Ontario Dispensary Law and Regulations

Ontario Cannabis Retail Regulations

Like many provinces in Canada, Ontario is slowly rolling out their retail cannabis program. Taking on a phased approach, Ontario estimates brick-and-mortar retail cannabis stores will begin sales in April 2019.

Ahead of this next phase of legalization in Ontario, the provincial government released new guidelines for licensing and retail sales. The Cova team is happy to announce our cannabis Point of Sale system meets all of Ontario’s requirements for tracking and reporting.  We can provide a seamless and integrated POS system in your retail dispensary to take the pain out of compliance.

While these newly released details clear up a lot, there are still some unanswered questions and some rules could change. As new information comes out, we will promptly update this page. Be sure to check out our Canada dispensary laws page for information about regulations in other states.

ONTARIO CANNABIS RETAIL LICENSING

Here’s what you need to know about the licensing process for retail cannabis stores in Canada.

WHAT GOVERNMENT ENTITY HANDLES LICENSING FOR CANNABIS STORES?

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

WHAT HAPPENS IF A MUNICIPALITY DOES NOT WANT TO PARTICIPATE IN RETAIL CANNABIS?

Municipalities can opt out of the retail cannabis program, but they must do so before January 22, 2019. This is the only opt-out window as of now, so if a municipality fails to opt out before that date the AGCO will consider them a willing participant in the industry.

WHAT KIND OF RETAIL LOCATIONS ARE AUTHORIZED?

Right now, adults in Ontario can purchase non-medical cannabis through the Ontario Cannabis Store, a publicly operated online store and delivery system. The application process for privately operated brick-and-mortar stores is open and sales are estimated to begin in April 2019.

HOW MANY RETAIL CANNABIS STORES WILL BE LICENSED IN APRIL?

Ontario’s provincial government announced that only 25 cannabis retail licenses in Ontario will be granted in April 2019 through a lottery system. This decision was made due to a shortage in supply happening all over the country. The limited lottery system is only meant to be temporary solution. Ontario is calling on the Federal government for action to address the shortage.

 



WHAT LICENSES OR AUTHORIZATIONS ARE REQUIRED FOR A RETAIL CANNABIS STORE?

There are three in total:

1) Retail Operator Licence: For people or entities that will be operating a cannabis retail store.

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

3) 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 in relation to the sale of cannabis

    • Having signing authority to purchase cannabis, enter into contracts or make offers of employment



ARE THERE ANY ELIGIBILITY REQUIREMENTS FOR THESE LICENSES?

Generally speaking, all license holders must be at least 19 years old, financially responsible, have no convictions or charges under the Cannabis Licence Act of 2018, have no current or previous ties to criminal organizations and have not lied in their application.

DO I NEED ALL THREE LICENSES AND AUTHORIZATIONS TO OPEN A RETAIL CANNABIS STORE?

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.



HOW MUCH DOES EACH LICENCE COST?

1) Retail Operator Licence: $6,000 for a 2-year term, with a $2,000 renewal fee or $4,000 renewal fee for a 4-year term.

2) Retail Store Authorization: $4,000 for a 2-year term, with a $3,500 renewal fee or a $7,000 renewal fee for a 4-year term.

3) Cannabis Retail Manager Licence: $750 for a 2-year term, with a $500 renewal or a $1,000 renewal for a 4-year term. 

 

HOW DO YOU SUBMIT AN APPLICATION?

Licence applications are accepted online through iAGCO, the AGCO’s online service delivery portal. You’ll need to a create an account if it is your first time using the site. After licensing, you can also use this portal for licence management like renewals and modifications.

WHAT DOCUMENTATION IS REQUIRED FOR A RETAIL OPERATOR LICENCE?

Applicants may be required to include:

  • Constituting Document(s)

  • Schematic Diagram

  • Details of Shareholders

  • Financial Statements

  • Tax Return and Tax Assessment

  • Personal History

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



WHAT DOCUMENTS ARE REQUIRED FOR A RETAIL STORE AUTHORIZATION?

