Ontario’s deficit forecast drops $1 billion for the year to $13.5 billion

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Ontario’s deficit figure is changing again as Finance Minister Vic Fedeli says higher tax revenue is expected to shrink the annual shortfall by $1 billion in the fiscal year ending March 31.

An unexpected windfall from corporate income taxes and higher consumer spending through the HST in the third quarter should reduce the annual shortfall to $13.5 billion, Fedeli said Wednesday, improving on a forecast $14.5 billion deficit in his November economic statement and $15 billion after taking office last summer.

Ontario Finance Minister Vic Fedeli had forecast a $14.5 billion deficit in his November economic statement.
Ontario Finance Minister Vic Fedeli had forecast a $14.5 billion deficit in his November economic statement.  (Adrian Wyld / THE CANADIAN PRESS)

“Thanks to stronger economic growth…Ontario’s revenue position has improved,” he told a news conference, crediting the “open for business” agenda of Progressive Conservative Premier Doug Ford’s government.

Liberal MPP Mitzie Hunter (Scarborough-Guildwood) cast doubt upon the deficit number, charging it is “inflated…to justify an austerity agenda” as the Conservatives work to fulfil a promise of $6 billion a year in spending cuts with Fedeli’s spring budget approaching.

“Both the Financial Accountability Office and the previous provincial comptroller dispute the government’s numbers. This is no small thing,” added Hunter, her party’s finance critic.

The independent FAO headed by Peter Weltman put Ontario’s deficit at $12.3 billion in a December report — $1.2 billion lower than Fedeli projected at the time — saying the government’s forecast of tax revenue was on the low side. Fedeli said that was because he was being prudent.

Read more:

Higher tax revenues lead to lower Ontario deficit, minister says

Ontario’s fiscal watchdog says deficit is $1.2 billion lower than claimed, but warns of huge future shortfalls

Tories mum on why provincial controller quit after refusing to sign off on $15 billion deficit

Cindy Veinot, the provincial controller who quit in September because she said she “did not agree with accounting decisions made by the current government,” has maintained the deficit figure could be as much as $5 billion lower than Fedeli’s estimate.

That’s because the new government, unlike its Liberal predecessor, no longer counts $11 billion in co-sponsored Ontario Public Service Employees’ Union Pension Plan and the Ontario Teachers’ Pension Plan assets on the provincial bottom line.

After trimming the deficit $1.5 billion, Fedeli said the government is now 10 per cent toward its goal of eliminating it and promised a “detailed” road map to balancing the books in his spring budget, for which a date has not yet been announced.

“The road ahead will not always be easy,” he warned, noting the province is now spending $12.5 billion a year for interest on the accumulated debt of more than $300 billion.

“The people of Ontario deserve to hear the honest truth about the hard work still in front of us,” he added, adding that “tax relief is still coming” but refusing to reveal a time line.

Green Party Leader Mike Schreiner said the new deficit projection shows the Financial Accountability Office was closer to the mark than Fedeli.

“Back then the government disputed the FAO numbers, while today they pat themselves on the back,” Schreiner, the MPP for Guelph, said in a statement.

“Ford tells us the private sector is being crushed by an increased minimum wage and environmental protections, but these numbers say the opposite.”

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Rob Ferguson is a Toronto-based reporter covering Ontario politics. Follow him on Twitter: @robferguson1

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Experts call Ontario’s full-day kindergarten ‘visionary.’ The Ford government is eyeing changes

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Ontario’s full-day kindergarten program is in a class by itself.

With a full-time teacher and full-time early childhood educator working together, it provides a unique staffing model and two-year curriculum for the province’s 4- and 5-year-olds.

But now, the Ford government is eyeing potential changes, raising concerns among experts who say the program — while costly, at $1.5 billion a year — is worth the price.

“It would be extremely disruptive to change the model — disruption for education, for children, for families,” said Rachel Langford, a professor in the school of early childhood studies at Ryerson University.

The staffing, which has been in place since full-day kindergarten was rolled out almost a decade ago, has made Ontario “a leader, a visionary in this regard, and that, from our perspective, is very positive,” said Langford, who at one time was a kindergarten teacher.

Other provinces with full-day kindergarten typically use a teacher-only model.

Late last month, Education Minister Lisa Thompson launched consultations, asking unions and trustee associations about the “implications of the present two-educator model” for students, working conditions as well as “value for money” — and whether other options are available — as the government faces a deficit of up to $14.5 billion.

