Cannabis, liquor industry split on ending prohibition on ‘pay to play’ store promotions

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A proposed end to a ban on manufacturers buying favours from retailers is being embraced by Alberta’s cannabis industry as a way to break what they call marketing shackles not imposed on the booze sector.

But many in the province’s alcohol industry have voiced opposition to Alberta Gaming Liquor Cannabis’ proposal to end the prohibition on inducements, or what those in the industries call “pay to play,” that currently stops producers from purchasing prized spots in stores.

“After analyzing the feedback from stakeholders (last fall), AGLC is considering recommending the repeal of the inducements and prohibited relationships segments in the Alberta Gaming, Liquor and Cannabis Act,” states AGLC vice-president Dave Berry in a Feb. 22 letter to the industry.

The push to end that prohibition for both the cannabis and liquor industries came from those sectors, said AGLC spokesperson Heather Holmen.

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While they say doing away with inducements could unfairly tilt the playing field to producers who can better afford to pay for them, many players in Alberta’s cannabis industry view the change as a way towards less regulation and more power to advertise.

It’s an ability tightly constricted by federal law, noted Kieley Beaudry, president of the Alberta Cannabis Micro License Association.

“I think it’s great, it’s less regulation,” she said, adding any new promotions would be visible in-store only.

“I can’t even give free product to retailers for their employees to test like liquor stores can . . . if you don’t have strong branding, you’re nowhere.”

Producers are looking for certainty in what constitutes inducements, which could include tours for retailers of growing facilities, said Beaudry, who operates Edmonton’s Parkland Flower which markets seeds.

If that ban is overturned, there’s a chance for badly-needed sponsorships or even “safe consumptions sites” on producers’ facilities similar to breweries’ tap rooms, she added.

Inducements could help lower costs for retailers by providing stores with things like fridges and accessories with savings passed on to the consumers, said Ryan Ross, owner of Lake City Cannabis shop in Chestermere.

“A local grower got their wrists slapped for handing out vaporizer batteries (to retailers),” said Ross.

“We could better engage with growers, while advertising items that might benefit consumers, like cheaper batteries.”

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The AGLC is currently conducting a second phase of consultation with the industry that began late last month.

In surveys conducted last fall, most respondents in the cannabis industry embraced changes with 69 per cent of them saying “yes” to them while just 16 per cent registering “no.”

Results on the liquor side were less clear, with some polls showing support for ending the inducement ban while others were more opposed.

“We’re seeking more clarity with the second consultation,” said the AGLC’s Holmen.

But some in the liquor industry, particularly the smaller players, say ending that ban would squeeze them out of what’s already a precarious foothold.

“It’s extremely, extremely bad for small manufacturers like ourselves who can’t afford to buy people to sell our products — it’s why the prohibition was put in place in the first place,” said Mark Freeland, owner of Calgary’s Two Rivers Distillery.

“We almost have to change our market plan to not sell our product to liquor stores.”

Two Rivers Distillery’s Mark Freeland poses for a photo at his distillery in Southeast Calgary on Wednesday, March 3, 2021.
Two Rivers Distillery’s Mark Freeland poses for a photo at his distillery in Southeast Calgary on Wednesday, March 3, 2021. Photo by Azin Ghaffari/Postmedia

Freeman said he’s aware the quid-pro-quo practises already occur behind the scenes, something echoed by those in the cannabis industry.

“But it’s not carte blanche — as soon as they unleash the dogs of war it’ll be a blood bath,” he said.

A large segment of the industry — retailers and manufacturers — are opposed to the proposal that’s backed by only a few large players, he said.

A letter signed by several liquor retailing and manufacturing associations and sent to Alberta Finance Minister Travis Toews urges them to retain the prohibition on inducements, saying ending them would tilt the playing field.

And some in the industry say the latest stakeholder feedback period of about two weeks that ends Friday is too short.

The ban on inducements in the liquor industry dates back to 1993 when liquor retailing was privatized, says the AGLC.

“The intent was to prevent ‘tied houses’ and to provide a level playing field for large and small operators alike,” the AGLC’s Holmen said in an email.

It’s not known when a decision will be made on the issue, she said.

BKaufmann@postmedia.com

on Twitter: @BillKaufmannjrn

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