Monday, March 28, 2022

On February 8, 2022, the Alcohol and Gaming Commission of Ontario (AGCO) announced new rules related to inducements. Based on industry feedback, the AGCO is amending the new rules to create an additional exemption that will permit agreements between retailers and licensed producers (LPs) for store brand products (also known as white labels, private labels, private brands, and in-house/house brands).

The new rules will take effect on June 30, 2022, as originally announced.

Updated Standard

The additional exemption is included at the end of Standard 6.5, below:

6.5 Licensees and their representatives may not, either directly or indirectly, accept or enter into any agreements for any item, benefit or service with a licensed producer or their representatives. The following exemptions apply:

  1. a licensee and its representatives may accept items of nominal value,
  2. a licensee and its representatives may accept items, benefits or services exclusively for the provision of training or education related to cannabis,
  3. a licensee may enter into an agreement to sell its data for business intelligence purposes,
  4. where a licensed producer has an ownership interest in the licensee, the licensee may enter into financing and lease agreements,
  5. a licensee may enter into a franchise agreement with a licensed producer or its affiliate,
  6. a licensee may enter into an agreement for a store brand cannabis product. (New)

The AGCO takes industry feedback seriously. As the cannabis sector evolves, the AGCO will continue to be responsive, including supporting innovation and flexibility in the sector while regulating in accordance with the principles of honesty and integrity and in the public interest.

Store brand agreements will be subject to the constraints listed in Standard 6.6 to mitigate any risks related to inducement activity. Retailers will also need to maintain records of all agreements, which will help the AGCO better understand and monitor these activities over time.

For more information

If you have questions or need guidance on complying with the updated Registrar’s Standards for Cannabis Retail Stores by June 30, 2022, your local Inspectors are available to help and support you with additional information and education.

For more information, including examples of what is permissible and what is not, please view the updated Guidance Document — Inducements Rules for Licensed Cannabis Retailers

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