Canada: Vancouver Enacts Bylaws To Regulate Medical Marijuana-Related Retail Businesses

Medical marijuana is becoming big business. Recently, it was announced that two titans in the medical growing sphere have agreed to merge in a $58-million deal expected to close in August. The headlines in Vancouver relate to the recent boom in medical marijuana-related storefront "dispensaries." Over the last two years, the number of these retail businesses in the City has grown by 100 percent each year. As of April 2015, the City reported that there were over 80 such businesses operating in Vancouver without a business licence.

On June 24, 2015, Vancouver became the first city in Canada to regulate this emerging business sector. The bylaw amendments were made pursuant to the City's business regulation and licensing powers (Vancouver Charter, s. 272) and regulate business licences, not directly the sale of marijuana. The full text of the amendments is available here.

What follows is a summary of the key features of the new regulatory and licencing regime in Vancouver.

Two New Types of Business Licences: Compassion Club and Retail Dealer

As of August 24, 2015, those operating a medical marijuana-related retail business must have a licence from the City. There are two new classes of business licences available: Compassion Club and Retail Dealer – Medical Marijuana-related.

A Compassion Club is a retail business that advocates for the use of medical marijuana while providing non-marijuana health services at least 60% of the time. Compassion Clubs must also be duly registered non-profit societies, serve only their members, and hold membership in the Canadian Association of Medical Cannabis Dispensaries. The annual business licence fee for this category is $1000. No person can hold more than one licence as a Compassion Club.

The retail dealer licence applies to businesses that advocate for the use of medical marijuana and do not carry on any other business on the premises. Holders of this licence cannot incorporate, but may be non-profit societies. A person can hold up to five licences of this category; however, the licence fee is $30,000 annually, the City's highest licence fee.

Ban on Selling Edibles and Provisions Protecting Minors

Neither business licence category permits the sale of edible products, with the exception of tinctures, capsules and edible oils. This exception responds to the Supreme Court of Canada's decision in R v. Smith, 2015 SCC 34 which found that the federal ban on possession of non-dried forms of medical marijuana was unconstitutional. It ensures that individuals can make their own edible products while balancing against concerns about their potential appeal to children.

Minors are not permitted on the business premises. Businesses are also prohibited from advertising or displaying wares in a way that may reasonably be seen by a minor.

Obtaining a Business Licence

Following enactment of the regulations, all known medical marijuana-related retail businesses will be notified and asked to apply for a Development Permit prior to August 24, 2015. Before granting a Development Permit, property owners and residents will be notified and the Director of Planning must have regard to their opinions and the liveability of neighbouring residents in assessing the application.

Applications will be assessed to ensure that they comply with Zoning regulations prohibiting these businesses in the following locations:

  • within 300 metres of another marijuana-related business;
  • within 300 metres of a school (elementary, secondary, community centre or neighbourhood house);
  • in the Downtown Eastside other than on sites located on Hastings or Main Street;
  • in the Granville Entertainment District;
  • on a minor street (any street without a painted centre line).

Further, the business cannot be carried on in conjunction with any other use or with an automated banking machine on the premises.

If a location is within 300 metres of a school, the application will be refused. If it is within 300 metres of another marijuana-related business, competing applications will receive points for

  • non-compassion club use [10 points];
  • more than 1 complaint by more than 1 complainant in past 12 months [2 points];
  • existing work without permit [3 points]; and,
  • history of poor business practice [4 points].

The applicant with the lowest number of points will be awarded the licence. Unsuccessful applicants will be required to close, or to relocate to a zoning-compliant site and reapply.

The applicant must comply with all Building Bylaw and Licensing Bylaw regulations. Once compliant with all regulations, a time-limited Development Permit and Building Permit (if necessary) may be issued. Once the City inspection has determined that all regulations have been met and the licence fee paid, a business licence may be issued.

Businesses that do not meet the City's deadlines (including application deadlines) or regulations (ex: locational or operational) will be subject to enforcement measures. These include ticketing with fines, denial of development permit renewal, business licence suspension/revocation, orders, prosecution and most seriously, injunctions and court action to enforce bylaws.

Possible Issues Going Forward

Given the number of existing marijuana-related businesses in Vancouver, the Globe and Mail has reported that about two-thirds of existing dispensaries are expected to close or relocate under the new rules. While the City has attempted to strike a balance between accessing medical marijuana and preserving community health and safety, the bylaw may attract legal challenges including those from business owners or the federal government.

It remains to be seen how these issues will be resolved.

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