Regulation - LGIC
Proposed regulatory amendments to O. Reg. 468/18 under the Cannabis Licence Act, 2018
Regulation Number(s):
Ontario Regulation 468/18, Ontario Regulation 33/18
Instrument Type:
Regulation - LGIC
Bill or Act:
Cannabis Licence Act, 2018, Ontario Cannabis Retail Corporation Act, 2017
Summary of Proposal:
The Ministry of the Attorney General (MAG) is seeking feedback on proposals for regulatory amendments that would support retail store authorization (RSA) holders.
MAG is proposing to amend Ontario Regulation 468/18 under the Cannabis Licence Act, 2018 (CLA) to:
• Authorize the transfer of an RSA if certain conditions are met;
• Authorize the sale of cannabis inventory between RSA holders in certain limited circumstances;
• Provide more flexibility for cannabis retail stores to access spaces shared with other businesses in certain circumstances;
• Change requirements for verification of tax compliance status to allow auto-renewal of cannabis retail operator licences (ROLs); and
• Clarify that store layout requirements for cannabis retail stores apply on an ongoing basis.
The government is also proposing to make consequential amendments to Ontario Regulation 33/18 under the Ontario Cannabis Retail Corporation Act, 2017 (OCRCA).
Amendments to O. Reg 468/18 under the CLA
RSA Transfers and Inventory Sales:
The Less Red Tape, Stronger Economy Act, 2023 amended the CLA to enable regulations to be made allowing for the transfer of cannabis retail licences and authorizations and the transfer or sale of cannabis inventory between retailers in prescribed circumstances. Currently, retailers acquiring an existing cannabis store that is owned by another licence holder must apply for a new RSA, and the application is reviewed as if it were for a new cannabis retail store.
MAG is proposing to allow transfers of RSAs between holders of ROLs.
Retailers who are closing a store and who have requested that the Registrar cancel their RSA would be able to sell all or part of the remaining inventory to one other ROL holder. Any unsold inventory would still have to be disposed of as specified by the Alcohol and Gaming Commission of Ontario (AGCO) Registrar's Standards for Cannabis Retail Stores.
Store Layout Requirements:
Section 9 of O. Reg 468/18 permits cannabis retail stores to access shared commercial space in enclosed shopping malls provided there is no direct access to or from any other business; however it does not otherwise permit shared spaces such as rear hallways leading to washrooms and loading areas. This limits retailers' choices for retail locations and creates barriers to market entry. MAG is proposing to amend the current restrictions to provide more flexibility for retailers to have access to employee-only spaces shared with other businesses, while maintaining a focus on security of cannabis product and protection of youth.
Tax Compliance Verification:
Section 6 of O. Reg 468/18 effectively requires that the AGCO confirm tax compliance status for each application for the renewal of a ROL before the licence can be renewed. Consequently, the AGCO has been unable to implement an auto-renewal process, similar to that which exists for persons licensed under the Liquor Licence and Control Act, 2019. The proposed amendments would provide for an auto-renewal process, which would streamline renewal applications and reduce turnaround times. If the proposed changes are made, applicants for ROL renewals would be required to attest that they are compliant with all tax obligations. This would result in decreased processing times for businesses.
Housekeeping Amendment:
The proposed amendment to section 9 of the regulation would clarify that the store layout requirements for cannabis retail stores apply on an ongoing basis as a condition of an RSA.
Amendments to O. Reg 33/18 under the OCRCA
MOF is proposing to make consequential amendments to enable the sale/transfer of cannabis inventory between retail stores. Section 2 of the OCRCA provides the Ontario Cannabis Retail Corporation with an exclusive right to sell cannabis in Ontario to the holder of an RSA. An amendment to the regulation would provide an exemption to the exclusive right in cases where inventory sales between cannabis retail stores are permitted by the CLA.
