government relations

what is a golden ticket in the ontario retail lottery worth?

25000:1 is a long shot. But for 25 people or groups it’s a come up. So what’s it worth?


the “numbers”:

We don’t have empirical data in the illegal market. So we’re using best estimates and big round numbers to get a rough sense of the market 25 legal brick and mortar stores could share in Ontario:

The Parliamentary Budget Officer in Ottawa projected Ontario’s retail sales is worth $2.1 to $2.3 billion.

The black market is entrenched with significant input cost advantages. Let’s say they keep 2/3.

So legal channels share the remaining 1/3 : which could be $716M shared between 25 brick and mortar retailers and the OCS’ e-commerce platform.


In fewer than 100 days since legalization, the OCS is closing in on 500,000 orders. Again data is scarce but we can assume the OCS will do 1 million orders in the first year. Orders have balanced out since the huge novelty of 100,000 orders in the first week to ~2,500 / day. We’ll give them a generous avg order price of $75 per.

That could leave $640M for legal brick and mortar. All location aren’t created equally. It surely won’t be an even split / the 25 (that would be $25.6M in first year sales for each licensee).

Experienced cannabis retailers out West say it’s ~30% margin business.

Sales will vary widely by region but each of the 25 will see significant revenue.

30% margins on $25.6M first year sales is ~ $7,700,000.

$7.7M annual sales is ~ $21k in daily sales. - well below public admissions from black market dispensary owners who claimed $30k - $80k on good days in the illegal market with far fewer barriers to entry and more competition.


supply and demand:

How many consumer will cross over into legal brick and mortar is a great question. We estimate a third to start. But the real supply and demand to consider for the next couple of weeks isn’t consumers come April.

t’s how badly to big retail brands need to strike a deal to partner with a lottery winner. And how well lottery winners set a minimum price.

Beyond the market opportunity in a limited 25 stores market, there is a significant value to established retail brands to get exposure in Ontario. Since they’re unlikely to winner by lottery, they need to find a partner who did.

Ontario is nearly 40% of the national population and expected to do half of national cannabis sales. It’s also far and away Canada’s biggest tourist draw with 10M + international tourist visits annually.

The market in Ontario is huge. And only 25 retail brands will have exposure to start.

Many retail brands have expended significant capital to secure locations and planning to bring their retail brands to Ontario. Unlikely to win the lottery, they need to find partners who did. The cost doesn’t matter, they need a beachhead to scale in Ontario over the next year for round 2 of licensing.


Retailers are readying lucrative partnership offers:

  1. A seven figure cheque up front

    (depending on region (high seven figures for Toronto, & GTA, middle 7s for East or West. Lower 7s for the North)


  2. a turnkey operation to open doors on April 1st

    read: they handle everything


  3. a revenue split for a defined period

    (how well can you negotiate?)

hey i heard you got a license.jpg

hey i heard you won…

Once the 25 lottery winners are posted on Saturday Jan 12th, it will be a mad scramble to pair winners with established brands to secure the capital, team, experience, and plan to open a retail location on April 1st. Partnering with an establish retail brand will be a necessity for most lottery winners to meet ambitious timelines to open doors in 80 days.

It’s up to the lucky 25 to decide what they want to do. A quick deal for a quick buck or finding the right partner and playing your hand right to a lottery win a generational come up.