The Alcohol and Gaming Commission of Ontario (AGCO) is asking the cannabis industry for feedback on changes to its rules for “pay to play” in-store promotions, or so-called inducements.
The provincial regulator released a survey on Friday, which outlines specific scenarios in which inducements would be allowed, as well as more detailed record-keeping requirements.
“Current reports of practices and business relationships between licensees and licensed producers suggest that the current Registrar’s Standards for Cannabis Retail Stores have not been effective in addressing material inducements,” reads a statement in the survey.
The suggestions more clearly set out what the AGCO sees as an inducement, the statement continues.
“These changes are consistent with the prohibition on inducements included in the Cannabis Licence Act, which seeks to minimize the risk of anti-competitive practices so that licensees and licensed producers of all sizes have a reasonable opportunity to enter and compete within the cannabis marketplace.”
“The AGCO’s objective is to address the illicit market which includes promoting consumer choice and a level playing field. Inducements between [retail] licensees and licensed producers, left unchecked, could directly undermine these objectives.”
The feedback period is open until Aug. 23.
In March, after its own consultation period, Alberta decided to uphold its store promotions ban.
Read more: Alberta’s regulator upholds promotions ban
The proposed amendments are as follows.
Current standard: 6.4 Licensees may not accept or request material inducements from licensed producers, their representatives, or suppliers of cannabis accessories.
Proposed standard: 6.4 Licensees and their representatives shall not, either directly or indirectly, accept or enter into any agreements for any item, benefit or service with a licensed producer or supplier of cannabis accessories. The following exemptions apply:
- a licensee and its representatives may accept items of nominal value;
- a licensee and its representatives may accept items, benefits or services exclusively for the provision of training or education related to cannabis;
- where a licensed producer has an ownership interest in the licensee, the licensee may enter into financing and lease agreements; and
- a licensee may enter into a franchise agreement with a licensed producer or its affiliate.
“The proposed standard provides greater certainty and clarity regarding what types of items, benefits or services are prohibited. It allows licensees to accept things of nominal value or benefits that the AGCO considers to be of legitimate benefit to the sector, such as education and training,” the statement reads.
“Under this revised standard, activities such as the sale of advertising space, travel costs and data insights would be prohibited.”
Current standard: 8.1 Licensees must ensure that the following records are maintained, retained a minimum of three years, or longer as may be required by other laws and regulations, and made available to the AGCO in accordance with the notification requirements or upon request.
Proposed additional requirement for standard 8.1 (8.1.10): When entering into any financing or lease agreement, or accepting any item, benefit or service pursuant to standard 6.4, a licensee shall maintain the following records:
- a copy of the complete agreement,
- a description of the item, benefit or service,
- the date of receipt of item, benefit or service,
- the name of licensed producer and representative, and
- the fair market value of the item, benefit or service.
“Record keeping requirements for items, benefits or services received will enable licensees to demonstrate their compliance to standard 6.4 and allow the AGCO to monitor the efficacy and consistency of the application of our standards across the sector. It is anticipated that a subset of licensees will be selected to submit records of requirement 8.1.10 to the AGCO, in addition to those requested during an inspection.”