Last month, she and Premier Doug Ford caused an uproar after they wouldn’t commit to keeping full-day kindergarten. They later backtracked, affirming they would continue with what they referred to as “full-day learning.”

The full-day program was introduced by the Liberal government of Dalton McGuinty. The original report on its design had recommended teachers work a half-day, with early childhood educators (ECEs) covering the rest of the school day as well as after-hours care.

However McGuinty — in a move to please the teacher unions — opted for one full-time teacher and one full-time ECE for the school day, adding half a billion dollars annually to the cost.

Since it was implemented, critics have derided it as expensive daycare; economist Don Drummond recommended scrapping it to trim the deficit, and in 2014 former PC leader Tim Hudak proposed a teacher-only model — with smaller class sizes — to save $200 million a year.

When full-day began, there were growing pains: Teachers were used to working alone at the head of the class, and ECEs working in teams in child-care settings. Their differing education credentials and huge salary discrepancy meant some ECEs felt more like assistants than educators. (School-based ECEs can earn well below half of what top-earning teachers do.)

Over time, “the level of integration of the staff team increased,” said University of Toronto professor Janette Pelletier, a researcher of Ontario’s full-day program. “Staff members reported that they benefited professionally from working together and that families benefited from the integrated team approach.”

Team teaching has also been key to the academic, social and emotional success children have had in full-day kindergarten, added Pelletier of the Dr. Eric Jackman Institute of Child Study.

“The current model works,” she added. “If student success is important, then why talk about changing the model? I can speculate — perhaps student success would be negatively affected if educators no longer had the same combination of professional training and expertise.”

A teacher-only model might mean less focus on the play-based nature of the program; two early childhood educators would need to be trained in kindergarten curriculum, she added.

Pelletier also noted there is a shortage of ECEs in the system.

For teachers and early childhood educators, the strengths they each bring to the classroom are key.

Sarah Fernandes, who teaches one of five full-day kindergarten classes at Scarborough’s St. Maria Goretti Catholic School — each with the maximum 29 students — has worked with early childhood educator Anthonia Ikemeh for the past five years.

“We work well together,” said Ikemeh, adding the two bounce ideas off one another and create inquiry-based projects on topics the kids are interested in.

The two closely document everything their young students do, taking photos and creating a binder of pictures and classwork to detail their progress over the two years they are in the full-day program.

Over the years, they’ve refined and improved their program and projects. They’ve brought in bins of “loose parts” — bottle caps, paper towel rolls, buttons, clothespins, smooth beads — and put them out on shelves for children to touch, play with and use to help with counting and adding. They created a family tree on the wall with photos of students’ families, as well as their own.

Meanwhile, next door, teacher Kayla Larkey and ECE Celeste Riparip take turns instructing students, working with small groups.

Larkey, who worked as an early childhood educator before returning to university to earn her teaching degree, said, “I love it because I feel like we both bring different things to the table.”

Riparip “has a lot of experience with what’s child-appropriate and developmentally appropriate for kids in the class, and she keeps me on page to make sure everything is play-based,” Larkey said.

In turn, Larkey, who has taken professional development in areas such as special education, shares that expertise and knowledge.

“Recently we’ve noticed (students) are really into snow, so we are doing a snow inquiry,” Larkey added. “I might bring in some books from the Toronto Public Library; Celeste might prepare some activities for them.”

Recently, “we brought in some snow and they were watching it melt.” (A student put a snowball in his pocket to share with the class.)

“With both of us being here, we can work with kids one-on-one or in a smaller group,” said Riparip. “Whereas if it’s just a teacher, it’s harder to do that with 20, 25 or 30 kids. It’s a lot for one person to handle.”

Larkey points to the teacher desk in the classroom, saying it’s nice to have but it’s hardly used.

“We never sit.”

The University of Toronto’s Charles Pascal, the architect of Ontario’s full-day program, said after consultations on his report to McGuinty, “we decided to combine the specialized knowledge of kindergarten teachers about the school environment” and also thinking ahead to the transition to Grade 1.

Using ECEs only would require about 8,000 more when there is a shortage within the profession, Pascal added.

“The cost savings would not actually be huge and the major disruption to something that is working would produce chaos for several years that’s not good for kids and parents,” he said.

“It’s taken nine years to begin to smooth out the model — and now, on the back of an envelope, a hasty change that will likely inhibit the social and economic progress being made, is irresponsible.”

Kristin Rushowy is a Toronto-based reporter covering Ontario politics. Follow her on Twitter: @krushowy

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Don’t panic over Ontario’s looming health care overhaul, former top bureaucrat says

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A prominent member of Premier Doug Ford’s health advisory council is urging Ontarians not to panic over a looming overhaul of the health-care system, saying “relax” until the plan is made public.

