Ontario Cannabis Laws

On May 9, 2024, Ontario Cannabis Store (OCS) announced a new policy that would allow Farmgate retailers to sell exclusive products at their locations. Farmgate cannabis retailers are cannabis producers with a retail storefront at their production facility.

Although details are yet to be confirmed, Farmgate owners welcome this change as an initiative to drive more traffic to their retail stores by offering cannabis products exclusive to their location.

On New Year’s Day, a new legislation went into effect increasing the number of cannabis retail stores that can be owned by a single entity, from 75 to 150. The change was announced late last year when the Ontario government amended the Cannabis License Act.

Lawmakers say the change will help support a healthy and competitive market but retailers argue that this will just drive smaller, independent stores out of the market.

• Minimum Age: Recreational cannabis can only be sold legally to adults older than 19 years of age.
• Possession Limits: Adults can carry up to 1 ounce (or approximately 30 grams) of recreational cannabis in public.
• Medical Use: Qualified patients 19 years of age or older can order medical cannabis from a federally licensed producer with a doctor’s written notice, online or by phone.
• Recreational Use: Recreational cannabis has been legal in Ontario since 2018 after the Cannabis Act was passed.
• Consumption Areas: Cannabis, medical or recreational can only be consumed in private residences, designated smoking areas, some public places like parks, etc.
• Regulatory Organization: The Alcohol and Gaming Commission of Ontario (AGCO) is responsible for the licensing and regulation of cannabis in Ontario.
• Compliance Software: In 2024, Ontario introduced its new POS Data Reporting Platform for cannabis retailers. The new system aims to streamline compliance and reporting requirements for businesses. The Cova POS is already fully integrated with Ontario’s Data Reporting Platform.
• Growing Regulations: Adults older than 19 years of age may grow up to 4 cannabis plants per residence (as long as it is not forbidden by a lease or rental agreement). It must be for your personal use and the starting materials must be purchased from an authorized retail store.

The minimum age for purchasing recreational cannabis in Ontario is 19, one year older than the federal minimum.

Cannabis retailers can sell other items, like bags or cannabis accessories, but they must comply with advertising rules and be approved by the AGCO.

Adults over the age of 19 years old can have a maximum of 30 grams (about one ounce) of dried cannabis in public at any time.

30 grams of dried cannabis roughly amounts to:

• 15 grams of edible product, 70 grams of liquid product
• 0.25 grams of concentrates (solid or liquid)
• 1 cannabis plant seed.

The possession limits also apply as purchase limits for cannabis retail stores. This means a single transaction is limited to 30 grams of dried cannabis (or equivalent).

Retailers are required to purchase all wholesale inventory exclusively from the publicly-owned Ontario Cannabis Retail Corporation. This is the same entity that runs the online Ontario Cannabis Store.

For more information, visit OCS’ wholesale portal.

The AGCO authorizes the sale of cannabis in the form of:

• Dried flower
• Pre-rolled joints
• Oils and tinctures
• Capsules
• Seeds
• Edibles
• Beverages
• Concentrates

For the latest information, check Ontario’s official website.

The Alcohol and Gaming Commission of Ontario (AGCO) is the licensing authority for retail cannabis stores in Ontario. Producer licenses will be granted through Health Canada.

To be eligible for a cannabis retail license in Ontario, applicants must meet certain criteria laid by the AGCO (under the Cannabis Licence Act):

• Applicants must be at least 19 years old, including directors, officers, and shareholders of corporations.
• Applicants must not have been convicted or charged with specific offenses under the Cannabis Licence Act, Cannabis Control Act, or Cannabis Act.
• Applicants must not have current or past involvement with a criminal organization, as defined by the Criminal Code of Canada.
• Applicants must provide accurate information in their application and make no false statements.
• Applicants must have no outstanding tax returns or payments owed to the government of Ontario.
• The applicant's corporation must not be more than 25% owned or controlled by licensed producers or their affiliates.
• Applicants must demonstrate financial responsibility and the ability to operate the cannabis business lawfully and with integrity.

AGCO may also decide to impose additional conditions on the license to address risks or concerns (should these criteria not be met fully).

