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Marijuana Businesses in Canada

Marijuna Business Law

On June 24, 2015, prompted by both the federal government’s pledge to legalize possession of marijuana for recreational purposes, and the growing number of marijuana-related businesses in the city, Vancouver became the first city in Canada to create by-laws regulating marijuana-related businesses. Marijuana businesses in Ontario have become more common but are currently unregulated at the municipal or Provincial level.

The Vancouver by-laws created two classes of licenses for medical marijuana-related businesses with differing fees and qualifications: “Retail Detailers” and “Compassion Clubs”. “Retailer Detailer” simply refers to a business that solely conducts marijuana-related business. The fee for licensing is set at $30,000 and is significantly higher than the $1,000 fee to register as a Compassion Club. However, to register as a Compassion Club, the business must be a registered non-profit society providing non-marijuana-related health services for at least 60% of the time.

In addition to licensing fees, prospective licensees of both classes must consider restrictions on the location of their business, and the likelihood of obtaining the correct permits. The by-laws restrict marijuana-related business to commercial zones and specify that they must be located at least 300m away from schools, community centers, neighborhood houses, youth facilities serving vulnerable youth and other marijuana-related businesses. The licensing process also requires prospective licensees to obtain a development permit, including a standard community notification process, and a signed good neighbour agreement.

While most Canadian cities, have been slow to follow Vancouver’s lead in enacting by-laws regulating marijuana-related businesses, it seems that the tide may be turning. On May 12, 2016, Victoria’s City Council created by-laws regulating marijuana-related businesses. These regulations arguably give greater freedom to prospective licensees than the Vancouver bylaws (i.e. permitting the sale of edible marijuana products, and having less restrictive location requirements). In Toronto, Mayor John Tory recently called for a study of the licensing regimes in place in Vancouver and Victoria to determine whether Toronto should follow their lead. Indeed, the controversy over the recent crackdown by the Toronto police on such shops would indicate that the debate over regulating marijuana-related businesses in Toronto is just beginning.

However, at present, Toronto has no licensing regime for marijuana-related businesses. Indeed, Chapter 565 of Toronto’s Municipal Code explicitly bans marijuana grow operations. Thus, in Toronto, only marijuana producers licensed by Health Canada are allowed to sell marijuana and only to those who have medical prescriptions. Illegal dispensaries may be fined for operating without a business license or contravening zoning bylaws. Contravening zoning bylaws can carry a fine of up to $50,000 for a corporation and $25,000 for an individual. Individuals may also face criminal charges; thus, the recent raids resulted in 186 charges for possession for the purpose of trafficking, and 71 for proceeds of crime. While it is likely that Toronto will adopt by-laws regulating marijuana-related businesses, the shape of those laws is not yet clear.

For legal assistance for your business, contact Nick Wright at nick[at]wrightbusinesslaw.ca to arrange a time to speak.

This article and the contents herein are for informational purposes only and do not constitute legal advice. Readers are advised to seek legal counsel prior to acting on any matter discussed. We take no responsibility for any third-party sites linked, nor is the presence or absence of a link an indication of endorsement of views expressed.

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