The advice from Michael Decter, deputy health minister in former premier Bob Rae’s NDP government of the early 1990s, comes amid conflicting versions of the shape a “transformation” acknowledged by Health Minister Christine Elliott will take following the leak of confidential draft legislation.

While New Democrat Leader Andrea Horwath, whose office has received other leaked documents related to the creation of a new health-care “super agency” with powers to increase privatization of medical services, Elliott flatly denies the charge and has insisted nothing is “finalized.”

“People should just relax a little bit and not see this as the start of a war,” Decter said Wednesday, noting he was speaking for himself and not for the council headed by Dr. Rueben Devlin.

“Nothing really moves that fast in health care.”

A “status report” from the second week in January warns of several risks, including moving home care from existing Local Health Integration Networks to new integrated care models could lead to “service disruption” during the transition period and “potential labour disruption” by care co-ordinators who are members of the Ontario Nursing Association, whose labour contracts expire in March.

“Ford and his government have been doing all this behind closed doors, in secret,” Horwath said in a statement.

Elliott’s office said earlier this week that “much of the material released by the NDP has ever even crossed the minister’s desk, let alone made it to the cabinet table.”

However, the super agency has been incorporated as the Health Program Initiative, as indicated in the documents released by Horwath, according to a search of public records.

Decter, who has advised governments of all three stripes on health-care matters over the last three decades, said health is a massive ministry and that opposition parties need to be cautious when receiving leaked papers.

“I’m sure all of the documents are real but when the minister says I never saw those ones I tend to believe her. I had a minister that used to say that to me fairly often: ‘where the heck did this come from?’”

In regard to the leak, an unnamed civil servant was fired Monday by acting secretary of cabinet Steven Davidson for breaking the oath of confidentiality, with the Ontario Provincial Police anti-rackets squad now considering whether to investigate. Horwath’s office said it has not been contacted by the OPP.

In the meantime, the bargaining agent representing civil service managers and professional staff is representing the worker in a grievance, as is “routine” in cases of dismissal.

“We have no comment on the concern expressed by some that the person dismissed is not the person who leaked material to the NDP,” the Association of Management, Administrative and Professional Crown Employees of Ontario.

Horwath and others including former deputy health minister Dr. Bob Bell, who served under the most recent Liberal government, have raised concerns that the world-renowned Cancer Care Ontario would be subsumed into the super agency and lose effectiveness.

But Decter said this could be a way to use the cancer agency’s expertise and model to improve mental health and other forms of care.

“Rather than seeing it as cancer loses, maybe you see it as mental health learns from cancer how you run something province-wide and measure quality,” he added, noting Cancer Care Ontario is already helping improve kidney dialysis.

Rob Ferguson is a Toronto-based reporter covering Ontario politics. Follow him on Twitter: @robferguson1

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Ontario’s Tories hope Ryan Gosling video will keep supporters from breaking up with the party

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The Progressive Conservatives are banking that lapsed supporters of the party will not want to break up with Ontario-born heartthrob Ryan Gosling.

Embedded in the party’s latest fundraising appeal is a GIF of the actor from the 2013 movie Gangster Squad.

Actor Ryan Gosling prior to a news conference at the Toronto International Film Festival on Sept. 11, 2018.
Actor Ryan Gosling prior to a news conference at the Toronto International Film Festival on Sept. 11, 2018.  (Andrew Francis Wallace / Toronto Star)

“It’s been a while. Are you still with me?” reads the email blast signed by Doug Ford, the premier and PC leader.

Clicking the purple “yes” button takes recipients to an “I’m with Doug!” page.

“Ontario has a leader for the people. Doug Ford and the Ontario PCs are cleaning up Kathleen Wynne’s mess. Add your name if you’re with Doug!” it reads, referring to Wynne, the former Liberal premier Ford defeated last June.

But clicking the red “no” buttons leads to a decidedly different direction on a page entitled “Change your Ontario PC Party email preferences.”

Underneath is a black-and-white GIF of Gosling, who was born in London, Ontario, and grew up in Cornwall.

“Don’t go,” the actor is saying to an off-screen Emma Stone.

Embedded in the Ontario PC Party's latest fundraising appeal is a GIF of actor Ryan Gosling from the 2013 movie Gangster Squad.
Embedded in the Ontario PC Party’s latest fundraising appeal is a GIF of actor Ryan Gosling from the 2013 movie Gangster Squad.  (ontariopc.ca)

“We know we email you a lot, but here’s the truth,” reads the message from the Tories below.

