AGCO’s 30-Day Consultation on Changing Inducement Rules

What is the consultation on?

The Alcohol and Gaming Commission of Ontario (AGCO) has launched a 30-day consultation with Ontario cannabis retail license holders and other stakeholders pertaining to potential changes and clarification around the inducement rules contained in the Registrar’s Standards For Cannabis Retail Stores.

What is the purpose of the consultation?

The AGCO is furthering its objective of addressing the illicit market, which includes promoting consumer choice and a level playing field in Ontario’s legal cannabis industry. Specifically, the consultation will address the point of material inducements from licensed producers, their representatives, or suppliers of cannabis accessories. The province has stated that it is important to maintain a cannabis marketplace where cannabis retailers and Licensed Producers of all sizes have a reasonable opportunity to enter the market and compete.

Why are these changes being proposed?

Currently, section 6.4 of the Registrar’s standards states:

Licensees may not accept or request material inducements from Licensed Producers, their representatives, or suppliers of cannabis accessories.

Furthermore, section 6.3 of the Registrar’s Standards states:

Licensees may not provide cannabis or cannabis accessories free of charge or provide any other thing or benefit, as an inducement for the purchase of cannabis or a cannabis accessory.

These statements are relatively vague and often leave cannabis retailers confused as to what qualifies as a “material inducement” and what doesn’t. Cannabis retailers have also been particularly interested in offering a “rewards program”, however this also falls under the category of “inducement”.

The AGCO hopes to revise the existing verbiage under the Registrar’s standards and prohibit all commercial relationships between producers and cannabis retailers unless the relationship falls within certain exceptions (such as educational services to cannabis retailers and their staff, providing items of nominal value, or allowing retailers to invest/loan money to the retailer when the producer holds an ownership interest in the retail licensee).

Who do these changes benefit?

The proposed changes will ideally benefit cannabis retailers and consumers, as retailers will have a better idea of what is and isn’t permissible under the Registrar’s Standards when it comes to material inducements and partnering with Licensed Producers.

Consumers will benefit by having the opportunity to participate in rewards programs and other creative customer loyalty building concepts.

What is the deadline to participate in the consultation?

The deadline for a response to the survey is August 23, 2021.

How can Cannabis License Experts help?

Cannabis License Experts is your solution to help navigate the regulatory requirements in preparing, reviewing and submitting your cannabis retail license application. We offer support from day one of starting your cannabis store, including strategic planning, business plan development, floor plan preparation, license submission, Standard Operating Procedures, and more.