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Ontario cannabis store regulator under pressure over alleged ‘pay-to-play’ deals

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Ontario’s cannabis store regulator is facing calls to crack down on alleged pay-to-play schemes that some industry executives say allow larger marijuana producers and brands to secure shelf space for their products and other special treatment from retailers.

Industry executives say the problem ballooned earlier this year after the Alcohol and Gaming Commission of Ontario (AGCO) attempted to clarify its rules on inducements – or “slotting fees” – by issuing an update to the Registrar’s Standards for Cannabis Retail Stores – the rules governing legal marijuana stores.

Jennawae Cavion, co-founder and CEO of Calyx + Trichomes in Kingston, said pay-to-play is common in many industries, “but they’re straight up not allowed in Ontario, and I don’t understand why the AGCO and other provinces don’t do anything about it.”

“It’s a really thin veil,” she said.

To get around curbs on slotting fees, industry officials allege, some producers and brands are instead paying cannabis retailers for their sales data to ensure their products get preferential treatment in the Ontario retail market.

The monthly fee can reportedly amount to tens of thousands of dollars or more.

Some industry officials told MJBizDaily that the sales-data workaround falls into a quasi-legal gray area, given that brands and manufacturers aren’t paying directly for prime shelf or display space or exclusive sales deals involving their product.

At the same time, however, some licensed producers and retailers say many of the data-fee agreements that have become widespread are effectively slotting fees, where brands are paying to play, which is technically not allowed by Ontario’s cannabis regulator.

AGCO silent 

The cannabis store regulator in Ontario won’t say whether it has taken any specific action regarding prohibited inducement arrangements between retailers and licensed producers, even though industry sources say so-called pay-for-play deals have become rampant.

“We have received information about concerns in the sector surrounding alleged inducement activities between cannabis retailers and licensed producers,” an AGCO spokesperson said via email.

“We can confirm that we are actively monitoring and conducting regulatory activities in a number of areas related to the Standards, including inducements.”

The AGCO declined to answer MJBizDaily’s questions about the number of complaints it has received.

The regulator also wouldn’t say how many enforcement actions it has taken, if any.

The Ontario Cannabis Store, the provincial wholesaler, directed questions to the AGCO, “as this is a regulatory matter.”

In Ontario, retailers requiring or receiving payments from licensed producers for preferred shelf placement is prohibited.

Harrison Jordan, a Toronto-based lawyer who has assisted dozens of cannabis retailers, shared with MJBizDaily an emailed response from the AGCO to an inquiry about the data-sale policy:

“If the payment for the sales data is based on how much product a store stocks/sells – rather than the value of the data itself – it may not be strictly falling outside the parameters of Standard 6.6, but we would be considering whether it is a material inducement,” according to the email.

Standard 6.6 established four prohibitions “to ensure that they are not used as a method for material inducements.”

Jordan said the AGCO’s answer underscores the ambiguity surrounding the data-sale deals.

“It’s hard to ensure a level playing field when these types of arrangements aren’t definitively ruled as impermissible,” he said.

Independent entrepreneurs in Ontario, such as Paul Thompson of Little Leaf Cannabis Co. in Stratford, say it’s tough to compete fairly because the data revenue allows large corporate chains to sell marijuana below cost.

He said he’s spoken with a number of smaller LPs that are open to the “no data deal” conversation.

“There’s a movement starting, where LPs and retailers are pledging to not do data deals,” Thompson said.

“I shouldn’t have to pay you to sell weed. It just seems crazy.

“Good weed will sell itself. And I think that’s where some of these large corporations can’t compete – they just don’t have good weed.”

Can AGCO sell data?

Some entrepreneurs have told MJBizDaily that pay-to-play deals give an advantage to large companies at the expense of independently owned stores.

“(Retail chains) are using a second stream of income that’s allowing them to sell (cannabis) products at a loss,” said Mike Ainsworth, owner of Kelly’s Cannabis, an independently owned store in Huntsville.

“How is anybody expected to compete with that when they have one or two stores?”

“They’re using the millions of dollars they’re getting in data sales to subsidize their operation costs, which then allows them to sell product cheaper than any independent store in Ontario,” he said.

Ainsworth warned that such data-sale schemes could potentially force hundreds of independent stores out of business.

He wants the AGCO to enforce its rules.

“If it’s in black and white that it’s against the rules, then why was this not stopped yesterday?” he asked.

Ainsworth suggested that the AGCO could sell consumer data to producers, rather than stores selling the data themselves.

“The AGCO and OCS own all that information, so anonymize it, sell it to the LPs, and take the money,” he said.

“It levels the playing field and everybody’s happy – if it’s all about data sales and it’s not about millions of dollars falling under the table.”

Ainsworth also alleged that some brands skirted the material-inducements rule by overpaying for accessories:

“A guy will walk into your store and say, ‘How much is that bong, CA$70? Why don’t I pay you CA$7,000 for it? And there’s no way for the AGCO to audit that, and I know that has happened.”

He also said licensed producers, or agencies representing them, have bought significant amounts of gift cards and then intentionally destroyed them in front of the store owner.

Unclear rules

Michaela Freedman, an international marijuana business consultant and founder of Toronto-based MF Cannabis Consulting, said some companies are being taken advantage of because there is no transparency or standardized rules governing pay-to-play, pushing the deals into the shadows.

One retailer, whom she declined to name, was charging different slotting fees to different companies – 200 Canadian dollars ($147) per SKU versus CA$50 per SKU.

Freedman wants more clarity.

“I think it would be better relative to what we have now if they were to say these standards need to be put in place, then maybe fewer companies would be taken advantage of,” she said.

A lack of clear rules for everyone creates an uneven playing field, Freedman added.

Jordan, the Toronto-based lawyer, said he believes it’s possible to have clearer rules.

“Why even have a material-inducements policy if this stuff is going to go on regardless?” he asked. “I think the intent behind not allowing material inducements is sound.

“I do think there is a fair argument, maybe not the most friendly to mom-and-pop shops, but there is an argument that can be made to just allow them, to just regulate them, as opposed to prohibit them.”

According to Standard 6.6, agreements between retailers and LPs must not “define the amount of product from the licensed producer or its affiliates that must be offered for sale at the retail store.”

Jordan said data agreements he’s seen do not define an amount of product that must be sold or displayed.

Rather, he said, they’re simply saying, “‘If you sell 10 of our XYZ product, we’ll give you CA$5 per product that you sell, which would be in the gray area.”

“It would beg the question,” Jordan said, “Why did they go through with this rigmarole of reining material inducements in, if we’re just going to say that this kind of material inducement, which is happening, is still allowed?”

Slotting fees not sustainable

Cavion of Calyx + Trichomes said the data-sale deals aren’t sustainable.

She said some retailers are pushed into accepting data-sale arrangements because they’re desperate for cash.

“That’s what makes some of these deals tempting, is some of them are for products I would be selling anyway,” she said.

“Most kickback deals are in the 8%-10% range, and I’ve seen them as 2%-3%. The more core the product, the lower the discount that is available,” she said.

Cavion said the data deals are an advantage to large corporations, because independents have less volume.

“Big companies have an advantage because they can buy hundreds of cases and move their inventory around if they need to, but I don’t really have that ability as much,” she said.

“It doesn’t make sense for them to deal with me, an independent, because I’m such a small fish compared to a chain (of stores).

“And I have much less buying power, even though I have a busy and successful store.”

Source: https://mjbizdaily.com/ontario-cannabis-store-regulator-under-pressure-over-alleged-pay-to-play-deals/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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AI & Technology

Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

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Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

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Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

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Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

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