Ontario Cannabis Retail Compliance Explained and Myths Busted (AGCO Q&A)

The cannabis retail industry has been growing fast in Ontario, and stores are opening up left, right, and center. Ontario is yet to catch up with Alberta, which has the highest number of stores per capita- but as new regulations are released, cannabis retail store owners must keep adapting to remain compliant. And since the cannabis industry is still in an infancy stage, laws are bound to change frequently, leading to myths and rumors that may not be true. Hence, Cova recently teamed up with CannDelta and Ontario cannabis regulatory authority, The AGCO, for a free AMA webinar to help anyone working in the cannabis retail industry navigate compliance and not waste their time and resources falling for misconceptions. This blog post highlights the points that stood out during this informative webinar, and Jeremy Locke, Director of Regulatory Compliance at the AGCO, had insightful answers to attendees' queries.

Q. What are the regulatory objectives of The AGCO in the cannabis retail space?

One of AGCO’s key regulatory objectives is to ensure that all private cannabis retail stores adhere to laws and remain compliant with regulations. Our processes have been designed to prevent people not of legal age from accessing cannabis and ensure that only authorized stores sell cannabis products to legal buyers while adhering to purchase limits. The AGCO does not issue licenses to cannabis cultivators or producers- that part of the industry is regulated and managed by Health Canada, except for cannabis farmgate stores, which must be licensed and approved by the AGCO.

Q. What are the major compliance issues that can lead to the revocation of retail licenses?

The number one compliance issue that we have dealt with over time is cannabis being visible from outside the store. We've had 28 such infractions in the past year alone. Other major issues include selling over the legal purchase limit, providing inducements to customers for purchasing cannabis, failing to comply with the registrar’s standards, and failing to meet marketing and advertisement requirements. These infractions don’t necessarily lead to revocations of a license, and that’s not our intention either. In the incident of a compliance violation, a cannabis retail store will be fined and sent a warning, but multiple infractions can indeed result in loss of license. 

Q. What is the mystery shopper program, and how does it help with compliance?

It is a very transparent process to assess the performance of retail operators concerning age verification and denying entry to anyone who appears to be not of legal age to consume cannabis. 80% of the stores were successful in this test, which means that everything happened as it should when a mystery shopper went into those stores. But 20% of the stores failed, which means that there’s still work to be done. The good news is that this program is only being used as an educational opportunity and to provide feedback to stores, thus allowing them to streamline their processes and improve cannabis compliance.

Q. With new stores opening up everywhere, compliance officers will find a reason to shut them down eventually: Myth or Fact?

That's definitely a myth- we are committed to compliance and if we have to shut down multiple stores, we would not be successful as a regulator. If we are issuing new licenses, we obviously want these retailers to open a store and succeed, and we regularly look at improving compliance trends. We want to help cannabis retailers operate their stores within the regulatory framework we have created.

Q. Regarding display windows, does the AGCO have a preferred approach other than frosting?

This one is among the most commonly held myths. The AGCO does not have a requirement to frost windows or vinyl wrap them, or the likes. Our requirements state that licensees must ensure that cannabis and accessories are not visible from the exterior. We follow an outcomes-based approach, and as long as retailers achieve this desired outcome, how they may be doing so is irrelevant.

Q. AGCO auditors monitor inventory regularly only to ensure that products are legally purchased from the OCS: Myth or Fact?

Not necessarily, but retailers can expect visits from our auditors more often as the sector matures. We must keep validating compliance with respect to record-keeping, reporting requirements, governance, and of course, inventory tracking as per the law. Moving forward, our compliance officials and auditors will have similar authorities, and it’s crucial to help facilitate whatever they want to monitor or verify- retailers must have the appropriate documentation to ensure an efficient and seamless auditing process.

Q. What is the future of curbside pickup and cannabis delivery in Ontario?

The Covid-19 emergency orders regarding curbside pickup and delivery will stay in place throughout stage 3 reopening, but beyond that, we can't say what the future will be, as that's for the government to decide. However, I must mention that there is a mechanism in place for those who wish to be vocal about maintaining some permanence with curbside pickup and delivery. The government is open to feedback on how these measures are impacting the cannabis retail sector and would welcome suggestions on streamlining processes further.

This blog post is just a synopsis of our educational webinar with the AGCO, where Jeremy Locke answered various other questions and busted myths about cannabis retail compliance in Ontario. We also received multiple follow-up questions, watch out for the answers in a subsequent blog post. But if you missed our AGCO AMA webinar last month and would like to learn more in-depth about where Ontario cannabis regulations are heading, click below to watch the recording.