If your application is rejected or revoked for any of these reasons, you must wait two years before reapplying. Once granted, licenses cannot be transferred to another individual/entity.

There are two license types that are required to open a retail cannabis store and an additional license for businesses/entities.

Retail Operator License: The base license for people or entities that will be operating any cannabis retail store.

Retail Store Authorization: Authorizes you to operate a physical storefront. You’ll need a different authorization for every location.

Cannabis Retail Manager Licence: Required for anyone with management responsibilities to ensure the responsible sale of cannabis. In this case, “management responsibilities” are defined as:

• Supervising or managing employees
• Overseeing or coordinating the sale of cannabis
• Managing compliance issues arising from the sale of cannabis
• Having signing authority to purchase cannabis, enter into contracts or make offers of employment

In almost all cases, yes. The first step is applying for a Retail Operator Licence, followed by a Retail Store Authorization and a Cannabis Retail Manager Licence. You cannot apply for the Retail Store Authorization without first submitting the Retail Operator Licence application.

The only exception is if you are a sole proprietor acting as both the owner and manager for a particular store. If so, you will not need the Cannabis Retail Manager Licence.

Applicants may be required to submit (including but not limited to) the following documents :

• Constituting Document(s)
• Schematic Diagram
• Details of Shareholders
• Financial Statements
• Tax Return and Tax Assessment
• Personal History
• Business Name Registration
• Proof of Ownership/Tenancy

While these aren’t technically required upon initial application submission, they can slow down the licensing process if they aren’t provided upfront.

Additionally, for a cannabis retail manager license, you’ll need a completed Personal History form (provided in iAGCO) that includes all of your employment and unemployment history. You will also need to provide tax returns or a tax assessment.

You can find detailed information in AGCO’s Cannabis Retail Regulation Guide.

The AGCO has implemented a 2-step open application process, starting with applying for a Retailer Operator License and followed by applying for a Retail Store Authorization. This new model replaces the previously used retail lottery system, eliminating the cap on potential license approvals.

We’ve summarized the application process but for a full overview, visit AGCO’s Cannabis Retailer Licensing Journey Map.

• Prospective applicants review requirements, consult the AGCO's licensing process, and check local municipal regulations.
• Applicants apply for ROL by submitting their application online to iAGCO, AGCO’s online portal. There are no set processing times and the wait varies based on the complexity of the application and due diligence required.
• Applicants find a suitable location and secure a lease or own a store, ensuring compliance with distance regulations from schools and municipal zoning.
• Once a location is secured, applicants can apply for RSA by submitting their application to iAGCO.
• If the application meets all the requirements, the AGCO will issue an ROL.
• Applicants can start receiving resources and wholesale pricing information from the OCS.
• As the OCS reviews applications, applicants are encouraged to continue working on the business plan. During this waiting period, your proposed store location will be reviewed manually. If any issues are found, an eligibility officer will reach out with more information.
• A public notice will be posted for residents and the municipality for 15 days to provide submissions regarding RSA issuance. A copy of the submissions will be provided to the business and they have 5 calendar days to respond to the Registrar.
• An AGCO Inspector provides education on the cannabis regulatory framework and pre-authorization inspection criteria.
• AGCO inspects the store to ensure compliance with regulations and standards before approval.
• AGCO makes a decision on RSA approval based on ROL issuance, completion of public notice, and inspection requirements.
• Once approved, the AGCO issues the RSA, allowing retailers to order products from the OCS.

As of April 2024, AGCO charges the following fees for the three cannabis retailer license types:

Retail Operator Licence

• 2-year term: $6,000
• Renewal Fee: $2,000
• 4-year term: $4,000

Retail Store Authorization

• 2-year term: $4,000
• Renewal Fee: $3,500
• 4-year term: $7,000

Cannabis Retail Manager Licence

• 2-year term: $750
• Renewal Fee: $500
• 4-year term: $1,000

The Cannabis Retail Manager License is not mandatory for sole proprietors. All of these fees are non-refundable.

