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Retail Licences in BC

With so much uncertainty still surrounding recreational cannabis regulations in BC, many would-be licensed retailers are still in the dark about several key aspects. Cannabis Retailer reached out to Shea Coulson, founder and principal of Coulson Litigation, to answer your questions:

“BC is set to soon open the application process for non-medical Cannabis Retail Licences. Applications will be assessed by the Liquor Control and Licensing Branch (LCLB) using both the statutory criteria set in the Cannabis Control and Licensing Act (CCLA) and regulations as well as internal policy. The CCLA has been released to the public, but the regulations and policies are not yet available.

“It is anticipated that the government will receive a very large volume of applications. The LCLB is required by law to turn its mind to each application and apply the require criteria in a reasonable manner. The LCLB must also engage in a fair and unbiased process. If the LCLB denies a licence application, the applicant will be entitled to reconsideration as well as a potential judicial review in the BC Supreme Court.”

Q-I want to build a separate cannabis store attached to my existing liquor store. Are there any restrictions in BC that stipulate how far away it has to be?

The Province of BC is not setting any restriction on the number and location of non-medical cannabis retail licences. Instead, the province has indicated that the LCLB will defer to the decisions of municipalities in this respect. As such, municipalities will set their own distance and concentration criteria. It is likely that most municipalities will set distance restrictions of 300-500m between retail outlets and from various prohibited zones.

Q-Once you are approved for a retail license from the province, can that license be located anywhere in BC or will you need to submit your location to the province for approval?

Municipalities will set their own application requirements that are not yet fully known. Applicants will have to ensure their application package provides both what the LCLB requires and what the local municipality in which they are located requires. In the future, any application to move a licence will also have to pass a similar process with the local government into which the licence is to be moved.

This delegation of all location decisions to municipalities could pose a legal issue for the province. It is not currently clear that it is lawful for the LCLB to delegate all decisions on this issue to municipalities and refuse to turn its own mind to the unique circumstances of a particular applicant. Though the CCLA requires the LCLB to obtain a “recommendation” from the local government prior to issuing a licence, if a local government were to outright refuse to issue licences, this could undermine the purpose of the federal Cannabis Act, which has its own licencing regime that comes into play when provinces do not implement a provincial regime. It may be that a conflict between the federal Cannabis Act and a local government’s outright refusal will end up in a legal battle.

Q-How long will the portal remain open once the province opens it?

The application process will likely only be open for a period of about one to two months.

Q-If you’re awarded your retail licence now, will it allow you to sell cannabis edibles when and if they become legal at some future time?

Currently, edibles are excluded from the non-medical cannabis retail framework. At this time, it is not clear whether all non-medical retail licences will eventually be permitted to stock edibles or if an additional licence application or special endorsement will be required. Given the government’s concern with carefully regulating edibles, however, it is likely that not all licences will be granted the right to sell edibles when legalized.

Q-As a liquor retailer, the government is both your supplier and competitor. Does the government plan to be fair with distributing cannabis to licensed retailers?

All cannabis production in Canada is federally regulated. However, provincially, the various liquor monopolies will have jurisdiction and a monopoly over distribution to non-medical retail licensees. In BC, the Liquor Distribution Branch (LDB) will build a separate warehouse to conduct distribution services for the industry. Cannabis retailers will not be permitted to buy directly from federally licensed producers, but will be required to purchase from the LDB, which will itself purchase from federal producers. Early indicaters are that there could be significant issues with supply as the LDB is not currently offering strong prices to producers, who are not required to sell to the LDB. Given the supply shortages likely at the commencement of legalization, it is very possible that federal producers will sell their products to provincial monopolies, such as Quebec and Ontario, which are promising to pay more, and to focus on the lucrative export markets. As such, the early supply of cannabis in BC could be highly constrained, of lower quality than desired, and with lesser selection than is ideal.

Shea Coulson, founder and Principal of Coulson Litigation, is a lawyer in Vancouver specializing in commercial and regulatory litigation. Shea has a special emphasis on cannabis regulation and has acted for the hospitality industry for the past 10 years in a range of commercial and regulatory matters, including the regulation of liquor.

If you have legal questions you would like answered in the Legal Corner column, please email them to mark@emcmarketing.com.