Given that Canada operates under a federated system, it can be difficult to understand the complexities of cannabis legislation and regulation throughout the various levels of government. However, by being aware of the roles and responsibilities at the Federal, Provincial and Municipal level, cannabis retail owners can arm themselves with the knowledge needed to make informed business decisions throughout the application process.
Federal Cannabis Regulations
As Canada’s highest level of government, the Federal government was responsible for creating the Cannabis Act. Serving as a baseline of restrictions across the country, the Cannabis Act allows provinces to adjust regulations as needed. For example, the minimum age of consumption outlined in the Cannabis Act is 18 but most provinces, including British Columbia, have raised the minimum consumption age to 19.
Health Canada also plays a part in the health and safety requirements for commercial operations. As a Federal department, Health Canada is responsible for ensuring quality control, seed-to-sale tracking, permitting licenses for growing and production, as well as maintaining the medical market.
Lastly, the Federal government mandates what types of products can be sold. While edibles are currently prohibited, this is set to change October 2019. Information on final regulations for edible cannabis, cannabis extracts and cannabis topicals can be found on the Government of Canada website but ultimately the regulations are meant to provide a level of consistency across the country.
Provincial Cannabis Regulations
Given the diverse demographics and populations throughout the country, Provinces had the opportunity to create more context-specific and regional rules through the Cannabis Act. Provinces were also given the ability to choose what type of market model they would want to adopt. While private and monopoly models were available options, British Columbia chose a hybrid model where both private and government dispensaries are permitted.
As the Provincial government is responsible for granting cannabis retail store licences, the application requirements include an application evaluation by the Liquor and Cannabis Regulation Branch, security screenings and financial integrity checks, and receiving a positive recommendation from the local government or Indigenous nation.
Municipal Cannabis Regulations
Municipal regulations will have the most impact for cannabis operations as each municipality can create rules that are directly linked to their jurisdictions. Municipal regulations will often dictate where cannabis can be sold physically, zoning regulations, and operation requirements.
As the first year of cannabis retail operations will show, these regulations vary greatly throughout British Columbia. Richmond, for example, has banned retail cannabis operations entirely whereas White Rock amended their bylaws to consider a single recreational cannabis store in the Town Centre area, under a Council-issued Temporary Use Permit. Vancouver on the other hand will grant cannabis business licences for both retail and compassion club operations providing they meet the application requirements.
The Challenges of Recreational Cannabis Sales in B.C.
Since the legalization of recreational cannabis in October 2018 through June 2019, cannabis retailers in British Columbia sold $19.5 million worth of legal pot. According to Statics Canada, this is the second worst performance in the country with Alberta taking the top spot at $123.7 million in sales.
Although British Columbia has a rich history with cannabis culture and “B.C. Bud” is widely considered as some of the best in the world, those in the industry blame a lack of legal outlets as one of the driving factors to the province’s poor industry performance.
With the B.C. Liquor Distribution Branch overseeing the management of government-owned dispensaries, it was noted in their annual report that problems with slow provincial and municipal approvals contributed to their lack of growth. This sentiment has been similarly echoed by cannabis retail owners and commercial cannabis growers alike.
In an interview with Global News, Dan Sutton, CEO with cannabis grower Tantalus Labs, said, “some of these operators [with licence applications] have been waiting with leases, paying out of their own pocket for 11 months now. I think it’s really time we see a bit more political ambition towards getting these entrepreneurs into the game.”
However, Public Safety Minister Mike Farnsworth partially blames the slow start due to those with vast connections to the black market within the province.
“Part of the challenge is ensuring that the legal cannabis market in B.C. doesn’t have links [to] organized crime or people engaged in criminal activity,” said Farnworth, suggesting B.C.’s licensing regime needed to be more careful in screening applicants than other jurisdictions.
Despite these challenges, there’s no denying that the Canadian cannabis industry is set to grow rapidly. With political leaders and constituents at a divide, cannabis retail owners need to be proactive in their approach in order to minimize their risk. As this market continues to evolve, it’s important to note that the liability landscape surrounding it will inevitably change too. For advice on cannabis insurance and risk management issues that are tailored to your specific needs, contact our team of dedicated brokers today.
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