Ontario Government Direction – Speech from the Throne, Fall Economic Statement

In the July 2018 Speech from the Throne, the Ontario Government outlined its priorities for the legislative session. The speech emphasized smart and efficient use of public resources, and respect for consumer choice. The government also highlighted the need to reduce regulatory burden on Ontario businesses. Specifically, the government reiterated its commitment to expand the sale of beer and wine to convenience stores, grocery stores and big-box stores.

The AGCO took note of the September 2018 report “Managing Transformation: A Modernization Action Plan for Ontario.”  In particular, the AGCO will align its activities with the identified priorities to implement a modernized Ontario government. In the 2018 Economic Outlook and Fiscal Review, the government reiterated its ongoing focus on reducing regulatory burden for business, and its commitment to modernizing the rules for the retail and consumption of beverage alcohol and highlighted its plan to develop options to allow for the sale of beer and wine at corner stores and big-box stores.  As an immediate first step in modernizing in this sector, the AGCO announced the alignment of permissible hours for the Beer Store, the LCBO and other authorized retailers such as grocery stores and agency stores to allow them to sell alcohol from 9:00 a.m. to 11:00 p.m., seven days a week.

Ontario Legislative Changes                                                                                                           

In December 2017, Ontario passed the Cannabis Act, 2017, in response to the federal legalization of recreational cannabis. In October 2018, Ontario passed the Cannabis Statute Law Amendment Act, 2018. In part, that Act created the Cannabis Licence Act, 2018, which will form the basis of the regime for the storefront sale of recreational cannabis in Ontario.

The AGCO is supporting the development and implementation of this private licensing model to create a socially responsible marketplace that can be sustained against the illegal market. The AGCO has and will continue to leverage its existing regulatory expertise to prepare for the opening of storefront recreational cannabis stores in April 2019.

Federal Legislative Changes

The federal government legalized recreational cannabis in Canada through the Cannabis Act, which came into effect on October 17, 2018. In Ontario, the Legalization of Cannabis Secretariat continues its work to coordinate and align the province’s legal, regulatory and policy development as legalization takes effect. As noted above, the recently passed Cannabis Licence Act, 2018 provides for the future regulation of storefront recreational cannabis. 

OLG Gaming Modernization

The OLG continues to implement its gaming modernization initiative which includes three key priorities: becoming more customer-focused; securing qualified service providers for the day-to-day operation of gaming; and renewing the OLG’s role in the conduct, management and oversight of lottery and gaming.

As the OLG’s plan has a significant impact on the AGCO operations, the two organizations will continue to work together as implementation of the modernization strategy moves forward. Key components of the strategy include increased private sector involvement, the introduction of new gaming service providers, new gaming sites and gaming channels, multi-lane lottery sales, rationalization of gaming operations in general and a greater focus on consumer protection and responsible gambling.

Open Government

The Open Government initiative was launched in Ontario in October 2013 with the objective of increasing transparency and accountability in government. The AGCO applies the Open Government approach in a number of its activities, including in its Strategic Engagement Framework and its commitments in accordance with the Open Data Directive. As part of these commitments, the AGCO has published a list of datasets in its custody and control, and over the coming year, will continue to make be making datasets open to the public on its website under through an “open by default” approach.    

Open for Business and Economic Development

This government-wide priority is designed to minimize the burden of regulation on Ontario businesses, foster competitiveness and welcome new business to the province.

Internally, the AGCO continues to work on a number of initiatives which support the overall goals of this program by reducing administrative burdens and using a regulatory approach intended to support responsible economic development. The Standards-Based Approach as the regulatory framework in the gaming sector, for example, allows operators and businesses more flexibility to adapt to marketplace changes and ultimately to increase their competitiveness. A similar approach is also at the forefront for future regulatory reforms in the liquor and horse racing sectors. In the storefront recreational Cannabis stores, the need for operator flexibility is a driving objective in the development and implementation of the regulatory model.

The achievement of these goals is enhanced through the AGCO’s continued efforts to build strategic partnerships and share information with government ministries and agencies including MAG, MOF, MTO, the Ontario Cannabis Store, OLG and the LCBO.

Social Responsibility: Evolving Social Attitudes

In an ongoing effort to modernize as a regulator and to better reflect the industries it regulates and developing societal views, the AGCO continues to refine its role in the promotion of social responsibility in the alcohol, cannabis, gaming and horse racing sectors. In the gaming industry, this has led to a focus on responsible gambling, while the changing views of the liquor industry place a greater emphasis on responsible use and enjoyment. In the horse racing sector, the AGCO is working with its industry partners on the development of a concussion management standards-based rule. Additionally, as part of the regulation of storefront recreational cannabis, the AGCO will be working with the industry to determine the best course to promote social responsibility in this line of business.

Emerging Issues and Industry Trends

The AGCO will continue to stay informed on issues related to unregulated areas of sectors we regulate, including unregulated internet gambling.

