so Justin could keep this one election promise.

I’m not sure how much margin is in glass pipes, rolling papers and similar paraphernalia, but I hope it is enough to keep the lights on for these brave business people who are betting the farm on a business model designed to support government rather than themselves.

Up 11 Down 7

Nero Fiddling While Rome Burns on Jan 16, 2019 at 11:02 am

Talk about Nero fiddling while Rome burned! The Liberals threw this marijuana distractor out there to deflect attention from the disaster they are creating while in office, for example does anyone else remember Trudeau flippantly saying the budget will balance itself? Now he’s saying a balanced budget of some pie in the sky will get here sometime in the 2040’s of all things.
Meanwhile the electorate is enthralled with the legal weed bone the liberals threw out that we see is taking local governments attention, resources, and funds that are sorely needed elsewhere. Does anyone else think there were 1,000 more important things that needed the Liberals focus besides weed and never ending apologies to everyone Trudeau can think of?

Up 16 Down 7

Better not be out where kids can see it on Jan 15, 2019 at 10:22 pm

Not sure about a store within a store. Don't want my teens influenced anymore than they are, so I'd say just have separate stores like liquor, off sales for marijuana....this is an adult recreational drug, and needs to be treated as such in any store setting. Just like alcohol, porn or cigs.

Up 8 Down 14

looking good so far on Jan 15, 2019 at 7:48 pm

This is an informative and well laid out article, and it seems to me that the government did a good job of rolling out the legalization of this industry. It's not often I feel compelled to say this, but well done!

I hope some good, down to earth people get involved in the retailing and that it doesn't just go to the superstore or something, and to people who are too cool for school, insisting they are the, 'biggest and the best and the most deserving and the coolest'. Or people who have questionably expensive lifestyles compared to their apparent income. Or to people running apparently empty shops.

I would add to the application review a request that the applicants explain where the money came from for their shop, for instance.

I also want to say that I fully support the government in remaining the sole wholesaler of product, at least for now.

Up 12 Down 4

Humble Measure on Jan 15, 2019 at 3:50 pm

@EditorialBypass - Did you catch the part where the King nodded?

Up 18 Down 3

EditorialBypass on Jan 15, 2019 at 3:33 pm

Man, this is one VERY long piece of writing. Don’t bogart that joint. Can someone pass that doobie over here please. I need a hit of something to get me through this.

Up 23 Down 5

Thomas Brewer on Jan 15, 2019 at 3:31 pm

What a happy group of people... perhaps they should have sampled some of the Monopoly's offerings before the meeting!

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