Ontario missing small amount of legal cannabis; vetting consultants extended

A small amount of legal recreational cannabis products in Ontario have gone unaccounted for, according to the provincial regulator responsible for adult use in Canada’s largest market.

Roughly 1,428 units of cannabis products were “lost or stolen” out of 13.6 million units in the provincial supply channel from September 2019 to July 2020, a spokesperson for the Alcohol and Gaming Commission of Ontario (AGCO) told Marijuana Business Daily.

asked the AGCO about the missing products after Ontario’s auditor general called out the provincial cannabis retail regulator last month for not properly monitoring cannabis inventory.

“While ‘leakage’ is often a common occurrence in any retail environment, we would conduct an audit and/or investigation to assess what happened to the product and the root cause,” the AGCO spokesperson said.

Regarding the discrepancy in Ontario’s inventory, a Health Canada spokesperson acknowledged there will be instances of discrepancies between reported and actual inventories in any regulatory framework.

“Health Canada works proactively with regulated parties to ensure that they have appropriate processes and controls in place to meet their record keeping and reporting obligations – and that remedial action is taken when deficiencies are identified,” the spokesperson said via email.

In her December report, Auditor General Bonnie Lysyk wrote that Ontario marijuana stores had 84,228 fewer units of product on hand than the amount recorded in their inventory system over an 11-month period starting in September 2019.

However, according to the AGCO spokesperson, the 84,228 figure represents the total of “imbalances” that often can occur in retailer point-of-sale systems and actual inventory counts.

“An imbalance does not necessarily mean that product is missing,” the spokesperson said.

“It can be due to many different things such (as) a data entry error by staff, or the product is in transit. When such an imbalance occurs, the retailer is required to notify us of the imbalance and the underlying cause, including if it is lost or stolen.”

The Ontario regulator pledged to take a number of steps to rectify issues raised by Lysyk.

The auditor general’s report also revealed that Ontario had hired consulting firms to conduct eligibility assessments for new cannabis store applicants.

Those contracts, which were set to expire near the end of 2020, have been extended to November 2021, the AGCO told MJBizDaily.

The consulting firms are:

  • Froese Forensic.
  • Duff and Phelps.
  • PricewaterhouseCoopers.
  • Ernst & Young.
  • Deloitte.

“The consultants are expected to work at the same pace” when reviewing applications, the spokesperson said. “The amount of time it takes to complete a specific file will depend on its complexity and unique facts.”

“An assessment will take place within two years to determine if a new procurement is warranted.”

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at mattl@mjbizdaily.com.