The Canadian cannabis industry has experienced significant growth and evolution in the last few years with its legalization. From 2018 to 2023 market size has grown 46% on average.
However, this expansion has caused some emerging concerns around pay-to-play in Ontario, Canada and its impact on fair market access.
What’s the pay-to-play cannabis for Ontario all about it? We’ll dive a little deeper into this claim.
Pay to play scheme for Cannabis
A recent article by the Marijuana Business Daily was one of the first companies to draw attention to the issue. Some cannabis insiders have claimed that a pay-to-play retail scheme exists in Ontario.
The scheme allegedly involved paying retailers for shelf space. This is called slotting fees – a term popular in the United States but fairly new in Canada.
However, in Ontario, regulators prohibit producers from paying for favourable treatment.
But to get around these restrictions brands are paying companies for their sales data to get around directly paying for shelf space. It draws a very grey line legally.
Essentially, this works by; Cannabis producers would pay stores for their consumer data. The stores would then share the data along with providing special treatment like prime shelf space.
The impact of the scheme
The pay-to-play raises some serious concerns about fair market access and competition for Ontario’s cannabis industry.
In order for companies to gain access to shelf space, small producers are left with no choice but to comply or risk being excluded from major retail chains.
Many smaller producers are unable to afford these costs.
Smaller licensed producers, startups and craft growers could face significant hurdles in securing retail space.
It would create a market gap between well-funded companies and those getting started. Everyone should have fair market access.
What’s the solution?
To maintain a fair and competitive cannabis market, several steps need to be taken:
The AGCO and other regulatory authorities should conduct thorough investigations into the alleged pay-to-play retail scheme, ensuring compliance with existing regulations.
Transparency and Accountability
Enhancing transparency in the licensing process and establishing clear guidelines and criteria for awarding retail licenses can help prevent unfair practices.
It is crucial to create a level playing field where market access is based on merit and compliance, rather than financial influence.
Collaboration and Advocacy
Industry associations and advocacy groups should actively collaborate to address concerns related to fair market access.
By collectively advocating for equitable regulations and working with regulators, the industry can help foster an environment that supports diversity, innovation, and healthy competition.
Support for Smaller Players
Initiatives should be developed to provide support and resources to smaller licensed producers and craft growers.
Mentorship programs, access to capital, and technical assistance can help level the playing field and foster the growth of emerging businesses.
Wrap up the pay-to-play
The pay-to-play scheme in Ontario’s cannabis industry raises concerns about fair market access and competition.
Smaller producers face challenges in securing retail space, creating a gap between well-funded companies and startups.
To address this, regulatory scrutiny, transparency, and collaboration are essential. Support initiatives for smaller players can level the playing field and foster growth.
By taking these steps, Ontario’s cannabis industry can ensure fair opportunities and a competitive market.