The promise of a fledgling industry about to burst onto the Canadian scene has led many to startups lining up to cash in on green gold.
So far, Health Canada has issued 23 licences to companies wanting to develop medical marijuana production facilities in Canada of about 1,200 applications received in response to the federal marijuana for medical purposes regulations released last April. While some municipalities have been preparing to deal with the new industry, others are scrambling to decide how to respond.
Among the applicants is CEN Biotech Inc., a Canadian subsidiary of Creative Edge Nutrition Inc. It plans to go into medical marijuana production in Lakeshore, Ont.
Right across the country, several companies, some of them public, geared up at the starting line as they sought a federal licence to begin marijuana production under the new regime. But even before getting production licences, some have developed plans, purchased real estate, filed rezoning applications, and started building.
CEN Biotech proposed building its medical marijuana production facility in a rural area populated by a dozen homes in a one-kilometre stretch along the shores of Lake Ontario in the Niagara region. The company marked its territory by constructing two fences topped with barbed wire and separated by a walkway area.
The proposal caught the town, like many communities, off guard. With the property zoned for agricultural use, the town ultimately decided after heated public meetings and deliberations that marijuana production facilities should be in employment or industrial areas.
“Municipalities across the country are kind of split on how to handle the zoning on these kinds of operations,” says commercial lawyer Bruck Easton, who represented the residents.
The residents are happy with the result in Lakeshore, but the discussion may not yet be over. CEN Biotech is arguing to have its facility grandfathered in as a legal, non-conforming use of the property zoned for agriculture.
The company argues the town’s motion applies to new facilities that intend to apply for a licence in the future.
“This motion did not affect our current position with the Town of Lakeshore and the facility that was granted permits to build as verified by the town earlier this year,” CEN Biotech stated in a press release.
While zoning is a focus for some communities, setbacks are an issue for others. Many others haven’t yet put any regulations in place and some believe existing definitions of industrial or manufacturing uses apply.
Peter Gross, who practises municipal planning and development law with Wood Bull LLP, says a disparity exists in municipalities across the country. He sees three basic approaches: municipalities that implement zoning bylaw amendments that could involve setbacks; those that see the production facilities as falling within existing definitions; and others that have site-specific zoning that requires an application.
“Any proposed operation should always look at the particular zoning for the municipality,” says Gross.
“They need to consult with the municipality.”
And while the federal guidelines clearly call for strict security, Gross wonders about the use of different setbacks by municipalities. He notes the need for empirical data to back up the municipal use of setbacks.
Gross points out that while the act of growing the plants suggests an agricultural use, the same licence can also allow for processing, selling, and shipping of marijuana, all of which points to an industrial use.
Both Toronto and Ottawa developed a framework in advance of Health Canada’s April 1, 2014, changes to the regulations governing medical marijuana.
Toronto passed its bylaw in early 2014 to permit medical marijuana production facilities in certain industrial areas with a setback of at least 70 metres from residential zones.
Toronto also built in accommodations for loading areas and fencing to meet the federal criteria.
Klaus Lehmann, Toronto’s manager of strategic initiatives, policy, and analysis, says while the city had received some applications, there were others operating under the former federal licence that were looking to transition to meet the new standards.
“We simply went through a review of the federal licensing,” says Lehmann.
“And we proceeded to put together the rules” to define what a facility is and the proper zoning for properties. They also specify that facilities should be in a closed building with no open storage.
So far, Health Canada has issued 23 licences with 15 of them to companies licensed to grow and sell to the public and another eight licensed only to grow medical marijuana.
In order to obtain a licence, companies have to satisfy several security requirements. They include restricted access to and continuous monitoring of the facility. Of the 1,200 applications received, Health Canada returned half as incomplete and more than 300 are proceeding.
The government further indicated that it had worked with law enforcement, municipalities, and other partners to ensure a smooth transition to the new system from the old one that allowed for personal and designated production by individuals in their homes.
Municipal officials in Ottawa began working on its bylaw in June 2011 and consulted with the federal
government along the way. City of Ottawa legal counsel Christine Enta, who heads up the city’s planning and development law unit, says that led to an investigation by planning and legal staff in 2013 to determine the role of the municipality in the process. Following a staff report, the city passed a bylaw at the end of February.
“We created a definition for medical marijuana production facilities and directed their use in the city,” she says.
“It was quite an interesting project to work on. The federal government gave the municipalities the ability to regulate it from a planning perspective.”
Enta looked at what other municipalities were doing in Ontario as well as in other provinces. Staff also examined marijuana production from both the industrial and agricultural perspectives.
In its examination of the issue, Ottawa decided medical marijuana production facilities were most similar to a pharmaceutical plant from a land-use perspective. And the city determined the best location for the facilities would be on industrial property. It also determined a setback of 150 metres from residential or institutions like schools and community centres would be necessary.
“It was very much a warehousing/industrial use to us,” says Enta.
“A concern for us was not being caught off guard,” she says, by an application from a company already having a federal licence in place.
But even so, the city’s bylaw was facing a challenge within a year.
When Cannabis Canada Medical Inc. sought a licence from Ottawa, a heated debate ensued. Dissatisfied that Ottawa’s setback was more than double that of Toronto and complaining that the city’s restrictions were excessive, the company turned to the Ontario Municipal Board in hopes of having the city’s decision overturned.
Ultimately, however, it dropped its appeal.