Online cannabis retail regulations in Alberta highlight fight against illicit websites

Image depicting online shopping

The government of Alberta, Canada, officially handed over responsibility for online cannabis sales and delivery to the private sector on Tuesday, with a handful of companies prepared to start marijuana e-commerce and more on the way.

At the same time, Alberta cannabis retailers are being required to take steps meant to give their new, online operations an air of trustworthiness compared to underground mail-order marijuana websites.

Until now, online cannabis sales and delivery had been the sole domain of the provincial government agency, Alberta Gaming, Liquor and Cannabis (AGLC), which also regulates Alberta’s private-sector marijuana retailers.

AGLC announced last December after a public consultation earlier in the year that its AlbertaCannabis.org online retailer would be shutting down and cannabis e-commerce handed over to the private sector.

“The growing popularity of e-commerce, partly due to COVID-19, is a driving force for the industry as they adapt to consumer demands,” the AGLC’s CEO, Kandice Machado, said during a Monday media briefing.

“This update will provide licensed cannabis retailers new revenue opportunities and enhance consumer convenience.”

Major Canadian cannabis retail chain High Tide is one of a handful of companies launching online sales on Tuesday, according to Omar Yar Khan, the company’s senior vice president of corporate and public affairs.

Khan said the company would be starting with online sales to customers in Calgary, Edmonton and Red Deer.

“Then, over the coming weeks, we’ll be expanding (online sales) across our broader Canna Cabana (store) network in Alberta.”

Concern about illicit websites

The change includes new requirements intended to help customers distinguish licensed online cannabis retailers from illicit mail-order websites.

“One of the most important considerations will be how to ensure Albertans know they are buying from a licensed online site,” said Dave Berry, the AGLC’s vice president for regulatory affairs.

To that end, the AGLC will require online cannabis retail websites to show:

  • Their license numbers.
  • The names and addresses of their licensed physical stores.
  • Public education material.
  • A link to the AGLC’s cannabis licensee search webpage.

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Berry noted that illegal online cannabis retailers could offer to ship across Canada, might “(feature) packaging for products that could appeal to young persons” or offer to sell more than 30 grams of cannabis or the equivalent.

Federal cannabis regulator Health Canada has warned consumers against buying cannabis from illicit sellers in light of several cases in which children were hospitalized after eating illegal marijuana edibles.

“The primary opportunity we see is that it gives us another tool to be able to eat into the market share of the illicit market,” High Tide’s Khan said.

“We know that illicit (cannabis) delivery services and websites are quite active in Alberta,” he added.

“And, up until now, we’ve been operating with one arm tied behind our back in terms of competing with them, because we haven’t been able to offer e-commerce and delivery.”

Five companies licensed for start of online sales

The AGLC’s Machado said that the province has more than 750 licensed brick-and-mortar cannabis retailers.

However, those stores must receive special AGLC endorsements to their retail licenses in order to conduct online sales – and online sales are available only to retailers with a physical store location.

Five companies with a total of 74 retail locations have received those license endorsements so far, the AGLC’s Berry said.

“Another 14 companies representing 18 locations in the province are currently being reviewed,” he added.

“We expect that over the next few weeks, additional Alberta retailers will also receive an endorsement and launch online sites.”

Retailers must submit their online sales process for an AGLC inspection to get approved.

Deliveries can be fulfilled by store staff or by a common carrier such as national courier, shipping or mail services, but third-party delivery companies are not permitted.

Age-gating requirements

AGLC is also requiring an age-gating scheme to screen customers who order from licensed online cannabis stores. The scheme goes beyond the simple age-attestation menus common in many other jurisdictions.

“In-store identification verification or videoconferencing are some of the options that may be used to ensure legal adults are verified to make purchases,” Berry told reporters.

High Tide’s Khan said the retailer will allow shoppers to set up an online profile in person at a store, where ages can be verified, or to go through an online verification process.

“We have been working on this for the past three months now, ever since they came out with their draft (regulatory) changes,” Khan said.

“We’re very confident that we’re going to be able to move forward in a compliant manner.”

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