Section 2: Regulatory requirements for licensees

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Please note that this guide does not replace the law. Please consult the LLCA, the regulations and the standards and requirements established by the AGCO Registrar to ensure understanding all responsibilities and obligations that come with holding a Grocery Store Licence.

The LLCA and its regulations set out the rules for liquor in a number of areas, including:

  • Rules regarding the purchase, sale, display, delivery and storage of liquor
  • Licences (including classes, sub-classes, and endorsements) and the conditions that licensees must follow
  • Regulatory oversight activities
  • Social responsibility measures
  • Transition of licensees into the new licensing regime

Licence holders should refer to the three regulations under the LLCA that are applicable to their licence:

Permitted Products and Packaging Requirements

Grocery store licensees must purchase all liquor from the LCBO.

If a grocery store licensee purchases containers of liquor that are packed together for consumer sale, the licensee must sell the liquor in that packaging. Grocery store licensees are permitted to sell beer, ready-to-drink beverages and cider with an alcohol content that is no greater than 7.1% by volume.

Grocery store licensees are permitted to sell wine, other than cider, with an alcohol content that is no greater than 18% by volume. Additionally, grocery store licensees are permitted to sell wine to which an alcoholic distillate (fortified wine) has been added, provided that the alcohol content is less than 18% by volume.

Beer, wine (including cider) and ready-to-drink beverages kept for sale, offered for sale, or sold must not be in a container with a volume of more than 5 litres.

Permissible Retail Sale Hours

See Hours for Liquor Sale, Service and Delivery. 

While grocery store licensees may choose to further limit the hours of beer, wine (including cider) and ready-to-drink beverage sales, store licensees must ensure that beer, wine (including cider) and ready-to-drink beverages are not made available to customers outside of the permissible hours. In addition to not selling outside of the permissible hours, store licensees may choose to lock the refrigerators in which the products are located, create a partition around the display aisles, or lock the point-of-sale system to disallow the sale of beer, wine (including cider) and ready-to-drink beverages outside of the permissible hours. Grocers have the flexibility to determine how best to meet this requirement in their store environments.

Some grocery stores may also have general hours of operation that are outside the permissible hours of sale (e.g. a 24-hour store), however they are only permitted to sell in-store, allow in-store pickup, and perform deliveries of liquor within the permissible hours.

Product Display and Storage Requirements

Ontario has established specific product display requirements, including requirements to display products made by small manufacturers. Criteria for these small manufacturers can be found in O. Reg. 746/21. The LCBO product catalogue is available to assist in selecting products that align with these requirements. 

It is the grocery store licensee’s responsibility to properly display the beer, wine (including cider) and ready-to-drink beverages that are offered for sale. Energy drinks and products that would promote the immoderate consumption of liquor (e.g. beer pong kits) cannot be displayed immediately adjacent to liquor. 

Regarding liquor product display, licensees must also ensure the following:

  • That at least 20% of the containers of beer on display are containers of beer produced by small breweries.
  • That at least 20% of the containers of cider on display are containers of cider produced by small cideries.
  • That at least 10% of the containers of wine, excluding cider, on display are containers of wine produced by small wineries.
  • That at least 20% of the containers of ready-to-drink beverages on display are containers of ready-to-drink beverages produced by small breweries, small distilleries or small wineries.

Additionally, at least 40% of containers of wine, excluding cider, on display in grocery stores must be containers of wine that is produced using grapes from a single country and in respect of which at least one of the following criteria is met:

  1. The wine is quality assurance wine.
  2. The wine was produced by a small winery.
  3. The country where the grapes were grown produces, in the aggregate, less than 150 million litres of wine annually from grapes grown in that country.

Beer, wine (including cider), and ready-to-drink beverage inventory that is not on display for sale to customers must be stored in a secure storage area that is not accessible to the public.

Dealings with Manufacturers or their Representatives

Grocery store licensees are prohibited from directly or indirectly requesting, demanding, or receiving a financial or non-monetary benefit in Ontario or any other jurisdiction from a liquor manufacturer or from a person acting on the manufacturer’s behalf, including a benefit requested, demanded or received in exchange for the provision of shelf space at the store or product listing of the manufacturer’s liquor or for any merchandising, marketing or promotional opportunities.

Grocery store licensees are also prohibited from entering into an agreement with a liquor manufacturer if the agreement restricts the manufacturer’s ability to sell its liquor in other stores.