“It costs us $2 to call a supporter, $1 to pay for postage to mail a supporter, but it’s free to send an email,” the message continues.

“Kathleen Wynne changed the rules to fundraise. While we supported eliminating corporate and union donations, the game has changed and emailing our supporters has become the most cost-effective method to communicate with people like you.”

In 2016, following a Star exposé of Liberal fundraising practices, Wynne banned corporate and union donations, lowered maximum contribution amounts, and introduced a per-vote public subsidy of parties.

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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Does Ontario’s Regulation 274 help or harm students?

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Concerns have been raised by school boards, principals, parents — and teachers themselves — over a hiring rule that gives preference to supply teachers with the most seniority, and Ontario’s education minister says that’s why the province is now reviewing it.

“From my days in opposition to my first day as minister, right through to today, I’m hearing a lot that (Regulation 274) is impeding teacher mobility, it’s causing frustration with principals with regards to interviewing some of the qualified candidates, and I also want to check in to make sure” that hiring is transparent and equitable, Lisa Thompson told the Star in a telephone interview.

Sam Hammond, president of the Elementary Teachers' Federation of Ontario, said any changes to the hiring process should be made in upcoming contract talks this summer.
Sam Hammond, president of the Elementary Teachers’ Federation of Ontario, said any changes to the hiring process should be made in upcoming contract talks this summer.  (Jim Rankin / Toronto Star)

Last month, the province wrapped up public consultations on a number of education issues — including sex-ed — that saw 72,000 people take part, and now wants to hear from teacher and support staff unions, as well as trustee associations, on changes to class size, full-day kindergarten and hiring practices.

Under Regulation 274, implemented in 2012, teachers hired into long-term and permanent positions are to be chosen from among the five applicants from the supply teacher pool who have the most seniority within the specific board.

The rule was created at the urging of the Ontario English Catholic Teachers’ Association, to curb nepotism, mostly in smaller boards. While initially opposing the regulation, other unions came to support the seniority-based change.

But principals have said the rule complicated the hiring process and administrative work, and it doesn’t always allow them to hire the best fit for the job.

A consultation document distributed last week says “the Ministry of Education recognizes teachers as the single most important out-of-the-home factor in student success. This is supported by research that suggests that what teachers know and are able to do is crucial to student learning. As such, teacher quality is paramount in ensuring students are able to succeed in the classroom.”

It goes on to say that Regulation 274 was created to “bring greater transparency, fairness, consistency and accountability to school board hiring practices of teachers. However, since its implementation, stakeholders … have raised concerns about the regulations. As boards make hiring decisions under the regulation, we have been told that student success may be negatively impacted and there have been some unintended consequences.”

The ministry says issues include how teachers lose all their seniority when they switch boards, meaning “permanent teachers could see this as a barrier to relocation” because they have to start over as supply teachers if they move.

A statement from Thompson about the consultations says the government also wants to start “reviewing the elements school boards should take into consideration when inviting candidates to interview for teaching positions” to ensure they are “interviewing the most-qualified candidates,” as well as “start discussing which factors should be taken into account … to ensure more transparent hiring practices.”

The regulation has led to situations where principals have interviewed the top five candidates, meanwhile applicants who might exceed qualifications “would not qualify for an interview.”

“This ministry has heard concerns about hiring that is heavily based on seniority … (that it) only values time spent on a list. It does not value quality of teacher, commitment to students, experience/time spent in a particular school or suitability for the particular assignment,” the document says.

Unions have heard complaints from their members about the mobility issue and said that is one area of the regulation they’d be willing to discuss.

Even former premier Kathleen Wynne — whose government introduced the regulation — said in 2013 that it went too far in trying to correct hiring problems by making seniority the main criterion.

Harvey Bischof, head of the Ontario Secondary School Teachers’ Federation, said, “We are absolutely prepared to engage in consultation with this government and can offer, as we have in the past, solutions to some outstanding problems with the hiring regulation.”

But Sam Hammond of the Elementary Teachers Federation of Ontario said any such changes should be made in upcoming contract talks this summer.

“Quite frankly, we were a little surprised that the fair hiring piece was there,” agreed Liz Stuart, head of the Ontario English Catholic Teachers’ Association. “Because that’s not a funding issue — we see that strictly as a bargaining issue.”

Hammond said a 2014 provincial report disputed criticisms that school boards were hiring unqualified candidates or that the rules were preventing young, diverse teachers from landing jobs.

