I’ve worked my ass off for everything I have. I grew up in subsidized housing in Barrie, with three siblings and three half-siblings. I got lousy grades in school and was always landing in trouble, but I did better outside the classroom. When I was 12, I became a pin chaser at the five-pin bowling alley where my mom worked. Later, I had a job at No Frills. I figured out that if I pushed myself hard, working late and stocking fast, people noticed and appreciated me. I went to Brock for business, paying my own way with double shifts at No Frills in the summers, and got myself invited to friends’ houses for the holidays so I’d have somewhere to eat. Then I earned my MBA at McMaster, working a full-time job and studying at night.
When I heard the weed lottery radio spot, I was in my 30s, working as a VP of operations for a medical supply-chain management company. I’d also purchased a couple of houses in Hamilton and Edmonton that generate rental income. I’m restless by nature. I’d been thinking about my next move but I wasn’t sure what it would be.
Years ago, I heard a story about Jim Carrey writing a postdated cheque to himself for $10 million. Corny, yes, but I decided to do it too. My $10-million cheque to myself is framed on my wall at home: by 2030, I should be able to cash it. I’m an entrepreneur at heart, and running my own business was always the plan. I just didn’t know what that business would be.
The lottery opened January 7, 2019, just after midnight. The next day, my in-laws were over for dinner at our house in Mississauga, helping me and my wife, Mallory, take care of our 16-month-old daughter. When we finished eating, I sat at my laptop in the kitchen and filled in the application to submit to the Alcohol and Gaming Commission of Ontario. It took less than half an hour. I applied to all five regions in Ontario, figuring the blanket approach would help my chances.
I talked it over with Mallory. Cannabis is not her thing—she’s never smoked a joint in her life—but she was fine with it. I’m always setting goals on a lark, whether it’s travelling to China, gutting my house or buying real estate. Mallory said, “Just to be clear, you’re not going to quit your job to run a pot shop, right?” I assured her I wasn’t. I think she thought, There goes Steve, giving another adventure a shot—and a long one, at that.
I remember telling a friend: “I have a good feeling about this. I think I’m going to win!” He scoffed. “What are you talking about? You’re full of shit.” It turns out 17,000 other people had the same good feeling. I hit send and didn’t think about it again until another friend sent me a Facebook message on January 11. “Hey, are you the Steven Fry who won the pot lottery?” He’d seen the list of winners in his news feed. I checked my computer and there was an email from the AGCO: “Congratulations! Your Expression of Interest entry for a Cannabis Retail Operator Licence was selected for the West Region.”
It was like a gun went off in my head. I had the right to apply for a retail licence—but the offer expired in seven days. I needed to come up with a $50,000 letter of credit and $10,000 in non-refundable fees. To avoid financial penalties in the thousands, I’d have to open the doors to my brand-new store by April 1. I had 10 weeks to become a cannabis entrepreneur.
Theoretically, I had the funds to rent a location on my own if I sold or mortgaged the properties I owned. But there was no way I could liquidate them fast enough to access that cash. Even if I could, I figured I needed about a million dollars to buy enough inventory for the first few months. I knew I’d need to find a partner as quickly as possible. The province had tried to keep the big players from dominating the new market by stipulating that it wouldn’t issue retail licences to corporations that were more than 9.9 per cent owned or controlled by a cannabis producer. Winners also couldn’t sell the licences, at least until December 2019. But partnerships were acceptable. Sixty-four per cent of the winners were sole proprietors, like me, and right away, the big companies started circling like sharks.
The email from the AGCO arrived in my inbox at 6 p.m. on a Friday. By Saturday morning, I had 30 messages on LinkedIn, many from cannabis company executives. You win something like this and everyone wants to be your best friend. Someone hired a private investigator to get my phone number. People were flying in from Alberta and B.C. to meet me. I booked one-hour appointments back to back and set up shop at a corner table at the Union Social Eatery near my house. I said to the wait staff, “Listen, I’m going to be here for eight hours.” I tipped really well.
As people flowed in, I sat back and let them talk. I heard stupid-low offers, like $50,000 or $100,000 for the whole business come December. Sometimes the proposals were wildly inflated, like, this business is going to be worth $80 million! I was gullible. I almost signed with one company that predicted we’d do $30 million a year and split the profits 50-50. But when I looked closer, I realized it was ridiculous. I knew the amount we would be permitted to sell would be capped—supply wasn’t bottomless, so profits wouldn’t be either. A single LCBO isn’t worth $80 million. But everyone had cannabis fever. I hated those early talks in the restaurant. No one was interested in the fact that I’m a competent businessperson. I’d been an entrepreneur in real estate, and I’d grown and scaled businesses. In the cannabis frenzy, I was just a commodity—lottery meat.
