Local government’s role in retail
A battle of wills ensued in Langford, BC recently, as a local business owner fought to keep his medical cannabis dispensary open despite the municipality’s refusal to grant him a business license (and frequent police raids). The business owner’s position was simple: people need the product and it will be legal soon anyway, so let me run my business. Many cannabis businesses have been opened around BC in similar circumstances, ignoring the requirements for a municipal business license with the expectation that legalization would remove many obstacles.
When the proposed federal Cannabis Act was introduced on April 13, 2017, it became clear that it would be left to the provinces and territories to create the regulatory framework for the distribution and sale of cannabis in their respective jurisdictions. Much of what that regulation will look like for British Columbia has been answered in recent months, culminating in April 2018 with the introduction of the proposed Cannabis Distribution Act1 and Cannabis Control and Licensing Act (the “CCLA”)2.
Of great note (and much to the chagrin of entrepreneurs like the one noted above) is the amount of control that has been left in the hands of local government when it comes to the control of retail cannabis.
Licensing for cannabis businesses will fall under the purview of BC’s Liquor Control and Management Branch. The province will have a public wholesale distribution monopoly and operate public retail stores, while the CCLA will also create a private retail licensing scheme, similar to the current liquor system. Local governments, including First Nations, will play a significant role, with control over business licensing, zoning, public consumption, and distance requirements.3 More importantly, local governments will be able to cap the number of cannabis stores or even prevent cannabis sales within their respective jurisdictions altogether.
Section 33 of the CCLA provides that a license must not be issued to a cannabis retailer unless the local government for the relevant area “gives... a recommendation that the licence be issued.”4 In giving said recommendation, the local government must gauge the public’s interest in the cannabis business being opened in their region, potentially by referendum or public hearing; however, there is no requirement that the local government gauge public interest when refusing to recommend a licence or that it take any action at all, meaning a board or council could unilaterally block any licensing applications.
Unfortunately for those who rushed to open a retail store prior to legalization (throw a rock in Victoria if you want to find one), the province will not be “listening” to the local governments in every sense, as a recommendation to grant a license need only be “taken into account” by the province, and businesses with pre-existing licenses unlikely to be given favourable treatment in the application process. Existing cannabis stores should also expect increased license fees and more stringent requirements for security and public safety, among other things. Certainly, applicants should expect to bear the cost of whatever public hearing a local government holds.
As the province prepares for cannabis legalization in the summer, there will be a scramble at the local government level as councils and boards develop their own bylaws and policies surrounding the sale of cannabis in their communities. In doing so, it seems inevitable that clashes like the one in Langford will continue.
- 1 Bill 31, Cannabis Distribution Act, 3rd Sess, 41st Leg, British Columbia, 2018.
- 2 Bill 30, Cannabis Control and Licensing Act, 3rd Sess, 41st Leg, British Columbia, 2018.
- 3 For a clear indication that some local governments intend to enforce minimum distance requirements, see Green Dragon Medicinal Society v. Victoria (City), 2018 BCSC 116.
- CCLA, cl 33. See note 2.
Brian K. Beitz is a solicitor with Jones Emery Hargreaves Swan LLP in Victoria. He practises in the areas of corporate, commercial, and real estate law.