More GTA cannabis stores are cancelling retail licenses, AGCO report finds

Concerned about an oversaturated market, a growing number of cannabis retailers across the Greater Toronto Area (GTA) are reportedly closing up shop and cancelling their retail licenses.

According to data obtained by the Toronto Star, the Alcohol and Gaming Commission of Ontario (AGCO) has seen an uptick in the number of retail store authorizations that have been cancelled since the start of the year.

In January, the AGCO only had one cancellation. However, in June and August, the commission reported six and four cancellations, respectively.

In addition to cancellations, the AGCO is keeping an eye out for potential license expirations. The province’s cannabis retail store authorizations expire after two years.

In the GTA, there are approximately 139 authorizations up for renewal between October 2022 and February 2023.

How supply chain issues are affecting cannabis retailers

Growing competition is not the only deterrent for many store owners in and around Toronto. Businesses are having trouble ordering products from the Ontario Cannabis Retail Corp. (OCRC), which is the province’s sole cannabis distributor for retailers.

In her December 2021 report, Ontario Auditor General Bonnie Lysyk highlighted that the OCRC’s inventory forecasts often came up significantly short of actual demand. In some cases, there were almost 150 per cent more orders than available products.

George Smitherman, President and CEO of the Cannabis Council of Canada, told the Star that if the province’s distributor can’t supply product reliably, stores of all sizes suffer. He added that the disorderly supply chain makes it even more difficult to attract and retain customers.

Supply chain issues in British Columbia have already led to a number of store closures and significant layoffs. Mood Cannabis recently cut 90 per cent of its workforce at two of its stores in Nanaimo, while Flora Cannabis has temporarily laid off 30 employees.

According to Cannabis Benchmarks, there were more than 3,200 licensed cannabis retailers in Canada as of June 30, 2022. The Star notes that Ontario has approximately 1,500 stores with roughly a third located in Toronto.

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Termination packages for cannabis store employees in the GTA

In Ontario, if cannabis retailers decide to close their doors and lay off staff, they must provide their workers with severance pay.

Non-unionized employees and senior executives in the cannabis sector are owed full severance pay when they lose their jobs due to downsizing or corporate restructuring.

Severance in Ontario can be as much as 24 months’ pay, depending on a number of factors.

LEARN MORE
• Mass layoffs in Ontario: Rights to severance
• Employment lawyer on worker rights in the event of a layoff

WATCH: Employment lawyer Lior Samfiru explains what rights employees have if they are being fired or let go on an episode of the Employment Law Show.

Before you accept any severance offer, have an experienced employment lawyer at Samfiru Tumarkin LLP review it and your employment contract. We can tell you if what you have been provided is fair and how to get proper compensation if it falls short of what you are actually owed.

If you aren’t given the full amount, which happens often, you have been wrongfully dismissed and are entitled to compensation.