In reversal, Ontario cannabis regulator to allow white-label retail deals

Image of white-label gel caps

The cannabis retail regulator in Ontario, Canada, is set to reverse course on its recent decision to ban retailers from creating in-house brands and white-label products, MJBizDaily has learned.

The move, if implemented, would allow cannabis stores in Canada’s largest market to continue signing agreements with producers to create such products, according to an email from the Alcohol and Gaming Commission of Ontario (AGCO) obtained by MJBizDaily.

Industry officials welcomed the reversal.

In February, the AGCO announced its intention to prohibit retailers from co-branding cannabis or accessories with producers.

The move would have meant products branded with a retailer’s name or white-label products produced under a special brand were off the table.

Existing white-label products could have continued to be sold, but the provincial retail regulator said it “(expected) retailers to exit any current agreements and not enter any new agreements with (producers) once the updated standards come into effect.”

The new rule was to take effect at the end of June, along with other regulatory changes such as updated rules surrounding material inducements from licensed cannabis producers.

However, the AGCO now “will be announcing an amendment to these standards, permitting retail licensees to enter into agreements with (producers) for store brand or white label cannabis products,” according to the email from an AGCO manager this week.

The regulatory reversal on white-label products “is a result of input from the cannabis sector and reflects the AGCO’s ongoing commitment to engagement with stakeholders,” the email noted.

In a statement to MJBizDaily, an AGCO spokesperson said the regulator “is currently reviewing the matter and will share more information with the sector in the near future.”

Several Canadian cannabis retailers with Ontario operations had already launched, or planned to launch, white-label or house brands, including High Tide, Sessions Cannabis and Fire & Flower.

The AGCO’s move to ban those white-label products came as a surprise, said Mimi Lam, co-founder of Ontario cannabis retailer Superette, which has white-label products for sale at its stores and others.

Lam said she was part of a group of cannabis industry stakeholders who pushed back against the AGCO’s white-label position.

With some retailers already having established white-label partnerships, she said, “the requirement for operators to get out of (white-label products) by June 30 would have had material impacts to businesses on both sides of the equation and has material impact to future business as well.”

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Lam said she was glad the AGCO took industry stakeholders’ concerns into account.

“It shows a good sign that they’re willing to work collaboratively on making decisions that might make sense for the industry,” Lam said.

White-label partnerships, she added, “could potentially result in really interesting products and brands going forward.”

Solomon Israel can be reached at solomon.israel@mjbizdaily.com.