Grocery store licensees are also prohibited from entering into an agreement with a liquor manufacturer that guarantees the provision of shelf space at the grocery store for a product listing for the manufacturer’s liquor or that guarantees any merchandising, marketing, or promotional opportunities.

Prohibited Brands

Grocery store licensees must not offer a brand of liquor for sale at its store if the licensee or any of its affiliates has a direct or indirect financial interest in the brand or a trademark under which the brand of liquor is marketed.

Loyalty Points or Reward Programs

Grocery stores can offer loyalty or rewards points for the purchase of beer, wine (including cider), or ready-to-drink beverages, as long as the points are applied equally to all these products (i.e., no extra points for specific brands are allowed). The points should not be used to specifically encourage the purchase of alcohol.

Points must be applied equally to all alcohol products purchased (i.e., no extra points for specific brands are allowed) and rewards for the purchase of alcohol or the redemption of rewards cannot be subject to special offers or bonuses (i.e. extra points as an inducement for buying alcohol is not permissible). 

This requirement applies to all forms of points or rewards issued by a loyalty or rewards program, including coupons, tickets, points or other rewards.

Cross Promotions and Advertising

Grocery store licensees cannot offer free or discounted merchandise that requires the purchase of beer, wine (including cider) or ready-to-drink beverages. For example, a store cannot offer a promotion where a free or discounted snack item is available to customers who purchase beer, wine (including cider) or ready-to-drink beverages.

Other products may be displayed alongside alcohol products if they are displayed by the licensee for the purpose of a cross-promotion with alcohol products (beer, wine, cider or ready-to-drink beverages). However, energy drinks or products that promote the immoderate consumption of liquor are not displayed immediately adjacent to liquor.

Grocery store licensees cannot advertise or promote liquor or its availability unless the advertising is conducted in accordance with Standard 2.1 of the Registrar’s Standards for Grocery and Convenience Stores. For more details on how to advertise or promote liquor, grocery store licensees should also consult the Guide for Grocery Store and Convenience Store Licensees: Advertising and Inducements. 

Sampling

Licensed grocery stores may serve or offer to serve samples of beer, wine (including cider) or ready-to-drink beverages to customers in a designated area that is within or adjacent to the liquor display area in the store. Samples may be provided to customers by licensed manufacturers’ representatives or staff of the licensed grocery store. Grocery store licensees must ensure that any person who is involved in the sampling of beer, wine (including cider) or ready-to-drink beverages in their store holds a valid certificate demonstrating the successful completion of an AGCO Board approved training course about responsible liquor sale, service and delivery training  and that all sampling is conducted in accordance with the standards and requirements established by the AGCO.

Conducting Delivery of Online Orders

Grocery store licensees can deliver their liquor products for a fee and, any liquor ordered must be supplied from the licensee’s inventory that is stored at the grocery store.

Posting Licence

Grocery store licensees must post their grocery store licence in a conspicuous place in the store. For example, posting the licence at a customer service counter or at a selected checkout aisle that is in a conspicuous place are acceptable options.

Ontario Deposit Return Program (ODRP)

Beginning on October 31, 2024, grocery stores that are licensed to sell liquor must accept empty containers of liquor and provide refunds for the deposits paid on them to the consumer. The LCBO will reimburse the amounts refunded to the grocery store licensee. 

Please note, until January 1, 2026, some grocery store locations will be temporary exempt from collecting empty containers and providing refunds, if they are located within 5km  of a Beer Store location on September 3, 2024. These exempt stores are instead, required to post the nearest location or locations where containers can be returned.

After January 1, 2026, all grocery store licensees will be required to accept empty containers and provide bottle deposit refunds to customers.

Signage Requirement — Warning Sign for Consumption of Liquor During Pregnancy

Licensed grocery stores must display a sign warning that drinking alcohol during pregnancy can cause birth defects and brain damage to a baby (also known as “Sandy’s Law” signs). The sign is required to be prominently displayed in a location where liquor is purchased (e.g., cash register). For more information and to download a copy of the sign, please see Signage Requirement – Warning Sign for Consumption of Liquor During Pregnancy.

Remaining an eligible business

Even after you start selling liquor in your grocery store, you must continue operating as a grocery store, meeting all the regulatory requirements, including offering a range of food products for sale. The food products offered for retail sale must take up at least 10,000 square feet or at least half of your retail floor space. This excludes prepared foods that can be eaten on site and liquor that is sold for retail.