Canada: Ontario gives green light to “white label” deals

The Ontario Alcohol and Gaming Commission (AGCO) in Canada, announced new rules related to recreational cannabis, which will allow agreements between retailers and licensed producers (LPs) to market private label (or 'white label') products. According to Markets Insider, the move was well-received among Canada's largest retailers and was supported by the Ontario Chamber of Commerce. 

The changes, which take effect this summer, were based on industry feedback, culminating in the creation of an additional exemption that will allow for agreements between retailers and licensed producers (LPs) for the marketing of white label products.

On the website of the Commission, which regulates recreational cannabis in Canada, we can read that: “AGCO takes feedback from the industry seriously. As the cannabis sector evolves, AGCO will continue to be responsive, including supporting innovation and flexibility in the sector, regulating in accordance with the principles of honesty and integrity and in the public interest.”

At the end of 2021, there were already some rumors that this possibility could come to fruition, for the benefit of the sector. According to the article of MJBizDaily, As of December 2021, this market opening to white labels would be something analysts anticipated, and that analysts will play a key role in Canada's cannabis extracts market as companies look for ways to capitalize on the crucial segment without spend a lot."

New measures welcomed

High Tide Inc. (TSXV: HITI) (Nasdaq: HITI) (FSE: 2LYA), Canada's largest cannabis retailer, with 113 retail stores currently operating across the country, including 34 in Ontario, announced "Welcome AGCO to amend the Registrar Standards for Retail Cannabis Stores, effective June 30, to allow retail cannabis licensees to enter into agreements with licensed producers of store-brand, or white-label, cannabis products. The change comes after extensive consultation with industry stakeholders and was supported by the Ontario Chamber of Commerce.”

“AGCO has shown that it is willing to listen to stakeholder concerns. Today's revisions to the standards will mean that when it comes to white label products and store brands, Ontario cannabis retailers will be treated on an equal footing with other retail sectors. The new rules will also make it easier for retailers large and small to differentiate their products, brands and stores,” said Raj Grover, President and CEO of High Tide.

Several companies already resort to “white-labeling”

As reported by Business Insider, several other companies are operating on a white-labelling basis, such as BevCanna Enterprises Inc. (OTC:BVNNF), which announced an agreement with Vancouver-based company Averi Health Products to produce a portfolio of cannabis-infused beverages in the Canadian market, employing BevCanna's white label partnership model, that allows unlicensed partners to enter the cannabis market in the country transparently and compliantly.

MediPharm has teamed up with Sunco Green Pharmaceutical Pty Ltd to supply the Australian medical cannabis market and New Zealand with GMP certified cannabis products. The two-year white label deal was MediPharm's 12th deal to supply cannabis to Australia, according to information made available by Business Insider. Valens Company Inc. (NASDAQ:VLNS) and Fire & Flower Holdings Corp. (NYSE:FAF)(OTC:FFLWF), a cannabis products retailer, confirmed a white label partnership late last year to manufacture Fire & Flower CBD oils for distribution in several Canadian states.