While not required, the AGCO strongly recommends completing the following steps before submitting a Retail Store Authorization application:

• Confirm that the location you are interested in opening your store in is zoned for commercial or retail use.
• If your intended location is on a reserve, obtain a Resolution of the Council of the Board showing approval.
• Have your Retail Operator Licence application file number or license number ready.
• Ensure your proposed store location meets all requirements (more on that later).
• Double-check that your business or store name complies with all Federal and Provincial laws regarding advertising and promotion.

The AGCO has laid out specific education requirements that mandate all licensees ensure employees act by the law and demonstrate honesty and integrity. In addition to this, the board also requires retailers to:

• Obtain criminal background checks from employees during the hiring process.
• Ensure employees understand their obligations regarding applicable laws and regulations.
• Ensure employees complete any required training, including Board-approved training, before their first scheduled shift.
• Ensure employees complete any required training within 60 days of it being approved and available.

The required training program is called CannSell and is available online in both English and French for a fee of $64.99 + HST. Existing CannSell certificate holders can complete new content for $10.00 + HST. For more information or to access the CannSell training program, visit CannSell.ca.

According to the Cannabis Licence Act of 2018, a retail cannabis location must abide by the following requirements:

• Must be located in a municipality or reserve that has opted into the retail cannabis program.
• Is not within 150 metres of a public or private school.
• Only operates between the hours of 9:00 am and 11:00 pm (Monday-Sunday) and municipalities can set different hours of operation.
• Must be the only business operating in the store and can only sell approved cannabis products and certain cannabis accessories like pipes and rolling papers.

Under Ontario law, cannabis stores are required to implement several security measures to ensure the safety and integrity of their operations. These requirements are laid out in AGCO's Registrar's Standards for Cannabis Retail Stores and we’ve put together a summary of the key rules.

• Maintain a high-resolution surveillance system that provides clear coverage of the interior and exterior of the premises, including entrances, exits, point of sale areas, receiving areas, sales floors, and cannabis storage areas. Video recordings must be retained for a minimum of 30 days and made available to the AGCO upon request.
• All cannabis products must be stored securely and accessible only to staff from receipt to point of sale, destruction, or return to the Ontario Cannabis Retail Corporation (OCRC) or the Licensed Producer.
• Any cannabis that is outdated, recalled, damaged, or otherwise ineligible for sale must be kept separate from other cannabis products.
• All access points to the premises must be secure and protected against unauthorized entry.
• Cannabis and accessories should not be visible from the exterior of the premises.
• Stores may use sensory display containers to allow customers to see and smell cannabis but the containers must be locked and tamper-proof to prevent customers from touching the cannabis.

AGCO's Registrar's Standards for Cannabis Retail Stores also includes strict marketing and advertising restrictions under section 6.0 Advertising and Promotions. It outlines the following main restrictions on cannabis and marketing:

Stores must have clear signs identifying their business on the exterior of the authorized store

Advertisements or marketing material may not:

• Appeal to or target persons under 19 years of age
• Promote cannabis or cannabis accessories in a false, misleading, or deceptive manner
• Suggest or imply that consumption of cannabis is associated with success, enjoyment of an activity, fulfillment of a goal, or resolution of a problem
• Cannot include any pricing information except for at the point of sale
• Be associated with medicine, health, or pharmaceuticals
• Depict or suggest the illegal sale of cannabis
• Associate consumption of cannabis with driving a motorized vehicle or any activity requiring care, skill, or having elements of danger

Retailers are also prohibited from entering into agreements with the licensed producer that:

• define the amount of product required to be displayed
• provide merchandising, marketing, or promotional activities
• restricts the ability of the licensed producer to sell its product at other retail stores
• restricts ability of the licensee to sell products from other licensed producers.

The Cannabis Act states no cannabis, cannabis accessory, or cannabis service can be advertised in any publication or broadcast that originates outside of Canada or has an audience that includes minors. These restrictions can limit your paid placements online.

That said, cannabis companies can use hyper-targeting to limit the age range to adults and only target users in Canada to work around federal marketing laws. Unfortunately, advertising platforms like Google Ads still has a strict no-cannabis policy even in legal countries like Canada.

If you are planning on using paid ads to promote your cannabis business, cosult with a lawyer to ensure you remain compliant with federal and provincial cannabis advertising laws.

