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OCS to resume cannabis deliveries after cyberattack on logistics partner

TORONTO — The Ontario Cannabis Store says its distribution centre is resuming some service after a cyberattack on one of its logistics partners caused the provincial pot wholesaler to halt deliveries this week.
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A variety of cannabis edibles are displayed at the Ontario Cannabis Store in Toronto on Friday, January 3, 2020. THE CANADIAN PRESS/ Tijana Martin

TORONTO — The Ontario Cannabis Store says its distribution centre is resuming some service after a cyberattack on one of its logistics partners caused the provincial pot wholesaler to halt deliveries this week.

“The Ontario Cannabis Store’s distribution centre is in the process of returning to operational status,” said David Lobo, the OCS’s president and CEO, in a statement posted to the distributor’s website Wednesday afternoon.

“A small number of deliveries from the distribution centre will be made later today, beginning with the delivery of the orders that were impacted at the time of shut down.”

The OCS will work "around the clock: to transition back to standard service levels and begin with deliveries of orders that were impacted at the time of shut down, he added.

Orders will be processed in the sequence they were placed on the OCS ordering platform and his organization will provide further information this evening about what retailers can expect during the recovery period.

The government-backed OCS sells cannabis to consumers online through OCS.ca, but is also the province's lone pot wholesaler, so Ontario's 1,333 licensed marijuana stores have no choice but to buy products they sell from the OCS.

Since the OCS revealed the Aug. 5 attack on the parent company of its third-party distribution centre, Domain Logistics, on Monday, several Ontario pot shops have said their supplies are dwindling and they worried they could run out of product and consumers would turn to the illicit market, if the delivery halt stretched on.

The OCS has said there was no indication its systems were targeted or its customers’ information was compromised during the attack. Domain Logistics has not responded to requests for comment.

Asked whether licensed cannabis producers will be compensated or the OCS will withhold payment from, fine or sue Domain Logistics, OCS spokesperson Daffyd Roderick said Wednesday in an email, “Our focus is entirely on recovery at the moment.”

An OCS letter to retailers obtained by The Canadian Press said “as a goodwill gesture,” the OCS will waive retailer delivery fees until Sept. 30 as well as the $500 processing fee for an emergency order — one per store — between Sept. 1 and March 31, 2023.

Licensed cannabis producer Hexo won’t be seeking compensation from the OCS because of the cyberattack, but CEO Charlie Bowman called the impacts of the situation “frustrating.”

Several of Hexo’s new product launches have been delayed by two to three weeks because of the attack.

“We've already launched in other provinces and what happens when there's a delay is you lose that new buzz,” Bowman said.

“You lose that customer experience because that customer then migrates to another brand.”

Bowman has also heard from retailers who are facing issues restocking products because of the attack and has noticed pot shops in neighbouring provinces not far from the Ontario borders are seeing a spike in traffic as a result of the breach.

“We'll pick up some business in some areas, and we'll lose some business, but what we have to do is hope that customer experience from our brand is so strong, that they'll come back to us when we're able to be back on the shelf,” he said.

“But I have no malice. There's nothing the OCS could have done to prevent something like this… so you work with them to make sure it's minimalized and everybody makes sure that it doesn't happen to them next time.”

This report by The Canadian Press was first published Aug. 10, 2022.

Tara Deschamps, The Canadian Press

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