Based on extensive industry feedback, the Alcohol and Gaming Commission of Ontario (AGCO) amended the new rules related to inducements that were announced on February 8th. In an update published March 28th, the Ontario regulator is reversing the policy to disallow private labelling for cannabis products.
An additional exemption 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).
Large cannabis chains such as High Tide, Fire & Flower, and Spiritleaf have spent a lot of money creating their own brands and building a market for them so this policy change is an important one for the profitability of the industry.
Omar Khan, Senior Vice President – Corporate and Public Affairs at High Tide, says, “Today’s announcement shows that when cannabis industry stakeholders mobilize and present well thought out arguments regulators can take notice. Kudos to the AGCO for listening to the sector and changing course so quickly. Enhanced product differentiation is a good thing for retailers and consumers alike.”
Ivan Ross Vrána, Managing Partner at Diplomat Consulting, says, “We are glad to see that the AGCO has clarified their position regarding white labelling in Ontario—this will allow for the further development of unique products and provide consumers with more choice in the marketplace.”
In a note to industry stakeholders, the AGCO reports, “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.”
Raj Grover, President and Chief Executive Office of High Tide, says, “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. The new Standard will also facilitate retailers both large and small, in differentiating their products, brands, and stores. With today’s news we intend to move quickly to work with the Ontario Cannabis Store to get our under-development Cabana Cannabis Co. products listed in Canada’s largest province.”
AGCO notes, “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, including examples of what is permissible and what is not, please view the updated Guidance Document — Inducements Rules for Licensed Cannabis Retailers.