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A Kelowna-based company didn’t capture one of 25 cannabis retail licences in Ontario’s lottery last week, but it has a chance to get into the market through a partnership with one of the winners.
Starbuds Canada, which last summer secured real estate locations in Whitby, Ont., and Windsor, Ont., in anticipation of the lottery, was one of 17,320 applicants. Most of the 25 winners are individuals who don’t know how to open a retail cannabis store, but Starbuds does.
The licences cannot be transferred through a sale, so the only option for cannabis companies like Starbuds to get into the lucrative Ontario market is through a partnership. There have been reports this week that licence holders are seeking more than $5 million.
“We’ve had 17 of those groups come back to us and say that they are open for offers,” Starbuds president Dave Martyn said this week. “We’ve talked to 12 in the last day. We’re going to submit offers. I don’t know the odds of getting a partnership with these groups, but given how tight the timeline is plus the various other concerns that are there, we think the fact that we understand the process—we’ve built stores—that should play favourably for us.
“Given the amount of people looking to partner, we think we’ve got a shot, but it’s ultra-competitive for those licences. We’re hearing crazy numbers. I don’t know the reality of them, but it’s the most highly chased licences we’ve seen in Canada thus far.”
Those who won licences have to pay a $6,000 non-refundable fee and supply a $50,000 letter of credit along with their application, and they have to do it by the end of the week.
“The timelines are extremely, extremely tight. I would say they’re almost not doable,” Martyn said. “I struggle to see anybody being open on April 1 given the building permits and things like that that always take a lot of time.
“So a lot of people have a very steep learning curve, and literally every single winner we’ve talked to has said, ‘I didn’t have a plan if I won. I entered this like a lottery ticket, and now I gotta figure out what to do because my money is actually on the line.’ It’s very, very interesting times in Ontario.”
— with files from Nich Johansen
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