On October 19, 2026, the Ontario government announced it would give the Alcohol and Gaming Commission of Ontario (AGCO) authority to inspect unauthorized cannabis storefronts and online sellers, seize illegal products and equipment, and issue administrative monetary penalties. The legislation has now been tabled as Bill 143, the Plan to Protect Ontario Act (Budget Measures), 2026 (No. 2). It has had First Reading and is ordered for Second Reading.

The cannabis measures are in Schedules 1, 5 and 6. This article explains what they would do, why the procedural design matters, and who should be paying attention.

This article is general information, not legal advice. Bill 143 is a bill, not law, and may change before it passes.

Where the bill stands

Schedules 1, 5 and 6 each come into force on a day named by order of the Lieutenant Governor in Council. Even after Royal Assent, the cannabis changes will not apply until proclaimed.

The government estimates that illegal retailers account for roughly 30 per cent of Ontario cannabis sales. Its stated goal is a fair marketplace for the approximately 1,800 authorized retailers in the province.

A shift in the AGCO’s mandate

Historically, the AGCO’s cannabis enforcement has followed the licence. It regulates the retailers, producers and registrants it has licensed, while action against unlicensed sellers has largely been left to police and municipalities.

Bill 143 changes the basis of the AGCO’s jurisdiction. Schedule 1 adds the Cannabis Control Act, 2017 to the statutes the Commission administers. Schedule 5 then gives the Registrar powers over persons who have no licence relationship with the AGCO at all: demands for statements and records, inspectors, investigators, entry, search and seizure powers, and penalty orders.

That matters for several reasons:

No consent through licensing. Licensees accept inspection and conditions as the price of the licence. Unlicensed operators have not. The authority comes entirely from statute.
A weaker regulatory-inspection rationale. Courts have tolerated lighter search standards in regulated industries partly because participants choose to operate in them. Whether that reasoning carries over to people who never entered the field is likely to be argued, including under s. 8 of the Charter.
Licensees are not outside the reach of the new powers. On my reading, the new demand, inspection and investigation powers are framed around contraventions of the Act rather than the status of the target. A licensed operator connected to an unlawful activity could be reached through the same provisions.
A new enforcement partner. The AGCO has said it will work alongside law enforcement. An administrative regulator with penalty and review powers now sits next to police and municipal enforcement.

Monetary penalties by order, not notice

Under the current AGCO Act, the Registrar imposes monetary penalties by serving a notice. Bill 143 replaces that with a power to impose penalties by order. If the Registrar is satisfied that a person has contravened a provision listed in the Registrar’s schedule of monetary penalties, the Registrar may impose the scheduled penalty by order.

That is more than a change of vocabulary:

The form is left to the Registrar. An order is in the form the Registrar determines, so the bill does not prescribe what it must contain.
Orders are directly enforceable. An unpaid order can be filed with the Superior Court of Justice and enforced as if it were a court order. An unpaid penalty is also a debt due to the Crown. The AGCO moves from issuing a demand to holding something close to a judgment, without a court having decided anything.
The appeal clock runs from service of the order. For appeals to the Licence Appeal Tribunal, the written request must be served within 15 days after the Registrar serves the order. A missed deadline leaves an enforceable order.
Penalties can be combined. A penalty may be imposed alone or together with other measures, such as licence action. The Registrar must also consider any fine imposed on conviction when deciding whether to impose a penalty and how much. Penalties, licensing consequences and prosecution can proceed in parallel.
Compelled statements can support a penalty. Statements and records obtained under a Registrar’s demand may be used as a ground for a monetary penalty, although they generally cannot be used as evidence in a prosecution under the Act.
The purpose is partly disgorgement. A penalty is meant to ensure compliance and to prevent anyone from benefiting economically from a contravention, and its amount must reflect that purpose.
Payment is not an admission. Paying a penalty is not an admission of the contravention for the purposes of any prosecution.

The schedule of monetary penalties

The Registrar already maintains a list of monetary penalties, and the new order power attaches to the provisions listed on it. The bill does not itself set penalty amounts or list the cannabis provisions. In practice, the reach of this regime will depend on which Cannabis Control Act provisions are added to the schedule and at what amounts. Anyone in the sector should watch for that update, since it will define the real exposure.

No hearing, and the Statutory Powers Procedure Act does not apply

The Registrar is not required to hold a hearing or offer an opportunity for one before making a penalty order. The Statutory Powers Procedure Act (SPPA) also does not apply to the order.

