As we’ve written before, Canada’s cannabis industry is one of the first in the world and involves a complex set of federal and provincial restrictions for producers and sellers. Ontario’s regulation of cannabis retailers has continued to develop over the past few years, including the recent addition of rules governing cannabis delivery and curbside pick-up services. Businesses must be cognizant of these requirements to ensure their continued compliance with Ontario’s cannabis regulatory scheme.
Cannabis governance in Ontario
In Canada, the production of cannabis is regulated on a federal level, while retail sales are governed on a provincial level. In Ontario, cannabis retail store regulation falls under the purview of the Alcohol and Gaming Commission of Ontario under the Cannabis Licence Act, 2018 and Regulation 468/18. As part of its mandate, the Alcohol and Gaming Commission is responsible for licensing eligible retail store operators and managers through Retail Store Authorizations.
Delivery-only business model prohibited for cannabis retailers
Offering delivery and curbside pick-up service is a useful way for cannabis retailers to expand their service model. However, Ontario cannabis retailers are not permitted to operate entirely, or even predominantly, as a delivery business. Under rules introduced earlier this year by the Alcohol and Gaming Commission, retailers must still maintain a physical store. Retailers that operate more than one location are prohibited from creating a centralized hub for cannabis deliveries.
Setting up a retail location requires understanding and compliance with certain requirements, including minimum distances from schools, physical space limitations, and access considerations.
Prospective cannabis retailers should also be aware that not all Ontario municipalities permit cannabis stores to operate within their boundaries. The Alcohol and Gaming Commission maintains an up-to-date database and accompanying map of all Authorized Cannabis Retail Stores in Ontario, as well as a list of municipalities that prohibit cannabis retail operations.
Existing cannabis delivery rules enhanced
The Alcohol and Gaming Commission has confirmed that the restrictions imposed on cannabis delivery services during COVID-19 are still in effect and have been enhanced by additional requirements. These rules are intended to prevent retailers from transitioning to a delivery-only business model.
As of March 15, 2022, the rules for cannabis delivery in Ontario include the following:
- Cannabis can only be delivered by the retail store location that has been authorized to do so (or its employees). Retailers cannot use third-party delivery services.
- Delivery orders must be placed at a specific retail location (i.e. not a centralized “delivery hub”). The order can only originate from that store and must be fulfilled using products that are stored on-premises.
- Cannabis cannot be removed from a store for delivery unless an order has been received. If the delivery is not complete, the cannabis must return to the same store that received the order, on the same day. It can only be removed from the store on the next day on which the delivery is attempted again.
- Cannabis deliveries cannot be made after-hours – i.e., deliveries may only take place at a time when physical cannabis retail locations are open to the public.
- Deliveries may only be made to a residence or private location within Ontario (e.g. a hotel room) and must be to the address specified in the particular order.
- A person receiving a cannabis delivery must be at least 19 years old. If they appear to be under 25 years old, the licensed retailer (or employee) completing the delivery must confirm that the customer is at least 19 years old using proper identification.
- Retailers must maintain records of all deliveries.
Requirements for cannabis retail websites and apps
The Alcohol and Gaming Commission has also created requirements for retailers using websites or phone apps to allow customers to place delivery or curbside pick-up orders, including the following:
- Websites, apps, or other online platforms used for cannabis retail purposes must enable licensees to take reasonable measures to ensure that customers accessing the service are at least 19 years old.
- Cannabis retail licensees must ensure their websites, apps, or other online platforms display the official Ontario cannabis retail seal. The retailer’s Retail Store Authorization information must also be readily available on all platforms, including:
- The authorization number;
- The authorization holder’s name;
- The store’s operating name; and
- The store’s address.
Experienced legal guidance crucial for ensuring regulatory compliance
To help cannabis retail operators navigate Ontario’s regulatory requirements, the Alcohol and Gaming Commission offers a Cannabis Retail Regulation Guide. The guide provides information about retail licencing and can help businesses apply for a Retail Store Authorization.
However, it is important to note that cannabis is a heavily-regulated industry and is subject to a number of ever-changing rules and restrictions. Retailers can face substantial liability for non-compliance with provincial and federal legal requirements. Having the assistance of a business lawyer who understands the cannabis industry helps companies minimize risk and maximize profitability.
Contact Bader Law for Experienced Advice on Cannabis Business Licensing & Compliance
Bader Law helps businesses navigate the complexities of the cannabis industry in Ontario. Our business lawyers assist clients in obtaining Retail Store Authorizations and ensuring ongoing compliance with the shifting changes in cannabis regulation. We create dynamic, creative legal solutions for cannabis newbies and experienced operators alike. Our firm proudly serves clients in Mississauga and throughout the Greater Toronto area. To schedule a consultation, call us at 289-652-9092 or reach out online.