After submitting a Retail Operator Licence application or successfully receiving one, you can move into the Retail Store Authorization process. You will need your Business Name Registration and Proof of Ownership/Tenancy (if applicable).

IS THERE ANYTHING ELSE I CAN DO TO PREPARE FOR A RETAIL STORE AUTHORIZATION?

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 licence number ready.

  • Make sure 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.



WHAT DOCUMENTS ARE REQUIRED FOR A CANNABIS RETAIL MANAGER LICENCE?

To apply for this licence, you’ll need a completed Personal History form (provided in iAGCO) that includes all of you employment and unemployment history. You will also need to provide tax returns or a tax assessment.

WHERE CAN I FIND MORE INFORMATION ABOUT ONTARIO’S RETAIL CANNABIS LICENSING PROCESS?

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

ONTARIO CANNABIS DISPENSARY LAWS

Are there education requirements for retail cannabis workers?

All individuals employed in a cannabis retail store must complete an employee training designed and approved by the AGCO Board. These education requirements have to be completed before the first day of work at any retail cannabis location. The program includes lessons on:

  • Basic cannabis knowledge

  • The socially responsible sale of cannabis

  • Rules related to the sale of cannabis

  • Legal and compliance responsibilities for cannabis retailers

What location requirements are in place for retail cannabis stores?

According to the Cannabis Licence Act of 2018, a retail cannabis location must abide by these 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.

ONTARIO CANNABIS RETAIL SALES

WHAT IS THE MINIMUM AGE OF PURCHASE FOR RETAIL CANNABIS?

The minimum age for purchasing non-medical cannabis is 19, one year older than the federal minimum age required for tobacco or alcohol.

CAN RETAIL CANNABIS STORES SELL ANYTHING OTHER THAN CANNABIS?

Any other items, like bags or cannabis accessories, must comply with advertising rules and be approved by the AGCO.

WHAT ARE THE POSSESSION LIMITS FOR RETAIL CUSTOMERS?

If proposed legislation passes, adults over the age of 19 years old will be able to have a maximum of 30 grams (about one ounce) of dried cannabis in public at any time.

WHAT ARE THE PURCHASE LIMITS FOR RETAIL CUSTOMERS?

Proposed legislation says purchase limits cannot exceed the 30 gram possession allowance, but could be limited to a lesser amount. We will update this answer when purchase limits are finalized.

WILL ONLINE CANNABIS SALES BE AUTHORIZED?

Yes; the AGCO will operate the Ontario Cannabis Store, an online marketplace and delivery system. Online cannabis sales in Ontario will begin on October 17, 2018.

WHERE CAN RETAIL CANNABIS STORES BUY WHOLESALE CANNABIS INVENTORY?

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

WHAT CANNABIS PRODUCTS CAN BE SOLD IN RETAIL STORES?

Right now, retail cannabis stores can only sell cannabis flower, tinctures, topicals and concentrates.

CAN RETAIL CANNABIS STORES SELL EDIBLES?

As of now, retail cannabis stores cannot sell edibles. The Federal government is taking a phased approach to product releases and edibles are expected to hit the market in early 2019, with the first draft of edibles regulations possibly available as early as December 2018.

CANNABIS TRACKING & REPORTING

WHAT IS REQUIRED OF CANNABIS RETAILERS WITH REGARD TO TRACKING AND REPORTING?

Retailers will be responsible for tracking cannabis as it moves in and out of their store, according to Section 81 of the federal Cannabis Act. That means 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.

DOES COVA’S POS MEET ALL TRACKING AND REPORTING REQUIREMENTS?

Yes, Cova’s Point of Sale system is made with the cannabis industry in mind and meets all 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. A POS must also monitor all system access and changes.

