Reminder — New Inducements Standards Take Effect June 30th, 2022 in the Registrar's Standards for Cannabis Retail Stores

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Information Bulletin
Cannabis

June 24, 2022

As previously announced, new inducement standards take effect June 30, 2022, in the Registrar’s Standards for Cannabis Retail Stores.

To support consumer choice and a level playing field in the legal cannabis industry, the new standards provide clarity with additional detail related to inducement activity between federally licensed producers and retailers.

The AGCO’s compliance team will be engaging in focused compliance activities to ensure licensed retailers are meeting their obligations under the new Standards.

New Inducement Standards: Updated Registrar’s Standards for Cannabis Retail Stores

The updated Standards are consistent with, and further clarify, the prohibition on inducements in the Cannabis Licence Act, 2018:

6.4 (Amended)

Standard 6.4 - Licensees may not accept or request material inducements from licensed producers, their representatives, or suppliers of cannabis accessories.
  

Guidance: inducements are items, benefits, payments, or services that are offered or given with the purpose to promote or increase the sale of a particular brand or product by the licensee or their employees.

6.5 (New)

Standard 6.5 - Licensees and their representatives may not, either directly or indirectly, accept or enter into any agreements for any item, benefit or service with a licensed producer or their representatives. The following exemptions apply:  

  1. a licensee and its representatives may accept items of nominal value,   
  2. a licensee and its representatives may accept items, benefits or services exclusively for the provision of training or education related to cannabis, 
  3. a licensee may enter into an agreement to sell its data for business intelligence purposes,
  4. where a licensed producer has an ownership interest in the licensee, the licensee may enter into financing and lease agreements, 
  5. a licensee may enter into a franchise agreement with a licensed producer or its affiliate,
  6. a licensee may enter into an agreement for a store brand cannabis product. 
6.6 (New)

Standard 6.6 - Licensees and their representatives may not enter into any agreement pursuant to Standard 6.5 that:

  1. Defines the amount of product from the licensed producer or its affiliates that must be offered for sale at the retail store;
  2. Requires a defined amount of display space in the retail store to be dedicated to product from the licensed producer or its affiliates;
  3. Provides merchandising, marketing or promotional activities to the licensed producer or its affiliates;
  4. Restricts the ability of the licensed producer or its affiliates to sell its product at other retail stores, or the ability of the licensee to sell products from other licensed producers or their affiliates.
8.1.10 (New)

Standard 8.1.10 - When entering into any agreement or accepting any item, benefit or service pursuant to Standard 6.5, a licensee shall maintain the following records: 

  1. Copy of the complete agreement 
  2. Description of the item, benefit or service 
  3. Date of receipt of item, benefit or service 
  4. Name of licensed producer and representative and 
  5. Fair market value of the item, benefit or service 

Recordkeeping Requirements

Retailers must maintain records of all agreements to help the AGCO better understand and monitor these activities over time.

To meet cannabis regulatory requirements under Standard 8.1.10, operators of authorized cannabis retail stores are required to:

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.

For more information

For more information, including examples of what is permissible and what is not, please view the Guidance Document — Inducements Rules for Licensed Cannabis Retailers.

If you have questions or need guidance on complying with the updated Registrar’s Standards for Cannabis Retail Stores, your local Inspectors are available to help and support you with additional information and education. If you are unsure who your Inspector is, or have misplaced their contact information, please email Compliance@agco.ca with your cannabis retail store’s address to get connected.

Cannabis licensees should familiarize themselves with applicable sections of the Cannabis Licence Act and the regulations, and the Registrar’s Standards for Cannabis Retail Stores to ensure they are in compliance.