When the restaurant closed, I migrated to a Tim Hortons and took meetings there until the sun came up. I met with representatives from a well-known retail empire. Very powerful people. One of the guys making the approach was worth millions; I’d read about him. They got me in a boardroom early in the week after I’d won and started with the high-pressure tactics. I said I wanted to run their proposal by a lawyer, and the millionaire kept saying, “No, no, don’t do that. We don’t need lawyers.” I was tempted to listen to him—they were throwing a lot of money my way—but my spidey senses were tingling. I posted on Facebook: “Hey, anybody know a good cannabis lawyer?” When I found one, he said, “That’s a shit deal.” I walked away immediately. I’ve spent about $65,000 on legal fees since all of this started.
I didn’t sleep the whole weekend, and on Monday, I went to line up a letter of credit for $50,000. I had no idea how hard that would be. My bank said it would take three weeks, but I had five days or I’d be disqualified. I went to the other big banks, which all told me that cannabis was too risky. Banks don’t want to back cannabis because it’s still illegal in most U.S. states, and their business is international. It would take weeks to vet for money laundering, for criminal activity—on and on, a chain of nos.
Using Facebook and Google, I tracked down several other lottery winners from my region and started emailing them, shooting questions: “Has anyone managed to get the letter of credit from a bank? What games are these big companies playing? Where are you going to set up shop?” Everyone was experiencing the same intensity: the onslaught of high-stakes, confusing offers; the emails and calls; the ticking clock. One of the winners called me at three in the morning crying, saying he couldn’t get financing and he wasn’t strong enough to do this.
I was offering support to the other winners, but I was also doing my due diligence: it was smart business to know what the other winners were up to. After all, we might be competitors one day. Some of them sold their souls to big companies who will profit off their licences for decades. Others accepted crazy-high royalty fees, where the big company earns 30 to 50 cents on every dollar sold—but the margins are so small right now that the partner ends up taking as much as 90 per cent of the profits. And others agreed to be paid in stocks, not cash. Sounds great: $2 million in stock, and they’re told it could go up to $18 million. But cannabis stocks are small and traded in small volumes. They could end up with nothing. That’s one of the problems with the low bar of a lottery. You get a mixed bag of winners: some were businesspeople, others weren’t built for commerce.
After the big bank rejections, I approached smaller financiers. I looked up the CEO of Alterna Bank, an online subsidiary of the credit union Alterna Savings, and Facebook messaged him directly: “Here’s my situation. What the fuck do I do?” To my surprise, he got right back to me. Then, finally, I had my letter of credit. I hooked up some of the other winners with Alterna Bank, too, including the guy who’d called me in tears.
At work, the word was out that I’d won the lottery. I guess I could have quit right away—that fantasy of sprinting out of the office and never looking back—but I knew it might be a long time before the store was viable, and I still needed a regular income to support my family (Mallory was newly pregnant). I manage about 100 people, and I called a company-wide meeting with my staff to tell them what had happened. Then I booked all the vacation days I had; when I did have to work, I moonlighted at the shop to get things organized.
I entered into a partnership with High Tide Inc., a mid-sized cannabis retail company out of Alberta that’s opened 24 stores across the country under the Canna Cabana banner. Their Jimmy Buffett, palm-frond-heavy branding appealed to me, but mostly I liked the arrangement we reached: I’d be the majority stakeholder and run the store on a day-to-day basis, and they’d provide support when needed.
I had the deal before I had the location. As everyone in our winners’ group started locking in retail space, it was like watching a live game of Monopoly: someone would put down a property at a certain location (I pick Guelph!), then I’d have to avoid that square on the map (stay away from Guelph!).
I homed in on Hamilton because I’ve lived there, I like the town and no one else seemed to be looking at it. But many landlords wouldn’t even talk to me once they heard the word cannabis. The real estate broker I was dealing with told me they were worried about shady clientele and noise, as well as sullying the reputation of neighbouring businesses. Others were concerned the store would literally stink, and said I’d have to pay through the nose for special ventilation and storage. (Not true: boxed cannabis is fine at room temperature. It’s only a tiny bit skunky, too.) I was rejected at least eight times.