After swift pushback from the industry, Ontario’s cannabis regulator is reversing its decision to ban the sale of in-house brands at pot shops.
In February, the Alcohol and Gaming Commission of Ontario released new retailer rules, primarily to restrict so-called pay-to-play deals that lead to producers effectively buying priority shelf space. Such deals can be anti-competitive as they give larger companies an outsized advantage.
The rules also banned house brands, which are white-label products made by a licensed producer and then branded to match the store they’re being sold at. But that rule has been scrapped.
“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),” reads an email bulletin sent out to stores on Monday.
Read more: Ontario sets clearer rules against pay-to-play retail deals
Read more: High Tide partners with Heritage, Loosh for in-house cannabis brand
Before February’s announcement, a number of stores were selling or had plans to sell in-house brands.
In September, retail giant High Tide Inc. (TSX-V: HITI) (Nasdaq: HITI) (FSE: 2LYA) said it was teaming up with Heritage Cannabis Holdings (CSE: CANN) (OTCQX: HERTF) to make Cabana Cannabis Co.-branded shatter, and with Loosh Brands to make THC Gummies.
In a statement, High Tide CEO Raj Grover welcomes the update.
“The AGCO has shown that it is willing to listen to the concerns of stakeholders. Today’s revisions to the Registrar’s Standards will mean that when it comes to white label products and store brands, Ontario’s cannabis retailers will be treated on par with other retail sectors, both regulated and unregulated,” he says.
“The new standard will also facilitate retailers both large and small, in differentiating their products, brands, and stores,”
The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) has also partnered with Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWF) to make Fire & Flower Revity CBD oil for distribution in Ontario, Manitoba and Saskatchewan.
“The AGCO takes industry feedback seriously,” Monday’s statement continues. “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.”
nick@mugglehead.com