“That report says that 274 is a more consistent, transparent and fair hiring process for Ontario teachers,” Hammond told the Star.

Toronto grandfather Charles Wakefield — who has long fought for the end of Regulation 274 — said “imposing a seniority-based teacher hiring policy has not been in the best interest of Ontario students and parents.”

He is a part of a groups called Parents for Merit-Based Teacher Hiring, which urges the government to cancel the regulation “after years of harm.”

University of Toronto Professor Charles Pascal, of the Ontario Institute for Studies in Education, said great teaching and “highly skilled teachers that can relate to the students they are working with” are the most important factors in hiring.

While he said he’s a “union guy at heart, I just think this is a balance of fairness for those who have been waiting around — there are a lot of teachers on that list who are highly qualified and who have proven their worth” and those who are just coming out of teacher education programs like the one at OISE.

“I’m a little soft on anything other than quality pedagogy trumps everything,” he said.

A private member’s bill introduced in 2013 by then PC education critic Lisa MacLeod — now minister of children, community and social services — sought an end to the regulation.

At that time, several boards had complained about a “domino effect” of the rule that led to “multiple teacher changes in some classrooms” within a school year.

Kristin Rushowy is a Toronto-based reporter covering Ontario politics. Follow her on Twitter: @krushowy

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Doug Ford rewrote the rules, now he wants to redraw Ontario’s borders

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There’s nothing wrong with right-sizing local government.

Provided it’s done right. In good faith and with good sense.

A sweeping review of grassroots governance, announced by Ontario’s Progressive Conservatives this week, aims for better services and greater efficiencies. Admirable goals — as long as the goalposts aren’t pushed back, and there’s a level playing field at the local level.

Our inherited hodgepodge of municipal boundaries and services is surely not sacrosanct. Regional government is long overdue for a rethink, given that its roots go back half a century.

But let’s not be naive about the potential to make municipal matters worse in search of ephemeral savings. And let’s not forget Doug Ford’s penchant for issuing edicts from on high about governments at ground level.

Has Ford learned any lessons from the political, legal and constitutional battle that erupted, paralyzing Queen’s Park and sapping his credibility? Have his supine cabinet ministers, who defended the indefensible, stiffened their spines?

The premier not only rewrote Toronto’s boundaries unilaterally, he is redrawing the Greenbelt willy-nilly. He has rewritten the rules for election fundraising, and reinvented cronyism by hiring his pal as OPP chief.

Now, a premier who doesn’t respect boundaries wants to redraw them.

Restructuring local democracy requires consultation, because governance is about process as much as substance. And amalgamation without approval is an abuse of process.

Many in the old City of Toronto remain bitter to this day about the amalgamation forced upon them with outlying boroughs to create a megacity in 1997. The promised savings didn’t materialize, even if service efficiencies did, but the political wounds still haven’t healed.

Notwithstanding Ford’s blind spots, he will rely on the eyes and ears of two long-time public servants with impressive credentials: Michael Fenn was a career bureaucrat who headed Metrolinx; Ken Seiling chaired Waterloo Region for decades.

But they have been relegated to the role of “special advisers,” not empowered as commissioners heading their own independent probe. They have promised to speak truth to power, but they will wield none of their own — not even a platform from which to issue a public report that speaks for itself.

While it’s true that elected governments always have the final say in any event, in this case only one level of government will prevail if the premier does as he pleases. In which case it will fall to Municipal Affairs Minister Steve Clark to stand up for democratic principles and good governance.

At age 22, Clark served as Canada’s youngest mayor in Brockville. At age 58, is he now ready to exercise his own good judgment and assert his ministerial authority?

When right-sizing municipalities, will the mayor-turned-minister do the right thing?

There will be no shortage of good arguments and ferocious disagreements over the best fit for local governments. There will not only be a push for amalgamation but a pitch for separation.

Should Mississauga separate from Peel Region, as Mayor Bonnie Crombie hopes? How will the sprawling regional municipalities of Halton, Durham and York emerge? Will Brampton be given short shrift merely because of Ford’s petty rivalry with Mayor Patrick Brown, whom he succeeded last year as PC leader?

This will not merely be an exercise in redrawing the municipal map, but an opportunity for Ford to draft his own political roadmap. What are his motives, what of his grudges?

The legacy of Toronto’s amalgamation — which made sense on so many levels — is that melding disparate political cultures is more art than science. It’s easy to imagine even greater divergences in other regions of the province.

