Ontario's Liberal government will be cracking down on illegal dispensaries with steep fines under new legislation introduced Wednesday for the sale and distribution of recreational marijuana.

The regime will take effect in July 2018 when the federal government legalizes the drug. It's the first bill tabled by any province aimed at regulating the sale and distribution of weed.

Storefront operations that continue to illegally sell pot after that could be fined up to $1 million and shut down under the new rules, according to Attorney General Yasir Naqvi, who tabled the Cannabis Act at Queen's Park.

"These shops, to the best of my knowledge, are illegal, have always been illegal, will continue to be illegal and are not contemplated as being part of the regime going forward," he said.

The policy on illegal pot shops is part of a framework for cannabis legalization which is the first set out by any province or territory.

Ontario Attorney General Yasir Naqvi tabled the province's marijuana legislation on Wednesday. (Chris Young/Canadian Press)

Under the new law, marijuana will be sold in up to 150 stand-alone stores run by a subsidiary of the Ontario Liquor Control Board — separate from LCBO outlets selling alcohol — by 2020.

These rules "make it explicit that only Ontario Cannabis Retail Corporation could sell cannabis in the province of Ontario," said Naqvi.

The province plans to open 40 stores by July 2018.

Minimum age of 19

Those stores will limit the sale of marijuana to people 19 or older "to protect our youth," said Naqvi. The minimum age also applies to possession, use and home growing.

"This aligns it with alcohol and tobacco use," he said, noting the province won't act punitively and will not criminally charge underage users caught with small amounts of marijuana.

New provincial rules to take effect in July 2018 will prohibit anyone under the age of 19 from purchasing, using or growing marijuana. (The Associated Press)

Those who violate the law could be fined up to $200, or a court could refer them instead to an educational or prevention program, said Naqvi

"I want to be very clear there will be no criminal record aside from a provincial offence, but most importantly, our purpose is not to punish our youth but to educate our youth," he explained.

It also stipulates the use of recreational cannabis will be prohibited in public places, cars and workplaces, and will only be allowed in private residences.

Hardline policy on illegal pot shops

Over the last year, police across the province have laid dozens of charges in a series of police raids on storefront marijuana dispensaries. Naqvi said Wednesday a big aspect of the bill aims to curb the sale of illegal drugs at storefronts by setting clear penalties for offenders.

"These shops, to the best of my knowledge, are illegal, have always been illegal, will continue to be illegal and are not contemplated as being part of the regime going forward," said Naqvi.

Illegal pot shops who defy the new rules will be fined and shut down, he said, adding police will be granted "interim closure authority," allowing them to immediately shut down the premises if illicit activity is suspected.

Three large jars full of marijuana buds sit on the counter at a pot shop. The province will rely on police to ensure illegal cannabis dispensaries are shut down. (Rafferty Baker/CBC)

Individuals working in illegal dispensaries will face fines up to $250,000 and up to two years of jail time. Businesses could face penalties up to $1 million for the same offence.

"These are very steep penalties and they escalate over time as well if somebody continues to sell illegally," he said, noting further fines of up to $100,000 and $500,000 will be invoked.

"It also puts restrictions on landlords who lease their premises knowingly to illegal pot stores," Naqvi said.

He said this policy is necessary because of rising concerns about fentanyl — a deadly opioid often added to street drugs.

"These current stores, there are no provisions in federal law for them," he said.

"We don't know where their product is coming from. We don't know what is in their products. What we do know is it's almost a $7-billion industry in Canada and a large chunk of that money is going to organized crime. That's not something we would condone."

The government has been coy on potential pricing, saying decisions will be made after more details come from the federal government, but that the aim is stay away from overly expensive prices that fuel illegal sales.

Municipalities in Ontario will find out in the coming weeks where the government wants to locate the first batch of cannabis stores, but the Finance Minister Charles Sousa says none will be near schools.