Cova’s POS meets all of this criteria and more, taking the hassle out of tracking and reporting. See the cannabis industry’s most loveable POS in action with a live demo.  

METRC

Reporting to your governing body is essential to running a legal (and successful) cannabis retail dispensary. Get the facts here.

What is Metrc?

Metrc is a cannabis track and trace reporting system that allows state governments to monitor commercial cannabis activity. Metrc, which stands for Marijuana Enforcement Tracking Reporting Compliance, was originally developed by software manufacturer Franwell for the state of Colorado; it is now used by the majority of states with adult-use cannabis markets.

When can I start working with Metrc?

Once you have a temporary or annual retail operator license, have created your account in Metrc and completed the required training, you may begin working with Metrc.



Am I required to report track and trace data in Metrc if I have a temporary license?

No, temporary licensees are not required to report in Metrc. However, temporary licensees are required to keep records of all track and trace information from the time they begin retail operations. Once an annual license has been approved, you must backlog all the track and trace information that you’ve recorded and begin daily reporting in Metrc.

How do I report in Metrc?

Once you’ve set up your account in Metrc, you’ll be able to enter your daily track and trace reports. There are two ways to do this.

The first way is manual reporting. This method requires logging in to your Metrc account at the end of every single business day and manually entering all the data from every transaction and other activity that occurred. Along with being time-consuming and cumbersome, manual reporting puts you at great risk of mistakenly recording incorrect information—which can lead to a serious compliance issue.

The second way is to utilize a retail-specific cannabis dispensary software that can integrate with Metrc and automatically sync reportable data from your store’s transactions and activities as they occur in real time.

How do I report if the system is down or the internet is out?

In the event that you lose connectivity to Metrc or experience an internet outage that prevents you from daily reporting, you must record all reportable information and upload it to the system within three days of restored connectivity.



What are my responsibilities with regard to inventory documentation and reconciliation?

The state mandates that retailers maintain accurate inventory records. Physical inventory must be reconciled with records at least once every 14 days. You must also reconcile physical inventory with the counts you’ve reported in Metrc at least every 14 days.




CANNABIS MARKETING LAWS IN ONTARIO

What restrictions are there on advertising cannabis in Ontario?

Canada's federal cannabis law (The Cannabis Act) includes strict marketing and advertising restrictions. It outlines five main restrictions on advertising cannabis, including:

  • No testimonials or personal endorsements (from clients, customers, employees, or celebrities);

  • Cannot appeal to children or be located anywhere with a minor audience;

  • Cannot include any pricing information except for at the point of sale;

  • Cannot use the depiction of a person, character, or animal (whether real or fiction); 

  • Cannot make cannabis look cool, glamorous, or exciting.

Can I use paid ads for my Ontario cannabis business?

The Cannabis Act says clear that 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 really limit your paid placements online, but it isn't impossible with research and due diligence. 

For paid ads on advertising networks like Google Adwords, a cannabis brand could possibly use hyper targetting to limit the age range to adults and only target users in Canada to work around federal marketing laws. Unfortunately, Google still has a strict no-cannabis policy even in legal countries like Canada. 

When crafting your online marketing strategy, be sure to talk with a lawyer to make sure you are compliant with federal and provincial cannabis advertising laws. 

I own a cannabis retail store in Ontario. Can I give away free product?

No, the federal law is very clear that no free product can be given out.

Are there any Ontario-specific cannabis marketing laws?

Ontario relies on the federal guidelines for cannabis advertising. The province does reiterate that no free product may be given away by a cannabis brand.

Ron Segev

Cannabis Business Lawyer & Founding Partner, Segev LLP

Legally reviewed by

Ron Segev

Ron Segev is the founding partner of Segev LLP. A practical-minded business lawyer with expertise in the cannabis industry, he represents cultivators, dispensaries, CBD extractors, oil extractors, food processors, media and marketing companies, consultancies, and other businesses in the legal cannabis market.

View Ron's full bio

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