How exactly will the promised consultations take place? Will they be limited to perfunctory online input, like the government’s outreach on sex education? Will the province merely mediate between rival political camps, or seek input from affected voters, perhaps relying on referenda to resolve disagreements?

Municipalities are creatures of the province, owing their existence and boundaries entirely to Queen’s Park. But they should not be manipulated like pieces on a chess board, nor their people treated like pawns.

Martin Regg Cohn is a columnist based in Toronto covering Ontario politics. Follow him on Twitter: @reggcohn

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Race on to partner with Ontario’s cannabis retail licence winners

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Businesses and investors are rushing to partner with the 25 winners of the Ontario cannabis retail licence lottery, with offers apparently worth millions of dollars, to be involved in the province’s first recreational weed stores set to open this spring.

Olivia Brown, the founder of Hamilton, Ont.-based Professional Cannabis Consulting, says one of her clients was among the 25 entities selected by the province via lottery, and has fielded three « big offers » on Monday alone.

« There’s a couple of large investors, one from the United States, one of them from Amsterdam… a very established Hamilton family looking to invest, » said Brown, who said her client did not want to be named.

The Alcohol and Gaming Commission of Ontario announced late Friday the 25 entities who can now apply for a cannabis retail licence in Canada’s most populous province, out of the 17,320 expressions of interest the government agency received. There were also 100 applicants on the wait list.

Big industry players shut out

The biggest industry players, however, were kept at bay as the province’s regulations stipulate applicants cannot qualify for a retail licence if it is more than 9.9 per cent owned or controlled by one or more licensed producer.

The vast majority of those lottery entries were from sole proprietorships, at 64 per cent, followed by corporations at 33 per cent, and partnerships and limited partnerships at three and one per cent, respectively.

Everybody is trying to find one of the winners and trying to cut some sort of a deal with them– Mark Goliger, National Access Cannabis

There were no big cannabis industry names among the 25 winners, who now have five business days to turn in their applications to the AGCO along with a $6,000 non-refundable fee and a $50,000 letter of credit.

They included Toronto-based travel agency Tripsetter Inc., who declined to comment when reached by phone.

If their applications are successful, they will have the opportunity to open the first 25 recreational pot stores on April 1 in Ontario, where cannabis consumers now can only legally purchase weed from a government-run website.

Scramble to find partners

However, these retail operator licences are not transferable under provincial regulations, which has companies and investors scrambling to find ways to partner with the lottery winners as allowed under the rules and cash in on the first-mover advantage.

« Everybody is trying to find one of the winners and trying to cut some sort of a deal with them, » said Mark Goliger, chief executive officer of National Access Cannabis Corp.

NAC, which has signed an agreement with coffee chain Second Cup to convert some of its coffee shops into weed dispensaries, has been in touch with a handful of lottery winners and is seeking a partnership, such as a services agreement or revenue-sharing arrangement.

« We’re not going to do a crazy deal that doesn’t make sense long-term… I know that there are players out there that are doing crazy deals. »

Brendan Kennedy, chief executive of licensed producer Tilray Inc., said their Nanaimo-based company has been in touch with provincial lottery winners as well.

« Stay tuned… They’re looking for potential partners as they build out their entities, » he said.

Offers north of $5M

Abi Roach, the owner of Toronto-based Hot Box Cafe, says her lottery entry did not win, but she has been in touch with winners on potential partnerships, and has been told other offers are north of $5 million.

It’s a big risk she says she is not willing to take, given that most of the winners are sole proprietors and there are restrictions on changing the structure of the company after entering the lottery, she added.

« The risk of putting in a large sum of money into a sole proprietorship without ownership is crazy, » she said.

Although the types of deals that can be made are limited, there was a « flurry of negotiations » over the weekend, said Ottawa-based lawyer Trina Fraser, who is representing clients looking to enter partnerships.

The deals Fraser’s clients are seeking include licensing or services agreements, which allow the license holder to retain sufficient control as required under provincial regulations.

Many of the 25 entities selected do not have industry experience, and will likely face difficulties satisfying requirements such as a letter of credit from the bank, she said.

Retail licence operators who are not ready to open their doors by April 1 will face hefty late fines that could total as much as $50,000.

« They need money and they need help, » said Fraser. « They don’t necessarily have the expertise or the resources to be able to execute on this on their own. They’re going to need partners. »

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Brampton man among those who hit jackpot in Ontario’s cannabis store lottery

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Clint Seukeran has no experience in the cannabis business.

But he’s long been an evangelist for the health and artistic benefits of the newly legalized plant.