What follows from that:

No statutory procedural floor. The SPPA is the usual source of notice, disclosure, evidence and reasons requirements for tribunal decisions. Without it, the process owed at the front end rests on the common law duty of procedural fairness, scaled to the circumstances.
The first decision is paper-based. A respondent may first learn of the case when the order is served. Responding properly to any demand for information is likely the main chance to put a position on the record before an order is made.
Judicial review is the backstop. Even where the bill makes a review decision final, challenges based on jurisdiction and procedural fairness would generally go to the Divisional Court. Expect early litigation about what fairness requires where there is no hearing.
Scope of the carve-out. The text disapplies the SPPA for the Registrar’s order. It does not address how the Licence Appeal Tribunal conducts its own appeal hearings for licensees.

Two tracks: licensees keep the Tribunal, unlicensed operators get Registrar review

The bill creates different review routes depending on the statute breached.

Licensees and other AGCO statutes. Appeals of penalty orders go to the Licence Appeal Tribunal within 15 days of service. Penalties for breaching racing rules under the Horse Racing Licence Act, 2015 go to the Horse Racing Appeal Panel. A cannabis retailer penalized for breaching its obligations under the Cannabis Licence Act, 2018 stays on the Tribunal route.

Cannabis Control Act contraventions. A penalty order for contravening the Cannabis Control Act, 2017 or its regulations cannot be appealed to the Tribunal. It can instead be reviewed by the Registrar. The Cannabis Control Act is the statute aimed at unlicensed retail, unlawful online selling and the new cultivation-for-retail prohibition, though it is possible for a licensed operator to be charged under this statute.

How Registrar review works:

The request must be in writing and reach the Registrar within 15 days after the order is served.
It must state whether it challenges liability, the amount, or both, and may include submissions and an address for service.
The Registrar may set aside, confirm or vary the order, and that decision is final.
The office that made the order is the one that reviews it. There is no independent adjudicator unless a court steps in.

Inspections, demands for records and seizures

Schedule 5 amends the Cannabis Control Act, 2017 and creates the field powers.

Demands for information. The Registrar may demand a written statement and records from a person the Registrar reasonably believes is contravening the Act, or who has information about someone who is. The demand must be delivered by personal service or registered mail and set a reasonable deadline. Failure to comply is itself an offence, and the Registrar may issue a document certifying the failure, which serves as proof of the facts it certifies.

Inspectors. The Registrar may designate inspectors. They may enter any place or conveyance, other than a dwelling, where they reasonably believe cannabis is being sold, distributed, cultivated, propagated or harvested. Their powers include:

examining and removing records (with a receipt)
opening containers and packages
testing, measuring and photographing
questioning people
seizing equipment they reasonably believe could be used in a contravention

Test purchases. An inspector or investigator may buy a substance they believe to be cannabis to check compliance. Schedule 6 adds to this by allowing the Registrar to appoint individuals of a prescribed age under 19 for compliance monitoring under the Cannabis Licence Act, 2018.

Investigators, warrants and warrantless searches

Schedule 5 also builds an investigation track:

Who investigators are. The Registrar may appoint investigators. Police officers and First Nation Officers hold investigator powers, and provincial park officers hold prescribed powers within provincial parks and conservation reserves.
Warrants. A justice of the peace may issue a warrant on an application made without notice. Entry into a dwelling requires that the justice be told the warrant covers a dwelling and expressly authorize it. A warrant expires within 30 days unless renewed.
Exigent circumstances. Investigators may exercise warrant powers without a warrant where it is impracticable to obtain one because of exigent circumstances. This does not apply to dwellings.
Closing premises. The provisions on vacating and closing premises are reworked so that investigators, rather than police officers, exercise them, with police available to assist.

Warrantless searches of vehicles and boats

One of the most significant new powers is the ability to stop and search vehicles and boats without a warrant. An investigator who reasonably believes a vehicle or boat contains evidence of a contravention of the Act or its regulations may, at any time:

stop and detain the vehicle or boat without a warrant; and
examine its contents, including cargo, manifests, records, accounts, vouchers, papers and other documents that may afford evidence of the contravention.

Key features of this power:

The threshold is reasonable belief. There is no requirement to obtain prior judicial authorization, and the trigger is the investigator’s reasonable belief that evidence of a contravention is inside.
It is broad in what it reaches. “Vehicle” includes rail-based vehicles and bicycles, and anything attached to a vehicle. Schedule 6 adds a matching definition of “boat” and a wider definition of “vehicle” to the Cannabis Licence Act, 2018.
Dwellings are excluded. The power does not apply to a vehicle or boat, or part of one, actually being used as a dwelling. A motorhome or houseboat used as a residence may therefore raise a different analysis.
Seizure follows. An investigator lawfully present in a place or conveyance may, with or without a warrant, seize anything, including cannabis, where there are reasonable grounds to believe it is connected to a contravention.
Practical exposure. Couriers, delivery operators, transport companies and anyone moving product or related equipment should assume that vehicles and boats can be stopped, detained and examined on that threshold, and should train drivers and staff on how to respond and who to call.