As a modern and collaborative agency, the AGCO is prepared to work with government partners, municipalities, law enforcement, and its stakeholders to address new challenges that may arise in the future.

Expansion of AGCO Regulatory Mandate

Marketplace evolution within the liquor and gaming sectors, along with government initiatives and legal and regulatory reforms such as recreational cannabis legalization, have continued to expand the AGCO’s regulatory authority. To help manage the operational and financial pressures related to this expanded mandate, the AGCO continues to implement its long-term direction through its Strategic Plan.

The AGCO strives to be proactive in implementing changes to improve efficiencies in its operations, demonstrating its commitment to the government’s goal of regulatory efficiency. Initiatives include implementation of an Enterprise Risk Management Framework, numerous program audits to improve efficiencies, and a long-term information technology strategy. Additionally, the AGCO’s shift to a risk-based regulatory approach has ensured agency resources are allocated to areas that represent greater risk, increasing effectiveness and efficiency.

Education, Training and Awareness (ETA) Initiatives for Licensees and Registrants 

The ETA strategy, and will continue to enhance and reinforce the AGCO’s approach to education across all its lines of business. The objectives of the ETA strategy are to ensure that existing and new initiatives are anchored in AGCO priorities, benefit from internal coordination, and support improved regulatory compliance and outcomes. One of the core elements of the strategy is to be more responsive to stakeholders’ feedback on potential options, opportunities and priorities from an educational perspective moving forward.

New programs will be identified to support stakeholder education and understanding of the laws that apply to them, including webinars on cannabis licensing. Funding for these new programs, in whole or in part, may come by leveraging monies generated through the assessment of Orders of Monetary Penalty (OMP). Moving forward, the AGCO will continue to use OMP funds to improve the education it provides to its licensees and registrants to support regulatory compliance and consider funding requests from external stakeholder organizations for educational initiatives which support the AGCO’s overall ETA program objectives.

Skilled Workforce

Essential to implementing a successful transformation of the AGCO’s regulatory approach and its business processes is establishing and maintaining a rewarding workplace environment with high performing and empowered staff who feel valued and supported, and where change management practices are understood and integrated into all initiatives. By continual investment in leadership development and coaching, the AGCO is preparing its leaders to effectively manage the significant and transformational changes taking place across the agency.

The AGCO has also taken a proactive approach to attract and retain high quality talent in order to effectively carry out its mandate. For example, the AGCO’s Manager 2020 initiative focuses on developing and recruiting leaders to be people-centric over being process focused. Furthermore, the AGCO is shifting its culture to ensuring that managers are placed into leadership roles based on their fit for the position and their ability to effectively manage people.

Strategic Planning

The AGCO undertook a review of the Strategic Plan that was established in 2013 to understand whether the existing strategic direction was still appropriately guiding the agency.  The process included internal consultations throughout the organization in order to obtain insights into the anticipated challenges and opportunities on the horizon, and ensuring the plan is aligned to government’s priorities to reducing red tape, increasing efficiency, as well as transparency and accountability. The result is a refreshed strategic plan, which includes a new vision statement, three reframed strategic goals (Modern Regulator; Service Excellence; and People-Centric), and the identification of key commitments to deliver on each of the goals. 

As was the case with the last plan, this plan is underpinned by an enhanced business planning process and integrated performance measurement approach to ensure that the current and future initiatives support the agency’s Strategic Goals; better position the AGCO to respond to expanded responsibilities; identify opportunities to enhance its regulatory approach; and align with the strategic priorities of the AGCO Board of Directors. The ongoing process of strategic orientation of major initiatives and key regulatory activities to the Strategic Plan positions the AGCO to adapt quickly to emerging initiatives and priorities.

The external and internal factors outlined above carry a number of risks and uncertainties which, if left unaddressed, could adversely affect the achievement of the AGCO’s Strategic Goals. The AGCO leverages sound risk management methodologies through the continued use and enhancement of an Enterprise Risk Management Framework to monitor and mitigate these environmental risk factors.

The framework consists of a portfolio view of risks.  An annual risk workshop is held with the senior management team to identify, assess, and decide on prioritization and mitigation activities for the AGCO’s top risks.  These risks are updated at minimum on a quarterly basis to ensure they reflect the changing risk landscape. Risk assessment activities are integrated with strategic and corporate planning process to ensure that risks arising from the AGCO’s goals and plans are considered and assessed.  The results of the risk assessment activities are a key input in the development of the AGCO’s audit and evaluation plan. The framework and associated processes are overseen by the Board of Directors who provide input on the process.

The framework assists in enabling the organization to identify areas of potential and existing risk and ensures that risk is routinely identified, assessed and overseen by the AGCO Board. This forms the basis of a systematic, disciplined and integrated approach to the management of risk.

The framework will continue to form a foundation to guide management decision-making processes when developing strategic plans and corporate planning activities. This ensures that the AGCO understands its business and operational risks and manages them to an acceptable level of exposure given its priorities and objectives.