Farmgate cannabis retail in Ontario is the new hot topic as of recently. Ontario is currently the first province to allow farmgate cannabis sales this year and while only a handful of applications have been submitted (compared to the thousands of regular retail store applications), we’re now seeing licensed producers at various stages of getting their Ontario farmgate retail license.
A farmgate cannabis retail program is also expected in British Columbia, however this may not be up and running until 2022. Before we go any further, we’ll first define what exactly “farmgate cannabis retail” means. Farmgate cannabis retail is a set-up that is very similar to a vineyard. In this setup, a licensed producer of cannabis will have a production site that also includes a store-front to allow customers to purchase cannabis products directly from the producer.
The farmgate model is a great opportunity for licensed producers to create jobs in their community, increase revenues and educate consumers on the production process and work that goes into creating a high-quality product. The Alcohol and Gaming Commission of Ontario (AGCO), regulating cannabis retail in Ontario, says they have received 14 Retail Operator Licence applications (see below for more information on licenses/authorizations) for farmgate sales, with six of them being approved for the following producers: Canopy Growth subsidiary Tweed Inc.
Thrive Cannabis, Dykstra Greenhouses, Medz Cannabis Inc., Muskoka Grown Ltd., and Level Up Infusions. As of just a few weeks ago, licensed cannabis producer, Thrive Cannabis, announced that their retail store (located at their indoor and outdoor production site in Jarvis, Ontario), will be the first farmgate cannabis store in the province and, by extension, all of Canada. Thrive Cannabis has received their Retail Store Authorization (RSA), which is the authorization issued by the AGCO that is required to open a legal cannabis store in Ontario, and their store has been open as of April 23rd, 2021.
Unfortunately, COVID-19 measures are still in place in Ontario, so customers will have to wait until restrictions are lifted to be allowed entrance into the store. If you’re a licensed producer that’s looking to explore the farmgate cannabis retail model in Ontario, we’re here to tell you everything you need to know, from securing the necessary licences, to getting your store up and running!
Licences and Authorizations Needed for Ontario Cannabis Retail
To open and operate a cannabis retail store and sell recreational cannabis, there are two licences and an authorization that you are required to secure from the Alcohol and Gaming Commission of Ontario (AGCO).
Retail Operator Licence
The Retail Operator Licence (ROL) is the first licence you need to apply for. You can apply for this licence as an individual/sole proprietor, a partnership or a corporation. The ROL will confirm that you meet the eligibility criteria set out in the Cannabis Licence Act and its regulations. The AGCO’s fee for a Retail Operator Licence is $6,000 CAD.
This fee is required to be paid upon submission of the licence application, and it is generally non-refundable. For more information on ROLs, click here. Generally, the ROL application takes a few months to process as it includes police and background checks, which will be conducted on applicants, and persons interested in the applicant (such as third parties involved in the project), as needed, to determine eligibility for the issuance of the licence. Sometimes, AGCO officers may reach out to request additional information as it’s needed.
After all of the necessary information has been provided and the application has passed a due diligence check, you will receive a Retail Operator Licence, which will contain your licence number, expiry date and any conditions on the licence (such as the requirement to notify the AGCO within 5 business days of any change in corporate structure or sources of funding).
Retail store operators will be required to enter into a wholesale supply agreement with the Ontario Cannabis Store (OCS) in order to begin purchasing cannabis for resale in their authorized stores. Once an ROL from the AGCO has been issued, the AGCO will share your contact information with the OCS so that they can reach out to get started on the wholesale supply agreement.
You do not have to wait for your ROL to be issued to apply for a Retail Store Authorization. After your ROL application has been submitted, your proposed retail store location (in the case of farmgate retail, this would be located at your cannabis production site) must qualify for a Retail Store Authorization (see below), which confirms the store meets the location, layout, security and other requirements described in the regulations and standards.
Retail Store Authorization
To apply for an RSA, you must have already applied for an ROL with the AGCO (or hold a valid ROL if it has already been issued). Applications for both an RSA and ROL can be submitted at the same time, but the ROL will be issued before the RSA is granted. The AGCO’s fee for a Retail Store Authorization is $4,000 CAD.
This fee is required to be paid upon submission of the application, and it is generally non-refundable. To be eligible for a Retail Store Authorization, the following criteria should be met since there are some places where you cannot open a cannabis retail store:
- Ensure you have applied for, or hold, a Retail Operator Licence;
- Ensure the proposed location for your retail store is more than 150 metres away from the property line of a school or private school;
- Contact the municipality where the store will be located and confirm that the proposed retail store meets local municipal requirements for retail store siting;
- Review the Registrar’s Standards for Cannabis Retail Stores to ensure you understand the requirements for your store;
- Ensure that the operating name of the proposed retail store complies with all applicable Federal/Provincial legislation related to advertising and promotion.