Because this power is not limited to licensees, expect it to be tested under s. 8 of the Charter, particularly on whether a reasonable-belief standard is enough where no warrant is obtained and the person has no licence relationship with the regulator.

Seizure, return and forfeiture

A person may apply to the Ontario Court of Justice within 30 days of a seizure for an order restoring the items. The court must be satisfied that:

the applicant is entitled to possession;
the items are not needed as evidence;
continued detention is not necessary to prevent an offence; and
forfeiture on conviction is unlikely.

If nobody applies, or an application fails, seized items are forfeited to the Crown. A person with an interest in forfeited property may seek relief from the Superior Court, but only if they did not participate in or benefit from the related offence.

Anyone whose stock or equipment is seized should calendar the 30-day window immediately.

New offences and landlord liability

Facilitation. The bill adds an offence of knowingly facilitating a contravention of the existing prohibitions in subsections 6(1) and (2) of the Cannabis Control Act.

Cultivation for retail. A new section prohibits any person aged 19 or older from cultivating, propagating or harvesting cannabis for retail to consumers in Ontario, or offering to, other than for sale to or through the Ontario Cannabis Retail Corporation. Knowingly facilitating that contravention is also prohibited. By its terms, licensed producers selling to or through the OCRC fall outside the prohibition.

Landlords. The existing landlord provision is expanded to cover premises a landlord knowingly permits to be used for activities prohibited by the new cultivation provision, in addition to the existing prohibition. The new offences also feed into the amended penalty provisions.

Obstruction and false information. New offences cover hindering or obstructing an inspector or investigator, withholding, concealing, altering or destroying relevant records or things, and knowingly giving false or misleading information.

Proving exemptions. A person relying on an exemption under the Act must, on request, produce the document prescribed by regulation or otherwise demonstrate the exemption to the satisfaction of the inspector, investigator, police officer, First Nation Officer or provincial park officer.

What operators, couriers and landlords should do now

Know the 15-day deadlines. Both the Tribunal appeal and the Registrar review must be requested within 15 days of service of the order.
Respond carefully to demands. Statements and records can be used to support a penalty, and ignoring a demand is its own offence.
Prepare an inspection protocol. Decide who deals with inspectors, how requests are logged, and when counsel is called.
Train drivers and delivery staff. Vehicles and boats can be stopped and examined on reasonable belief, without a warrant.
Landlords: review leases. Add cannabis-use and compliance covenants and document your lack of knowledge.
Keep exemption documents ready. If you rely on an exemption, be prepared to show it on request.
Calendar seizure deadlines. The 30-day restoration application window is short.
Consider making submissions. Second reading and any committee stage are the opportunities to raise concerns about penalties by order without a hearing, the SPPA carve-out, Registrar-only review, and warrantless vehicle and boat searches.

Frequently asked questions

Is Bill 143 law yet?
No. It is at First Reading, and the cannabis schedules take effect only on a day named by order of the Lieutenant Governor in Council.

Can the AGCO fine an unlicensed store without a hearing?
Under the bill, yes. The Registrar may impose a scheduled penalty by order without a hearing, and the SPPA does not apply to the order. For Cannabis Control Act contraventions, the remedy is a written Registrar review within 15 days, not an appeal to the Licence Appeal Tribunal.

Do licensed retailers get a different process?
Yes. Penalty orders under other AGCO statutes, including the Cannabis Licence Act, 2018, remain appealable to the Licence Appeal Tribunal within 15 days of service.

Can an investigator search my vehicle or boat without a warrant?
Under the bill, an investigator who reasonably believes a vehicle or boat contains evidence of a contravention may stop and detain it and examine its contents without a warrant. The power does not extend to a vehicle or boat, or part of one, actually used as a dwelling.

Can inspectors enter a home?
Inspectors cannot enter a dwelling. An investigator needs a warrant that expressly authorizes entry into a dwelling.

Can a landlord be liable?
The landlord provision would cover premises knowingly used for activities prohibited by the new cultivation-for-retail section, in addition to the existing retail prohibition.

Is this a change in what the AGCO regulates?
Yes. The AGCO has mainly enforced against those it licenses. This bill extends its enforcement tools to persons operating without a licence.

Talk to Substance Law

Substance Law advises cannabis licensees, retailers, couriers and landlords on regulatory compliance and enforcement matters. If you have received an AGCO demand, inspection notice or penalty order, or want help with a submission on Bill 143, contact our team.

Source: Bill 143, Plan to Protect Ontario Act (Budget Measures), 2026 (No. 2), Legislative Assembly of Ontario.

New AGCO Enforcement Powers Against Illegal Cannabis Operations

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