Spurned pot shop hopefuls going to court to challenge cannabis store lottery

A group of prospective cannabis retail store owners who won a lottery to apply for a licence in the burgeoning industry before later being disqualified are going to court Thursday to seek a judicial review.

Lawyer Peter Brauti confirmed to CBC News that he has filed applications for 11 people who were disqualified. According to court documents, they are seeking a hold on the distribution of any licences until a judicial review of the province’s lottery system can take place.

Brauti said in an email the crux of the court challenge is the fact the Alcohol and Gaming Commission of Ontario (AGCO) has said his clients didn’t meet timelines laid out for submitting documents.

“It is our position that our clients fully complied with the rules and all required documentation was submitted on time,” he said. “The issues in this matter have the potential to wreak havoc with the lottery system.

“It is our hope that common sense will prevail and at some point there will be a meaningful dialogue to resolve the issues. In the meantime, we have had no choice but to file an action requesting that the lottery system be put on hold for now.”

The case is scheduled to be heard in divisional court starting at 10 a.m.

Phil Serruya, director of communications for the AGCO, said in an email the agency is aware that a “number of qualified candidates have commenced an application for judicial review.

“It is their right to do so,” he said. “The AGCO will not make any further comment while the proceedings are ongoing.”

According to background laid out in court 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.

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.

Brauti maintained in court documents that his clients complied with all of those rules — but they were disqualified because they had failed to hand in a $50,000 letter of credit by a deadline set by the AGCO.

He alleges in court documents they did, in fact, meet that deadline.

“The disqualification decision was fundamentally wrong and the process by which it was reached was procedurally unfair,” the application reads.

“The applicants were completely denied the right to be heard; all of their attempts to make their case to the registrar were simply ignored.”