Retail Crash: Ontario Regulator Warns Stores Against Diverting Cannabis To Ilegal Markets

The Alcohol and Gaming Commission of Ontario (AGCO), which is also responsible for cannabis shops, warned licensed retailers against selling their inventory to “unlicensed third parties upon the closure of the store,” reported MJBizDaily. The warning came “in response to an offer from a company called Leafythings Canada to buy struggling stores’ cannabis inventory.”

Who Or What Are Leafythings?

Leafythings, a “web platform, mobile application, and advertising medium” focused on events, advertising and grassroots marketing, showcased what appeared to be illicit cannabis businesses, delivery services and brands.

In September, the firm launched a “retailer support program,” in light of Ontario’s challenging cannabis retail market.

“Due to the rise of cannabis store closures on the horizon in the Ontario cannabis marketplace, Leafythings has discovered the lack of an efficient orderly closure program existing for struggling retailers and is proposing a retailer support program,” stated the company in a press release.

The company “will begin its retail cannabis store support program by buying all available inventory from stores who wish to wind down in a timely fashion,” said Jeffrey Neil, Leafythings’ director of community engagement.

Cannabis In Bulk, By Unlicensed Third Parties

However, according to the AGCO email sent Thursday to licensed cannabis retailers procured by MJBizDaily, Leafythings’ program operates outside of the regulated market.

“It is the AGCO’s understanding that this program involves the solicitation of cannabis retailers for the purpose of purchasing cannabis in bulk by unlicensed third parties upon the closure of the store,” the regulator noted.

“Licensed retailers must comply with the law “to ensure there is no diversion of legal cannabis products to the illicit market. (...) Failure to properly dispose of inventory before you close may result in compliance activity by the AGCO or action from other law enforcement agencies.”

Photo by Yalın Kaya on Unsplash.