No, the federal law is very clear that no free product can be given out. In addition to this, Ontario’s AGCO also prohibits retailers to provide inducements that may influence a person’s decision to purchase cannabis or a cannabis accessory.

Similarly, licensees cannot accept or request inducements from licensed products and/or suppliers of cannabis and cannabis accessories.

In 2024, Ontario rolled out its new POS Data Reporting Platform for cannabis retailers. The new system aims to streamline compliance and reporting requirements for businesses.

Being very new, the system is supported only by a handful of Point of Sale systems in Canada including the Cova POS. Cova integrates directly with the POS Data Reporting Platform to automatically pull the required reporting data from the retailer's Cova Hub.

Retailers will be responsible for tracking cannabis as it moves in and out of their stores. The exact requirements are laid out in Section 8 of the AGCO's Registrar's Standards. Here is a summary of the tracking and reporting requirements in Ontario:

• Maintaining employee records, including their names, addresses, job responsibilities, shift schedules, training records, and dates of employment.
• Keeping records of all cannabis in the store, including purchases, returns, sales transactions, and destruction of cannabis products.
• Maintaining compliance with regulations prohibiting sales to persons under 19 years of age and those who are or appear to be intoxicated.
• Maintaining records of cannabis used for display purposes and accounting for the product after it is no longer on display.
• Ensuring availability of complete monthly federal reports and sales reports to the AGCO.
• Keeping records of purchaser information and residential addresses for delivered cannabis.
• Maintaining records of specific authorized stores for which a licensed Retail Manager is accountable.
• Maintaining records of agreements entered into as well as descriptions of items, dates of receipt, names of licensed producers and representatives, and fair market values of items or services received.
• Conducting full physical inventory counts of all cannabis every month or upon request by the AGCO, with logs of inventory results and reporting discrepancies to the AGCO.

In essence, each sale must be traceable back to the employee that conducted the transaction and all cannabis moving in or out of your store must be tracked in a way that allows for product recalls and limits diversion to the black market. A licensee’s records must account for cannabis products used for display purposes too, accounting for the product after it is no longer used in a display.

Yes, Cova’s Point of Sale system is made with the cannabis industry in mind and is fully compliant with all of the tracking requirements in Ontario.

Ontario requires that any POS systems used by a licensee must be certified by a recognized industry certification organization like the PCI Security Standards Council or the International Organization for Standardization. Cova’s POS meets all of these criteria and more, taking the hassle out of tracking and reporting.

Cova’s dispensary POS and inventory management system includes all the features needed to keep cannabis retailers compliant, including:

• ID scanner for age and patient card verification
• Integrated inventory and sales tracking and reporting
• Built-in product equivalency conversions and purchase limit enforcement

See the cannabis industry’s most loveable POS in action with a live demo.

Dive deeper into everything related to cannabis retail in and around Ontario with these curated resources.

• How to Open a Cannabis Retail Store in Ontario's Competitive Market
• How Cova Streamlines Cannabis Inventory Management & Compliance for Miss Jones
• How Cova eCommerce is Helping FlowerPot Increase Web Traffic
• Discover How Cova OCS Catalogue Subscription Boosts Your Bottom Line
• AGCO’s 2022 Compliance Reporting Changes for Cannabis Retailers in Ontario

Like many provinces in Canada, Ontario was slow to roll out its cannabis retail program, opting initially for a lottery system to release a limited number of retail licenses. The first round authorized 25 stores to open in April of 2019. The second, in the fall of 2019, added another 50 licenses across the province, including 8 designated for First Nations land.

In December 2019, the Alcohol and Gaming Commission of Ontario (AGCO) announced it would end the controversial lottery system and remove the cap on retail licenses in favour of an open market for private cannabis retail in 2020. In the five years since Ontario has witnessed a massive cannabis retail boom. More than 1,800 retail store licenses have been issued as of January 2024 with no signs of stopping.

That said, many cannabis retail store owners are not happy with the direction Ontario’s cannabis policy is headed. Needless to say, the market is going to continue evolving into 2024.

To stay on top of these changes, subscribe to the Cova newsletter and get the latest updates & insights on cannabis retail regulations, trends, and technology.