Shoppers line up to purchase cannabis from a store in Calgary after recreational marijuana was legalized nationwide in October. The first retail pot stores in Ontario will open by April 1.
Shoppers line up to purchase cannabis from a store in Calgary after recreational marijuana was legalized nationwide in October. The first retail pot stores in Ontario will open by April 1.  (Jeff McIntosh / The Canadian Press file photo)

Now Seukeran will have the chance to put his passion to practical use, as one of the first 25 people and companies given the chance to apply for a cannabis store licence in Ontario.

He was a winner of the provincial lottery held last week to open up the first group of licences.

“I thought it was junk mail. I thought there’s no way,” the Brampton man said of being notified of his win Friday evening.

Seukeran — who claimed one of the six spots awarded for the regions surrounding Toronto — quickly shifted from disbelief to glee as the news sank in.

“I was elated,” he said. “I was absolutely thrilled to become part of this movement.

“Basically I was in bliss … once I discovered it was real.”

Seukeran faced long odds to claim the opportunity.

The 25 winners, who were notified by the Alcohol and Gaming Commission of Ontario, were selected from some 16,905 applicants by purpose-built lottery software.

That gave entrants a 1-in-676.2 chance of winning. By comparison, Lotto 6/49 offers ticket buyers a 1-in-6.6 chance at some sort of prize.

But industry experts, such as Lift & Co. head Matei Olaru, say the store licences — which the lottery gave winners a chance to apply for — could be worth millions of dollars to the initial shop owners.

Olaru, whose Toronto company acts as an industry resource and information provider, told the Star these first entrants into the brick-and-mortar pot sector will almost certainly prosper from being the earliest recreational merchants in Canada’s most populous province.

"I was elated. I was absolutely thrilled to become part of this movement," said Clint Seukeran, who learned Friday he was one of 25 winners of the province's pot lottery. The win gives him a chance to apply for one of the first cannabis retail licences in Ontario.
« I was elated. I was absolutely thrilled to become part of this movement, » said Clint Seukeran, who learned Friday he was one of 25 winners of the province’s pot lottery. The win gives him a chance to apply for one of the first cannabis retail licences in Ontario.  (supplied)

But Seukeran, who owns the coconut water bottling company CGS Foods Inc., says he’s more interested in the health benefits he’ll help spread than in the monetary rewards.

Once an aspiring doctor, he said he’s been interested in the health effects of marijuana since he came to Canada in 1996 to study medicine.

“I didn’t finish my degree in medicine because I wanted to do something that was preventative rather than a solution,” he said.

“So I decided to get into health foods and healthy natural products, and I was interested in (the active cannabis ingredient CBD) specifically.

“The efficacy of these new compounds were so entrancing for me. I thought they (had) so many uses that I wanted to be part of that health movement.”

While he never sold medical marijuana, Seukeran did earn an MBA in the agriculture and food business from the University of Guelph.

And with a second manufacturing business in his native Trinidad and Tobago, he says he has the financial resources to open and operate his new endeavour.

But Seukeran readily admits the pot business is new to him and that he lacks enough knowledge to get started on his own.

“I’m not involved in the industry. I know nothing about it,” he said. “So I’ll defer to the expertise of the ones who do have it.”

To that end, Seukeran has turned to Cannabis Compliance Inc. of Mississauga to help him navigate his entrance into the trade.

That initial foray includes a rigorous and expensive licensing process that demands applicants provide a $50,000 line of credit to the commission and spend some $10,000 in non-refundable fees for licensing and store permits.

The first stores will be required to open by April 1 or face stiff fines. They will also need to train staff and install security systems, among numerous other compliance requirements.

Of the 25 winning application spots, five are in Toronto proper, six in the rest of the GTA, five more in eastern Ontario, seven in the western part of the province and two in the north.

Seukeran, 39, says he’ll have to wait until Jan. 22 — the deadline for municipalities to decide whether they will allow cannabis retail shops — to choose a store location.

Seukeran, who will submit his licence application under the CGS Foods Inc. label, was one of only seven winners who did not enter the lottery as individuals.

Some 64 per cent of all applicants were listed as sole proprietors, 33 per cent as corporations, and 4 per cent as partnerships and limited partnerships.

Joseph Hall is a Toronto-based reporter and feature writer. Reach him on email: gjhall@thestar.ca

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Draw for Ontario’s cannabis licence lottery expected today, with results within 24 hours

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Ontario could announce the results of a lottery to apply for the first 25 retail cannabis licences as early as today.

