The licenced operator of a chain of cannabis retail stores in Ontario is facing a $200,000 fine after the Alcohol and Gaming Commission of Ontario (AGCO) found it was giving certain cannabis producers preferential treatment in exchange for a fee or cut of profits.
The AGCO says Cannabis Xpress not only violated the province’s anti-inducement laws, but took great lengths to try and cover up the violations which occurred over a span of 30 months.
“The licensee repeatedly sought the participation of over a dozen LPs (licenced producers) in so-called “data service” or other such agreements,” the AGCO wrote in a release Monday.
“These agreements were actually an indirect means of requesting and accepting prohibited inducements where, for a fee or a percentage of product sales, Cannabis Xpress gave preferential treatment to products from LPs that had executed such unlawful agreements to the disadvantage of those that had not.”
The fine comes after the AGCO reviewed over 82,000 documents during compliance inspections.
Providing an example of what was transpiring the AGCO explained that Cannabis Xpress stores “refused to stock an LPs product unless they agreed to enter into prohibited inducement agreements and promoted the sale of cannabis products from producers who entered such inducement deals.
“It was found that the licensee attempted to disguise these illegal payments as agreements for the sale of data for business intelligence purposes, which are permissible under the Standards.”
“Provincial law and AGCO standards include anti-inducement regulations to protect consumer choice and maintain a level playing field for small businesses in the cannabis retail industry,” Dr. Karin Schnarr, Registrar and CEO of the AGCO said in a release.
“The AGCO monitors the sector’s compliance with these requirements and will take strong action against any licensee found to be engaging in illegal behaviour.”
