Despite objections by the city, the Ontario government is allowing a numbered company to proceed with an application for a legal marijuana store at the same Toronto address of a notorious illegal pot dispensary.

The company, 11180673 Canada Inc., which is proposing to open a retail cannabis store at 104 Harbord St., is among 29 applicants still in the running.

Its proposed location for a store is a CAFE outlet, one of four in Toronto. The Harbord Street location has been repeatedly raided and shut down by police. City officials have placed giant concrete blocks in front of the store to stop it from operating. CAFE, which stands for Cannabis and Fine Edibles, has repeatedly flouted cannabis laws.

Forty-two applicants were selected by the Alcohol and Gaming Commission of Ontario in its recent retail pot lottery, but only 29 submitted the required documents by an Aug. 28 deadline. Twelve have been disqualified and one applicant withdrew its application.

Jenessa Crognali, press secretary for Ontario Attorney General Doug Downey, defended the decision to include the company in its updated list, saying being selected in the lottery is "only a first step" to obtaining a retail cannabis licence. Two names of companies on the list in the Toronto region have been crossed out.

Jenessa Crognali, press secretary for Ontario Attorney General Doug Downey, says being selected in the lottery is 'only a first step' on the way to obtaining a retail cannabis licence. (Tijana Martin/Canadian Press)

Crognali said those selected initially had to demonstrate that they had secured retail space and had access to enough capital. They had to provide an original letter of credit for $50,000 and submit a completed application by the deadline.

Process is working, province insists

"What we are seeing now is the AGCO's process working, and applicants who failed to meet those requirements were disqualified," Crognali said in an email on Monday.

Crognali said the process is rigorous and will include "comprehensive" vetting of applicants.

"The AGCO will only license applicants who meet all legal and regulatory requirements and is now beginning its comprehensive eligibility assessment of the applicants who submitted complete applications by the deadline. This assessment includes police and background checks on the applicants and on any other interested parties, as well as ongoing reviews for lottery rule violations," she said.

Rob Heydon, the sole director of the numbered company, also a film producer and director, has told CBC Toronto that he has "no connection" to CAFE or the people behind it.

As of Aug. 8, a dozen charges had been laid under the provincial Cannabis Control Act in relation to the pot shop.

The city remains concerned.

Toronto Mayor John Tory's spokesperson says the mayor has raised concerns about the applications for retail cannabis stores with provincial officials. (John Rieti/CBC)

Don Peat, spokesperson for Toronto Mayor John Tory, said the mayor has raised concerns about the applications for retail cannabis stores with provincial officials. 

The city is particularly concerned about applicants associated with continuing illegal cannabis sales and applicants who wish to set up retail cannabis stores near schools, he said.

"Enforcement and administration of cannabis retail stores is done through the province's Alcohol and Gaming Commission and we hope they will rigorously review all these applications and actually listen to concerns raised by the mayor and Toronto residents," Peat said.

"The City of Toronto continues its enforcement efforts against illegal cannabis storefronts in the city and we expect the AGCO would support that work and send a strong message to those caught engaging in the illegal market while also trying to enter the legal market."

Lenny Hochberg, a Toronto criminal defence lawyer, said it is clear that the commission, a provincial government regulatory agency, has not reviewed the application yet.

'They can't just refuse it outright,' lawyer says

Hochberg said he went on a tour of CAFE at one point and he said it was run "quite professionally." He said it's possible that the company proposing a pot shop at the same address could be granted amnesty and given a licence with some conditions.

"They can't just refuse it outright. It has to all be reviewed," he said.

"What we can tell is that it's not a rigged system. If this particular applicant associated with CAFE did win the lottery, we would come to the conclusion that it's a fair system overall."

Residents who live near the illegal CAFE store, however, say it has never fit into the neighbourhood, which is home to areas where children play as well as a farmers' market.

Maddy Hertz, an area resident, said the illegal cannabis dispensary has made the neighbourhood less safe. She and her friend play water polo nearby and walk past the store on their way home.

"Especially walking home from practice at night, it wasn't necessarily the most safe or accepted thing going on, and you can tell it was a different clientele than is necessarily in this area," she said.