Ontario cannabis operator fined $200K for alleged illegal agreements

A group convened by the federal government to study the act that legalized cannabis is recommending the country review the excise taxes it charges pot companies. (Tara Walton/The Canadian Press)

A licenced cannabis operator in Ontario has been fined $200,000 for allegedly trying to enter into illegal agreements with producers that would have given them a preferential advantage.

According to the Alcohol and Gaming Commission of Ontario (AGCO), the operator Cannabis Xpress, who owns a chain of retail stores in the province, repeatedly tried to get over a dozen cannabis producers to enter into inducement agreements.

An inducement agreement occurs when an operator makes a deal with a producer in exchange for promoting or increasing sale of a particular product, thus offering them preferential treatment.

This is illegal under the provincial Cannabis Licence Act.

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The AGCO said that over a 30-month period, Cannabis Xpress tried to make agreements offering “data service” to producers.

“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.”

After reviewing 82,000 relevant documents, the ACGO fined the operator $200,000. The operator can appeal the decision to an independent tribunal.