MAG is proposing to amend Ontario Regulation 468/18 under the Cannabis Licence Act, 2018 (CLA) to:
• Authorize the transfer of an RSA if certain conditions are met;
• Authorize the sale of cannabis inventory between RSA holders in certain limited circumstances;
• Provide more flexibility for cannabis retail stores to access spaces shared with other businesses in certain circumstances;
• Change requirements for verification of tax compliance status to allow auto-renewal of cannabis retail operator licences (ROLs); and
• Clarify that store layout requirements for cannabis retail stores apply on an ongoing basis.
The government is also proposing to make consequential amendments to Ontario Regulation 33/18 under the Ontario Cannabis Retail Corporation Act, 2017 (OCRCA).
Amendments to O. Reg 468/18 under the CLA
RSA Transfers and Inventory Sales:
The Less Red Tape, Stronger Economy Act, 2023 amended the CLA to enable regulations to be made allowing for the transfer of cannabis retail licences and authorizations and the transfer or sale of cannabis inventory between retailers in prescribed circumstances. Currently, retailers acquiring an existing cannabis store that is owned by another licence holder must apply for a new RSA, and the application is reviewed as if it were for a new cannabis retail store.
MAG is proposing to allow transfers of RSAs between holders of ROLs.
Retailers who are closing a store and who have requested that the Registrar cancel their RSA would be able to sell all or part of the remaining inventory to one other ROL holder. Any unsold inventory would still have to be disposed of as specified by the Alcohol and Gaming Commission of Ontario (AGCO) Registrar's Standards for Cannabis Retail Stores.
Store Layout Requirements:
Section 9 of O. Reg 468/18 permits cannabis retail stores to access shared commercial space in enclosed shopping malls provided there is no direct access to or from any other business; however it does not otherwise permit shared spaces such as rear hallways leading to washrooms and loading areas. This limits retailers' choices for retail locations and creates barriers to market entry. MAG is proposing to amend the current restrictions to provide more flexibility for retailers to have access to employee-only spaces shared with other businesses, while maintaining a focus on security of cannabis product and protection of youth.
Tax Compliance Verification:
Section 6 of O. Reg 468/18 effectively requires that the AGCO confirm tax compliance status for each application for the renewal of a ROL before the licence can be renewed. Consequently, the AGCO has been unable to implement an auto-renewal process, similar to that which exists for persons licensed under the Liquor Licence and Control Act, 2019. The proposed amendments would provide for an auto-renewal process, which would streamline renewal applications and reduce turnaround times. If the proposed changes are made, applicants for ROL renewals would be required to attest that they are compliant with all tax obligations. This would result in decreased processing times for businesses.
Housekeeping Amendment:
The proposed amendment to section 9 of the regulation would clarify that the store layout requirements for cannabis retail stores apply on an ongoing basis as a condition of an RSA.
Amendments to O. Reg 33/18 under the OCRCA
MOF is proposing to make consequential amendments to enable the sale/transfer of cannabis inventory between retail stores. Section 2 of the OCRCA provides the Ontario Cannabis Retail Corporation with an exclusive right to sell cannabis in Ontario to the holder of an RSA. An amendment to the regulation would provide an exemption to the exclusive right in cases where inventory sales between cannabis retail stores are permitted by the CLA.
Analysis of Regulatory Impact:
The proposed changes are not anticipated to result in new compliance costs and are expected to reduce regulatory burden for private cannabis retailers by streamlining current AGCO licensing processes, providing retailers with more choice in locating retail stores and potentially reducing financial losses due to the closure of cannabis retail stores. Estimates of potential fee changes or reductions in processing times cannot be determined until the proposed regulations have been approved and assessments can be made of the changes needed to operational processes and systems required for implementation.
Further Information:
Registrar's Standards for Cannabis Retail Stores
Proposed legislative amendments to the Cannabis Licence Act, 2018 regarding licence and inventory tr
Proposal Number:
24-MAG002
Posting Date:
March 25, 2024
Comments Due Date:
May 9, 2024
Contact Address:
720 Bay St., 3rd Floor,
Toronto, ON
M7A 2S9
Toronto, ON
M7A 2S9