Since the legalization of cannabis in Canada, various retailers have been able to sell cannabis and other related products in licensed stores and online. However, the industry is still relatively young and constantly evolving—and some of these changes come with opportunities for growth.
Farmgate ROL is becoming an increasingly popular topic within the cannabis industry, particularly since some retailers are interested in adopting this method as a new distribution model. That said, the future of this new model depends on the development of new legal frameworks and regulations. Here’s an in-depth overview of what a Farmgate ROL is about for those interested in becoming a cannabis retailer.
What is the “Farmgate” Method in the Context of the Cannabis Industry?
In general, “farmgate” marketing or sales is understood as a method where farmers sell their own products (i.e. typically agricultural produce) directly to consumers and independent retailers at the point of production. This type of sales model is already a part of other industries, where consumers purchase cheese, beer, or wine on-site.
However, anyone interested in selling cannabis this way will need to possess a federal processing license as well as a Retail Operator License (ROL) and a provincially-approved retail store. Those who only have a cultivation license would not be able to sell their products through a farmgate method. Instead, cannabis growers would have to earn additional licenses, meeting the various requirements set by Health Canada as well as enforcing municipal and regional zoning and retail requirements in order to achieve full compliance.
Those interested in using a farmgate method for sales will need to receive specific retail licenses first
Discovering the Benefits of a Farmgate ROL for those with a Cannabis Retailer Certification
By adopting the farmgate method, cannabis retailers can expect to receive many benefits—including the chance to provide customers with a stronger and more meaningful cannabis education. This means that retailers can provide more information on how products are grown, promoting transparency as consumers visit the different cultivation areas and see the behind-the-scenes work themselves. In this way, the farmgate method can foster more community engagement, creating stronger ties between growers and consumers.
Through this model, retailers would also be able to increase the economic growth for rural areas and facilitate business for small or niche brands—providing a cannabis retail site for locals while also creating a “destination” retail experience for distant consumers interested in certain cannabis brands or quality standards.
This option will also allow retailers to better compete in the industry, potentially offering an online option for “click and collect” services. Ultimately, the farmgate method has the ability to significantly impact how some retailers conduct their business after earning their cannabis retailer certification.
The farmgate model can help retailers grow their business and develop stronger ties with interested consumers through cannabis education.
Exploring the Future of the Farmgate ROL Model
Some provinces have already expressed an interest in providing farmgate ROLs, but progress is still slow—and many cannabis growers are eager to get started. According to the AGCO (Alcohol and Gaming Commission of Ontario), around five out of 14 growers have been reportedly issued a Retail Operator License, and eight have submitted a Retail Store Authorization (RSA) application. Both steps are crucial in order to gain a farmgate cannabis retail licence, making cannabis retail compliance an additional priority.
Cannabis growers are interested in receiving a Farmgate ROL, with around 14 applying to the AGCO for official licenses
At this rate, Ontario could set a precedence for other provinces interested in creating a cannabis-based farmgate model. According to the government’s news release from September 2020, British Columbia will be developing farmgate programs in order to help small-scale producers sell their products on-site by 2022. However, much of this progress has been affected by the pandemic. During the wait, interested retailers can begin preparing by monitoring updates from the industry and from provincial or federal institutions.
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