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Cannabis Legalization in Ontario

Backgrounder January 13, 2022

Municipal Implications

Under provincial legislation and regulations on legal cannabis, municipal governments are responsible for deciding whether to allow cannabis retail in their communities, providing input on store locations, enforcing where cannabis can be used, as well as policing the grey market. Recreational cannabis can also impact municipal emergency services, economic development, and public health and safety.

In light of these impacts, the provincial government provided transitional funding to municipal governments through the Ontario Cannabis Legalization Implementation Fund (OCLIF). This was funded with a portion of Ontario’s share of the federal excise tax on cannabis. While OCLIF has expired, AMO continues to call for a renewed cannabis excise tax funding arrangement that supports municipal government and community needs, such as youth and community development programs, giving a strong incentive for consumers to choose legal cannabis retailers.

In addition to recreational cannabis, many Canadians continue to depend upon medical cannabis access to manage a variety of medical conditions and have a protected right to that access. However, many municipal governments, residents, and communities continue to be concerned about multiple personal and designated medical cannabis grow authorizations that can sometimes be located in one place. There is also concern about the lack information on authorized operations in their communities.

The federal Cannabis Act is slated for review. AMO encourages the federal government to update the Act to provide Canadians, provinces, and municipalities greater clarity on various issues surrounding legalization and to help municipalities accommodate cannabis in our communities with more options to manage factors such as odour or light pollution and personal and designated medical grows.


While cannabis for medical purposes has been legal in Canada since 2001, recreational cannabis was legalized by the federal government in October 2018. In September of that year, the Ontario government gave the Alcohol and Gaming Commission of Ontario (AGCO) authority to license private cannabis stores in Ontario’s communities.

Citing a national shortage in cannabis supply, in December 2018 the Ontario government decided to take a phased approach for the number of retail stores and locations in the province. AGCO began by awarding 25 store licenses through a lottery in the initial phase starting April 1, 2019. A second lottery was held on August 20, 2019, which awarded 42 more retail store licenses.

In early 2020, the Ontario government announced it would open the market, providing licenses to retailers who met provincial criteria. Stores operated by these licensees can be located in any municipality that allows cannabis sales, and storefronts can be proposed for locations that meet zoning requirements, subject to AGCO authorization. While this has led to a proliferation of stores in some areas, AMO is hopeful that the opening of the legal cannabis market will help curb the illegal or grey market for cannabis and that the retail storefront environment balances out supply and demand as consumers and companies gain experience.

In submissions to the federal and provincial governments, AMO continues to support better tools for municipal regulation of cannabis grows and retail as well as a portion of excise taxes to help communities provide services such as youth development programs that can help to encourage residents to be and stay healthy.


Craig Reid
Senior Advisor