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Risk-Based Licensing

The Alcohol and Gaming Commission of Ontario (AGCO) employs a risk-based approach to the issuance and regulation of liquor sales licences called risk-based licensing. This, allows the AGCO to encourage good business practices throughout the industry and strategically focus resources where they will make the most difference.

Although there is always some risk attached to the sale and service of alcohol, the AGCO recognizes that because of their type of business, location, past history, experience, etc., some establishments pose a greater risk to public safety, to the public interest and/or to non-compliance with the law. Risk-based licensing is one of several initiatives implemented by the AGCO since 2007 to refocus decision-making based on risk assessment, and to move toward regulation based on compliance rather than solely on enforcement.

Overall, risk-based licensing is helpful for liquor sales licensees as it assists them in operating their establishments in a safe and responsible way, and in compliance with the Liquor Licence Act and its regulations.

The authority to carry out this new licensing regime is under Section 8.1 of the Liquor Licence Act.

How Risk-Based Licensing Works

There are four key principles behind risk-based licensing:

  1. To identify persons or places that pose specific risks to public safety or the public interest;
  2. To lessen any risks and ensure compliance with the Liquor Licence Act through the entire lifecycle of a liquor licence;
  3. To reduce the administrative burden for those who pose a lower risk, where possible; and
  4. To focus more AGCO resources on those establishments that pose enhanced risks.

The application of risk-based licensing can occur at any point in the lifecycle of a liquor licence, and is a three step process:

  1. After an application is received, an assessment process takes place. During the initial application review, the Registrar of Alcohol and Gaming ("the Registrar") uses AGCO Board-approved criteria to assess the risk(s) posed to public safety and public interest, and of non-compliance with the law.
    Licensees/applicants are evaluated under the criteria of past conduct, liquor-related infractions, honesty and integrity, financial responsibility, and training and experience. The premises themselves are evaluated under the criteria of type, location, occupancy, activities and hours of operation.
  2. After reviewing all the available information on both the licensee/applicant and the establishment, the Registrar assesses the risks and determines if the licence should have a Level I, Level II or Level III risk designation, or no designation.
    • If the Registrar believes that no conditions need to be placed on a licence, or if a licensee has taken steps on his/her own to recognize and manage any risks, then the Registrar will most likely assess the licence as having no designation. These establishments will see no change in the way that their licences are administered.
    • If the Registrar believes that a licensee may need more assistance and support to remain compliant with the Liquor Licence Act (for example, by placing conditions on the licence, or by focusing more of the AGCO´s resources on the licensee and the establishment), then the establishment will be designated at Level I, Level II or Level III.
  3. If the Registrar designates an establishment at Level I, Level II or Level III, s/he may attach certain conditions (from among those approved by the AGCO Board for this purpose) to the liquor licence to help address the identified risks.
risk-based licensing diagram

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During the lifetime of a licence, the Registrar can reassess the risk posed by the licensee. This reassessment can occur either because the licensee requests a reassessment, or because the Registrar becomes aware that there has been a change in circumstances and there should be a reassessment. At each of these times the Registrar may add, remove or amend one or more conditions.

Conditions and Plans

To help a licensee in Level I, Level II or Level III manage identified risks, conditions can be attached to the licence, such as:

  • The holder of the licence shall sell and serve liquor only in containers that are approved by the Registrar of Alcohol and Gaming.
  • The holder of the licence shall sell and serve liquor only during the hours specified by the Registrar of Alcohol and Gaming.
  • The holder of the licence shall not provide or permit music or other forms of entertainment in outdoor areas.
  • The holder of the licence shall not sell or serve and shall not permit consumption of liquor after XY o´clock on the patio or other outdoor areas.
  • The holder of the licence shall ensure that no person under the age of 19 years enters the premises.

A licensee designated as Level I, Level II or Level III may also be required to submit a plan – such as a safety and security plan, nuisance mitigation plan (covering noise, litter, etc.) or patron control plan – to help him/her comply with liquor licence laws and protect public safety. The Registrar may provide standards or guidelines to assist licensees in preparing these plans.