Those seeking to open a pot shop in the province had from Monday to early afternoon Wednesday to submit an expression of interest.

The Alcohol and Gaming Commission of Ontario, which will regulate the province’s retail cannabis outlets, has said it will pick the winners randomly today, with the results expected to be announced within 24 hours.

Those selected through the lottery will have five business days to turn in their application along with a $6,000 non-refundable fee and a $50,000 letter of credit.

The licences are being divided regionally, with five going to the east of the province, seven in the west, two in the north, six in the Greater Toronto Area and five in Toronto itself.

Recreational cannabis can currently only be purchased legally in Ontario through a government-run website, with the first private stores set to open April 1.

The Progressive Conservative government had initially said it would not put a cap on the number of outlets, but later said it would begin with only 25 licences due to what it called serious cannabis supply issues that had to be addressed by the federal government.

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Ontario’s finance minister signals his intent to sue over claims made in Patrick Brown’s book

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Finance Minister Vic Fedeli is escalating his legal fight against allegations of “inappropriate behaviour” in a tell-all memoir by former Progressive Conservative leader Patrick Brown.

A lawyer for Fedeli has served Brown and his publisher with a letter signalling a notice of intent to sue and demanding a retraction of the passage in the 312-page book Takedown: The Attempted Political Assassination of Patrick Brown. A statement of claim has not been filed.

Patrick Brown at the launch of his book Takedown: The Attempted Assassination of Patrick Brown in Brampton on Nov. 16, 2018.
Patrick Brown at the launch of his book Takedown: The Attempted Assassination of Patrick Brown in Brampton on Nov. 16, 2018.  (Graeme Frisque / Metroland)

“From a legal point of view, having reviewed the letter, we believe there’s no basis” for the demand, Dean Baxendale of Optimum Publishing International said Wednesday.

Both he and Brown were served the letters last month, with Brown getting his at the Scarborough launch of his book at an Indigo store near Kennedy Rd. and Hwy. 401 five days before Christmas, sources said. The Star has not seen the letter and Fedeli’s office has declined requests for comment.

Brown was elected mayor of Brampton in November, shortly before the book came out.

In it, he wrote Fedeli was “accused…of inappropriate behaviour” by a female staffer who chose not to pursue a complaint while the PCs were in opposition prior to last June’s provincial election that brought Premier Doug Ford to power.

“I understand that soon after Fedeli became interim party leader, the woman was let go, but kept on the legislative payroll,” Brown added.

It is not unusual for political staff to leave or be dismissed after a change in leadership. The Star has not been able to confirm the allegation made by Brown.

“I did receive a lawyer’s letter requesting my publisher remove the reference in ‘Take Down’ which mentions a sexual misconduct complaint was made against Vic Fedeli which is perplexing as the CBC has already independently verified that a complaint was indeed made,” Brown said in a statement to the Star on Wednesday.

Baxendale noted the CBC story appeared Nov. 14 and added: “we state nothing more and nothing less in the book. We are therefore surprised that the lawyer for the finance minister would ask us to retract it.”

Fedeli’s office has not responded to repeated requests for comment from the Star, but the finance minister from North Bay said Nov. 15 — on the eve of his fall economic statement on government finances — that “these accusations from Patrick Brown are categorically false and without any merit.”

He also accused Brown of “using his book to pursue old grievances” and warned he had retained counsel “to take whatever action is necessary.”

Fedeli was interim leader after Brown’s departure, once famously saying he was rooting out “rot” in the party, and held the post until Ford took over following a leadership convention in March.

Brown said he considered Fedeli “the biggest betrayal” in the PC caucus, writing in the book that he “sucked up to me non-stop with compliments like ‘you’re the best leader we ever had’ and ‘you inspire me.’ He’d lay it on thick; it was over the top at times.”

There is a split of opinion in senior government and Progressive Conservative circles as to whether Fedeli should pursue any legal action, with one faction concerned about the potential fallout.

Baxendale posted a blog entry earlier this week, saying “we sought to verify facts by Mr. Brown based on investigators, media reports, and by reaching out to many who were directly or indirectly part of the story.”

“We will stand behind TRUTH and will protect the rights of individuals to bring that truth forward even when the powerful seek to suppress it at all costs,” Baxendale continued.

Brown was forced out as PC leader last January after CTV reported allegations of a sex scandal involving two women. He is now suing the network, which stands by its reporting, for $8 million.

Rob Ferguson is a Toronto-based reporter covering Ontario politics. Follow him on Twitter: @robferguson1

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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