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The Legalities of Store Location Considerations

What provincial requirements do I need to consider before entering into a lease for my cannabis retail store?

The most important provincial requirement for a prospective retail store operator to confirm is whether the proposed store location satisfies all required provincial setback thresholds with respect to certain types of facilities. Ontario’s Cannabis Licence Act, for example, requires cannabis stores be located at least 150 meters from a school. Alberta’s regime is even more restrictive in this regard and prohibits cannabis stores from being within 100 meters from both schools and healthcare facilities. In terms of the methodology for measuring these prescribed distances, an Ontario court recently ruled that this distance is to be measured “the way the crow flies”, meaning on a direct-line basis, as opposed to on “the way the wolf runs” or “on the street” basis.

There are other important provincial regulatory considerations and regardless of the province where you locate your store, retail store applicants should complete appropriate due diligence and ensure their prospective location is in compliance with all provincial legislative requirements prior to making any commitments or investing capital resources into the property.

Do I also need to consider municipal laws when choosing my proposed location?

Municipal laws need to be carefully considered when determining a prospective location for a retail store, including whether the city or town you are considering even permits cannabis retail stores. Prospective cannabis retailers are often surprised to learn that some of Ontario’s largest cities have prohibited cannabis stores within municipal boundaries. Notable cities on this list include Mississauga, Markham, Vaughan, Richmond Hill, and Oakville. There are also a number of municipalities in Manitoba that have prohibited cannabis retail stores and a host of other municipalities that have enacted restrictions on top of provincial rules, such as the City of Edmonton, which prohibits cannabis sales within 200 meters of a school, park, or library.

Certain municipalities may also use local and land use regulations to prevent the clustering of too many similar businesses, including cannabis stores. Some municipalities may also use zoning or site-specific land use approvals to control the location and number of cannabis stores within the municipality. For instance, in West Kelowna, cannabis retail stores are prohibited unless site-specific zoning bylaw amendments are granted following the successful completion of an evaluation process. The “powers” of municipalities to set these rules differ from province to province. The Cannabis Control (Saskatchewan) Act, for example, grants municipalities full discretion in setting the rules around the location of cannabis stores. On the other hand, Ontario’s Cannabis Licence Act includes restrictions on the ability of municipalities to pass any by-laws (including with respect to use of land) that treat cannabis retailers differently than other types of retailers.

Before making a commitment on a location, it is important that you check local municipal zoning, bylaws, and other regulations to ensure that cannabis retail is a permitted use and determine what type of municipal approvals will be required in order for you to operate your business.

What else should I know about my prospective cannabis retail store location before I make my decision?

Each province has its own set of regulations regarding the physical requirements of cannabis retail stores. Generally speaking, your location will need to have sufficient infrastructure to be able to secure all points of access to the store and support a high-resolution security camera network that can monitor specific areas of the store. In Ontario, cannabis retail stores must also be enclosed by walls separating the store from any other commercial establishment (i.e. no pop-up-shops within other stores), the store must not be able to be entered from any other commercial establishment, and the store cannot be set up such that you must pass through the store in order to enter another business. In addition, Ontario requires that the area in which cannabis is received and stored not be accessible by any other business or the public. This may preclude the use of shopping mall locations, which tend to share shipping and receiving facilities with the other businesses in the mall.

Prospective cannabis retailers are well advised to confirm that any proposed premises is able to accommodate all of these physical requirements, in addition to the other regulatory requirements discussed, before making their final decision on store location.

Eric Foster and Stuart Ruffolo are lawyers practicing with the Dentons Canada cannabis practice. Dentons has one of Canada’s largest and leading cannabis practices and is one of only two Canadian law firms to receive a Tier 1 Ranking for Cannabis Law from each of Chambers & Partners and Legal 500.