Al Simpson just paid $2.1-million for a pre-1954 charter so he can start buying up pharmacies in Ontario. Tatum Duryba/The Globe and MailTatum Duryba/The Globe and Mail
To open a pharmacy in Ontario, you either have to be a pharmacist or you need to have an extra $2-million.
In 1954, Ontario passed a law that said pharmacies must be majority-owned by pharmacists.
But the law contained a big exemption: Any corporation operating a pharmacy on May 14, 1954, was grandfathered in.
That legislation did little to restrain the growth of large chains of pharmacies, which now dominate the province. But it did create a grey market for what are called pre-1954 business charters, where the few left can trade for millions of dollars. Whoever owns one has the legal authority to own one or more pharmacies.
“It’s literally like a taxi medallion in New York at its peak,” said Peter Saad, managing partner at Loopstra Nixon LLP, referring to the high prices once commanded by the limited number of cab licenses. “That’s the only way to describe it.”
Al Simpson’s Saskatoon-based PharmaCorp Rx Inc. is one such owner.
Mr. Simpson is a co-founder of two other roll-up companies, which refer to a business strategy of buying up a number of small businesses to assemble them into a large one. He was the chief executive officer of a roll-up of hospital-equipment providers that now operates as HealthHub Patient Engagement Solutions Inc. and a former CEO of StorageVault Canada, a publicly listed roll-up of self-storage facilities.
He said he raised money to launch PharmaCorp after a recent meeting with the head of PharmaChoice, the third-largest pharmacy banner in Canada. PharmaChoice pharmacies are independently owned, but some owners wanted to retire and didn’t have an exit strategy.
“So that’s kind of where we stepped in,” Mr. Simpson said, with the new company buying up those pharmacies, whole or in part.
But for the strategy to work, PharmaCorp needed to buy a pre-1954 business charter. That turned out to be relatively easy once PharmaChoice put the word out to its members. And on May 1, PharmaCorp announced it had closed the purchase of a charter for $2.1-million.
“They trade quite regularly, though there’s no glut of them, that’s for sure,” Mr. Simpson said.
The Ontario College of Pharmacists said there are currently 46 active pre-1954 business charter companies, which own and operate a total of 954 pharmacies in the province – about 19 per cent. The majority of those – 859 – are owned by just 11 companies.
(There were 5,019 community pharmacies in Ontario in 2024, according to the college, of which 2,712 operated under franchises or banners.)
The college said it knew of another 84 inactive pre-1954 charter corporations that do not currently own an accredited pharmacy.
Mr. Saad said he deals with a few transactions a year involving someone buying or selling one of these charters, and there is no requirement that the pharmacy has to have been continuously operational since 1954 – or, if it has, to have operated only as a pharmacy over the years.
“It really is a normal company that happened to be a pharmacy on that day in 1954,” he said.
The price of a charter used to be around $500,000 or $600,000, he said. But when cannabis was legalized and money rushed into the sector almost a decade ago, retailers who wanted to open dispensaries started buying up the charters and drove the prices higher.
“The price has stayed up,” Mr. Saad said. “It’s two million-plus – which, conceptually, is insane if you think about it.”
Aly Haji, the founder of the Rx law firm, said corporations that operate with pre-1954 business charters may get less oversight than those owned by pharmacists. That’s because of a regulatory gap in which colleges set up to oversee health care professionals can sanction them by, for example, issuing fines or suspending licences. The colleges have less authority over individuals who are not professionals and thus not registered with them.
“The shareholders, the actual owners of the corporation, kind of evade scrutiny,” Mr. Haji said.
The Ontario College of Pharmacists has occasionally reviewed the ownership requirement after prompting from pharmacists. A briefing document prepared for the college’s council in 2015 noted the issue had come up several times over the previous 25 years – in 1989, 1994, 2001, 2011 and 2015. But each time the council felt there was no need to change the rules.
Ontario isn’t the only province that restricts who can own a pharmacy, according to the Canadian Pharmacists Association. B.C. also stipulates that a corporation can own a pharmacy only if a majority of its directors are pharmacists. Quebec mandates that only pharmacists can have an ownership stake. Other provinces have no ownership restrictions but may have licensing requirements that involve pharmacists.
For Mr. Simpson, the charter was worth the price of entry into Ontario.
“The opportunity to grow certainly offsets the price, I would say.”