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Familiarity with retail cannabis rules needed

Speaker's Corner

October 17 has come and gone. Recreational cannabis is now legal across Canada and demand spiked instantly.

The Ontario Cannabis Store, for example, says it received about 100,000 online orders within the first 24 hours of cannabis becoming legal. Twelve thousand of these orders were placed within the first hour of legalization. 

The federal Cannabis Act, which came into force on Oct. 17 and legalized recreational cannabis, left key aspects of regulation to the provinces and territories. Specifically, provinces and territories are each responsible for developing systems for the distribution and sale of recreational cannabis, as well as developing restrictions on consumption of cannabis in their respective jurisdictions.

On the same day that recreational cannabis was legalized on a federal level, Ontario’s Bill 36, the Cannabis Statute Law Amendment Act, 2018 received royal assent and changed previously established regulations on the consumption of cannabis at the 11th hour.

This meant that lawyers specializing in cannabis and otherwise needed to become re-familiarized with a brand-new regime. Immediately, lawyers impacted by cannabis legalization in a multitude of areas needed to consider what impact the change had on clients’ business plans and how to advise clients to change and adapt to the new legislation. 

Beginning April 1, 2019, Ontarians will see privately run stores sell recreational cannabis and cannabis accessories under strict regulation from the Alcohol and Gaming Commission of Ontario. The AGCO will be evaluating and granting applications to retail operator hopefuls. Until the bricks-and-mortar retail stores are up and running next year, all legal sales in Ontario will be done through the OCS’ online store. 

I am sure the general public is anxious for the application process to get started. Last week, the Ontario ombudsman confirmed that his office had received more than 1,000 complaints from customers frustrated with slow delivery times, poor customer service and unexplained changes or cancellations to their orders from the OCS. 

As soon as the plan for Bill 36 was announced, lawyers practising in all areas needed to be aware of the impact of cannabis legalization in Ontario. 

Bill 36 amended and renamed the former Cannabis Act, 2017 to the Cannabis Control Act, 2017. It also amended the Ontario Cannabis Retail Corporation Act, 2017 and the Liquor Control Act and created the new Cannabis Licence Act, 2018, which outlines licensing for private retail cannabis stores in Ontario that will launch in April 2019. Bill 36 also created the new Smoke Free Ontario Act, 2017. The effect of the new SFA is significant.

Ontario’s prior legislation would limit cannabis consumption to private residences. Now, under the new SFA, smoking and/or vaping (i.e., using an electronic cigarette or inhalant-type device) cannabis is now permitted in any location where smoking tobacco is permitted. 

Ontarians may now consume cannabis in many outdoor public places, including sidewalks and parks, certain designated guest rooms in hotels, motels and inns, residential vehicles and boats that meet certain criteria and, if certain prescribed requirements are met, in controlled areas in certain long-term care homes, retirement homes, supportive housing residences and psychiatric facilities. 

This change has come as a shock to many city counsellors and municipalities. The province has given municipalities options to enact bylaws to set rules beyond the provincially set minimum standard. Many municipalities have been immediately responsive to the consumption issue and many have already begun to establish bylaws to control consumption. 

The passing of Bill 36 also means that a new framework for recreational cannabis retailing has been introduced. Under Ontario’s former cannabis legislation, all retail in Ontario would be controlled by the government through a subsidiary known as the Ontario Cannabis Store.

Municipalities again have some power to prohibit the presence of retail stores. By passing a special resolution before Jan. 22, 2019, municipalities may take advantage of an opt-out of the cannabis retail framework. 

The catch? The municipal opt-out is a one-time-only offer. If municipalities either miss the deadline or opt in to the cannabis retail framework, they will not get another chance to opt out. 

However, municipalities will always have the option to develop bylaws to impose limits on the location of retail, consumption and other things. 

A municipal election was held in Ontario on Oct. 22. New and re-elected policymakers need to consider the attitude of their communities and city counsellors and whether or not the municipalities they serve are open to cannabis retail or not. Similarly, any potential retailer and their advisors must be mindful of municipal attitudes toward retail in order to avoid any roadblocks in the application process.

Whitney E. Abrams is a lawyer at Minden Gross LLP and an active member of the firm’s Cannabis Law practice group, where she provides regulatory and business advice to domestic and international cannabis stakeholders. She can be contacted at wabrams@mindengross.com and followed on Twitter at @whitneyeabrams.

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