What is a “Farmgate” store?
Under Ontario’s legal cannabis framework, federally Licensed Producers are eligible to apply to the Alcohol and Gaming Commission of Ontario (“AGCO”) to operate a single Authorized Retail Store at a production facility located in Ontario. These Farmgate Stores are licensed and regulated by the AGCO and are subject to the same requirements as all other authorized stores, including purchasing cannabis products wholesale through the Ontario Cannabis Store (“OCS”).
However, to support the unique needs of these stores, the OCS developed an operating framework to enable Licensed Producers to sell cannabis products to the OCS that are intended for sale at the Farmgate Store, without first having to ship that product to the OCS Distribution Centre (“Farmgate Transaction”). As a result, Farmgate Stores located at production facilities across Ontario are able to make their products available directly to adult consumers, either in-person or online for delivery or customer pick-up, subject to AGCO regulatory rules.
Who Can Participate in Farmgate?
Before a Licensed Producer can commence retail sales at a Farmgate Store, they must hold:
- The appropriate licence issued by Health Canada that enables the sale of cannabis products to a provincially authorized distributor, such as the OCS.
- The appropriate licence(s) and authorization issued by the AGCO that provide the purchase of cannabis from the OCS and the operation of a cannabis retail store.
Farmgate Store operators must also enter into contractual arrangements with the OCS that enable the sale of cannabis to the OCS and the purchase of cannabis from the OCS.
In addition to leveraging the Farmgate Transaction, Farmgate Store operators enjoy the same rights as all other Authorized Retail stores in Ontario, including the ability to purchase other cannabis products through OCS Wholesale (e.g., products listed by the OCS that are produced by other Licensed Producers).
What Steps are Involved in the Farmgate Process?
PHASE 1 – LICENSED PRODUCER
The Licensed Producer enters into a Supply Contract with the OCS allowing the sale of products from the Licensed Producer to the OCS.
- All products intended for sale at the Farmgate Store must be listed with the OCS through the Product Call process.
- When submitting to the Product Call, the Licensed Producer must indicate on their submission if the SKUs are primarily intended for re-sale at a Farmgate Store.
SKUs to Support Farmgate Store Opening
- Notwithstanding the above, the OCS may, at its sole and absolute discretion, list up to 6 new SKUs in accordance with the Product Call timelines to support the Licensed Producer in establishing its Farmgate Store.
- Licensed Producers that operate a Farmgate Store may receive additional listings in a controlled and phased approach consistent with Product Call timelines based on the performance of the store in the first few months post-opening.
Learn more about the Product Call Process.
PHASE 2 – OCS
The OCS purchases cannabis products from the Licensed Producer for resale to the Authorized Farmgate Store and facilitates the Farmgate Transaction.
- The OCS will issue a Purchase Order to the Licensed Producer for product based off anticipated demand at the Farmgate Store.
- The Licensed Producer is responsible for packing the product in the Purchase Order and moving it to a designated space on-site of its facility (separate from other inventory held) where the OCS takes title to the product.
PHASE 3 – AUTHORIZED FARMGATE STORE
The Authorized Farmgate Store holds a Retail Store Authorization and enters into a Retailer Agreement with the OCS, allowing the Farmgate Store to purchase products from the OCS.
There are two ways that Farmgate Store operators can purchase cannabis products from the OCS:
- Farmgate Order Portal: Submit a wholesale order for products held in the designated space using the Farmgate Order Portal. Once an order is received and confirmed by the OCS, the Licensed Producer may move the product to the Farmgate Store on behalf of the OCS.
- B2B Portal: Purchase products from the OCS Product Catalogue using the OCS Wholesale B2B Portal. Products purchased from the B2B Portal will be shipped from the OCS Distribution Centre.