For farmgate cannabis retail in Ontario, licensed producers (or one of its affiliates) are eligible to apply for a single RSA. In this case, the proposed cannabis retail store must be located on or within the site set out in the federally issued production licence. After you have submitted an ROL and RSA, you can move on to apply for a Cannabis Retail Manager Licence (see below).
Cannabis Retail Manager Licence
A Licensed Retail Manager is required at every cannabis retail store in Ontario. The Retail Manager is responsible for performing tasks such as:
- supervising, managing, or hiring employees of the store;
- managing the sale of cannabis;
- managing compliance issues relating to the sale of cannabis;
- buying cannabis for the store;
- entering into contracts for the store.
The only exception to this requirement is if the Licensed Retail Operator is a sole proprietor or is in a partnership between two or more individuals, and will be both the Licensed Operator and performing the duties of the retail store manager for a particular store – in which case a Cannabis Retail Manager Licence is not required. The AGCO’s fee for a Cannabis Retail Manager Licence is $750 CAD. This fee is required to be paid upon submission of the application, and it is generally non-refundable.
After your ROL and RSA have been submitted, the next step is the Public Notice Process and store inspections by the AGCO. Before your farmgate cannabis retail store can open for business, the store location must be inspected by an AGCO Compliance Official on two separate occasions to confirm that all eligibility and store-specific requirements are met.
The first inspection is called a Retail Store Pre-Authorization Inspection, which is conducted prior to a Retail Store Authorization being issued. The second inspection is a Pre-Store Opening Inspection, which will be done prior to the opening of the store.
More information on these inspections can be found here. Once your Cannabis Retail Store Authorization application is submitted, the AGCO will reach out and advise you on the dates of the public notice posting period, which lasts for 15 calendar days. The AGCO representative will email you the Public Notice placard for you to post visibly on the farmgate store front.
The placard period does not need to be completed before your first inspection can be scheduled (i.e. an inspection can be scheduled as soon as the placard has been posted, based on your readiness for your store to be inspected). Successful completion of the Retail Store Pre-Authorization Inspection will enter your application into the queue for RSA issuance.
Your RSA, once issued, may include certain terms and conditions the licensed Retail Operator must comply with before the store is open to the public. After that, successful completion of the Pre-Store Opening Inspection will allow your store to open for business! It should be noted that Compliance Officials may visit your retail store location at any time to confirm compliance with the Cannabis Licence Act, 2018 and regulations and Registrar’s Standards. Below are some rules you must follow when operating your store.
- begin selling cannabis at your authorized store within one year of getting your Retail Store Authorization, and continue to sell cannabis
- open only during permissible hours: between 9:00 a.m. and 11:00 p.m. on any day of the week
- display the official cannabis retail seal. The seal must be placed where people can easily see it from outside the store entrance. The seal must be at least 17 centimetres wide and 20 centimetres long. You can choose to post the French version of the seal, or the English version, or both
- remove the seal as soon as possible if your Retail Store Authorization is revoked or not renewed
- post your Retail Store Authorization in the store in a place where people can easily see it
- only sell cannabis that has been made by someone who is authorized under the Cannabis Act (Canada) to make cannabis for commercial purposes. Private retailers can only purchase cannabis from the Ontario Cannabis Store (OCS)
- keep records of specified information and activities
- have measures in place to reduce the risk that your cannabis will be redirected to the illegal market or illegal activities.
- record all sales
- make information about the responsible use of cannabis available to patrons
- obtain criminal background checks from employees as part of the hiring process
- ensure all licensed managers and other employees working in your store successfully complete the required Board approved training program (CannSell) prior to their first day of work at the store
- request identification of anyone who looks under 25 years old, and be satisfied the person is at least 19 years of age prior to allowing them to enter the store
- display your cannabis and accessories in a way that they cannot be seen by a young person, even from outside the store
You must not:
- sell cannabis or cannabis accessories to anyone who is under 19 years old
- allow anyone who looks under 25 years old to enter the store, unless you first request identification and are satisfied the person is at least 19 years of age
- sell cannabis to anyone who is intoxicated or appears intoxicated
- sell more than 30 grams of dried cannabis (or equivalent amount of another kind) to a person in a single visit
- hire anyone who is under 19 years of age
- sell cannabis or cannabis accessories from a display that allows self-service, or from a vending machine
Unfortunately, the pandemic and provincial restrictions have resulted in cannabis retail stores (farmgate and regular) being closed for in-person purchases. The AGCO has therefore introduced a new measure to the Registrar’s Standards for Cannabis Retail Stores to temporarily allow curb-side pick-up and delivery.
Click here and refer to Section 9.0 to learn more about the requirements for these new measures. We hope the information above gives you a solid understanding of how licensed producers can open a farmgate cannabis retail store, including all the steps involved in the application process, as well as the requirements that must be met once you’re up and running.
How we can help you
Cannabis License Experts is your solution to preparing, reviewing and submitting your cannabis retail licence application. We offer support from day one of starting your cannabis business, including strategic planning, floor plan preparation, site audits, SOPs and more.