U of R Statistician calculates Sask. cannabis lottery odds
U of R statistics professor Andrei Volodin said Prairie Sky Cannabis had a “very small” probability of winning four licences — one in 1,319,760.
David Thomas and his brother John Thomas have a busy summer ahead.
Their Regina-based company Prairie Sky Cannabis was awarded four cannabis retail store licences in the Saskatchewan government’s lottery.
“There’s a lot of work ahead of us, but we’re very excited and … we’re lucky, right?” said David Thomas.
The lottery results were unveiled Friday, with 51 applicants chosen from a shortlisted 1,327 to operate stores in 32 jurisdictions.
Prairie Sky did not win licences in all of the 28 jurisdictions in which it applied, but Thomas recognized it was “extremely unlikely” to win four — one in each of Battleford, Estevan, Martensville and Moosomin.
University of Regina statistics professor Andrei Volodin agreed that the probability of winning in these four locations was a “very small one” — one in 1,319,760, to be exact.
To calculate this, Volodin multiplied the likelihood of winning in each of the four locations, “because we assume that an event to win in one location is independent of an event to win in another location,” he explained in an email.
In Battleford, there was a one in 20 chance to win, because there were 20 applicants. In Estevan, chances were one in 54; in Martensville, one in 47; and in Moosomin, one in 26.
“Our goal was to enter our proposals that we decided on and to pass (the vetting process), get in the lottery,” Thomas said.
“The way we looked at it is that’s the best we can do, right? … We had a business plan ready to go and everyone’s in the same boat at that point.”
More than a few critics have questioned the legitimacy of the lottery, including Toronto applicant Greg Paul.
“The chances of (a few corporations) getting all of these licences out of how many applicants there were, in my opinion they’re very slim,” Paul said Monday.
“Obviously the statistical chances of some of these companies appearing again and again and again for multiple licences is probably pretty low,” agreed Regina applicant Pat Warnecke.
COMPANIES PREVAIL AGAINST TINY PROBABILITY
Despite what Volodin called an “unreasonably small” probability, six entities were repeat winners, obtaining 19 of the 51 licences.
Prairie Sky was not the biggest winner of them all.
Tweed Grasslands, a Yorkton-based subsidiary of Ontario-based company Canopy Growth, won five licences — in Fort Qu’Appelle, Humboldt, Meadow Lake, Melville and the RM of Corman Park.
The odds of this occurring, according to Volodin, were one in 12,830,400.
“We came in with no expectations,” Andrew MacCorquodale, Canopy Growth’s head of operations for Western Canada, said Friday.
The company applied in all 32 jurisdictions.
“We could have got zero; we could have got them all, right?” added MacCorquodale. “The lottery process was interesting and I’m sure led to a lot of office pools.”
Synergy Five Investments, a partnership of five First Nations-owned companies, had a one in 14,125 chance of winning its three licences in North Battleford, Warman and Yorkton.
A B.C. business, 1159711 BC Ltd., had a one in 10,764 chance of winning its three licences in Melfort, Outlook and the RM of Edenwold.
B.C.-based Aura Cannabis had a one in 519 chance of winning its two licences in La Ronge and Saskatoon.
In Regina, two individuals by the last name Anderson, both listing lawyer Glen Lekach as their application’s contact, won licences.
The Leader-Post has been unable to confirm that Dwayne and Jill Anderson are related.
However, the odds of two related applicants winning licences in Regina is one in 1,460.
HOW THE LOTTERY HAPPENED
Saskatchewan Liquor and Gaming Authority hired third-party auditing firm KPMG to oversee the request for proposals (RFP) process and lottery as a “fairness monitor,” said SLGA’s David Morris.
KPMG is expected to issue a report on the process at some point this week.
Separate lottery draws took place for each community where a permit was available.
In each draw, each application was assigned a unique number and a corresponding token was entered into the lottery.
Seven people from SLGA and KPMG oversaw each draw, the tokens being drawn from a “commercial lottery container.”
“The people making the draw and the recorders only had access to the numbers on the tokens — they did not have access to the proponent names associated with the token numbers,” Morris said in an email.
“Once all draws were made, the successful token numbers were matched with the proponent who corresponded to the ‘winning’ token numbers.”
PRAIRIE SKY MAKING PLANS
David Thomas, an electrical engineer who works in industrial mining, and John Thomas, a pharmacist, have partnered in some real-estate ventures in the past couple of years.
When cannabis retail came up, “We just saw it as just a fantastic opportunity and thought we might as well throw our hat in the ring.”
The brothers don’t plan on being front-line workers in their stores, but will hire a manager and staff for each location.
Their first step is to consult with the communities of Martensville, Battleford, Estevan and Moosomin to determine requirements and expectations.
“We want to make sure that we see their vision for opening the retail location,” said Thomas.
Then, they’ll determine the locations for their stores.
“Our goal is to be open for legalization. That date is unclear and it’s coming up fast. But we’re marking it on our calendar as late summer, early into fall,” said Thomas.