Farm-gate cannabis, also known as seed-to-sale cannabis, is a direct-to-consumer type of sales that allows licensed producers (LPs) to sell directly to customers. The system is similar to craft breweries and wineries that sell their products to customers onsite. The term “farm-gate” refers metaphorically to the gate of the farm, typically where farmers sell their own produce on the roadside next to where it isgrown.

Originally, this type of sales format wasn’t allowed in most places in Canada for recreational cannabis sales. That was because of the way the federal and provincial governments divided responsibilities, particularly with regards to retail sales. LPs that hold a Sales (Medical) licence from Health Canada for medical cannabis sell directly to patients with a prescription. But under the Cannabis Act, the federal government is responsible for regulating LPs while the provinces and territories oversee recreational sales.

Farm-Gate Cannabis – The Ontario Experience

In Ontario, for example, the Ontario Cannabis Store (OCS) is the provincial regulator for recreational cannabis sales, as well as the provincial wholesaler. All LPs who want to sell to the recreational market had to sell their product to the OCS. The OCS then distributes to cannabis retailers in the province as well as sells cannabis through its own online store. This system did not allow LPs to sell directly to consumers.

Regulations started to change in 2020 when the provincial government announced it would allow farm-gate cannabis sales. At the time, it was seen as a positive step for craft cannabis. Thrive Cannabis opened the first seed-to-sale cannabis store in April 2021.

However, whether or not cannabis can be consumed on the premises is still unclear. Ontario came out against cannabis cafes – though some people have found creative ways around it. The Wiarton Bongspiel set up an off-premises spot for people to enjoy cannabis. In Grand Bend, Ont., an outdoor consumption lounge and restaurant sits behind – but separate from – a cannabis retail store. So, unlike wineries and craft breweries, producers can’t technically allow customers to sample their products, but retailers are finding a way.

Farm-Gate Cannabis Stories Similar Across Most of Canada

The story of farm-gate cannabis is similar across Canada. In August 2021, New Brunswick announced that it would allow direct-to-consumer cannabis sales under specific circumstances. As of September 2021, both Alberta and BC were on track to start allowing farm-gate cannabis sales; BC announced new farm-gate cannabis rules would be developed by 2022.

Saskatchewan is the exception to these strict regulations. There, the term “farm-gate” may be considered too formal since it has perhaps the most open cannabis market in the country. LPs can sell directly to cannabis retailers without first selling to a centralized provincial regulator as in most provinces. There is nothing stopping LPs from also having a provincial retail licence and “selling” their product to themselves. These types of sales still must be registered with the Saskatchewan Gaming and Liquor Authority (SGLA) but are otherwise totally legal.