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March 2022

Dispensing with dispensaries: Pot shops on every corner

Eric Turkienicz
Eric Turkienicz,

By Eric Turkienicz

*Updated with edited version also published with The Lawyer's Daily.

You're walking to grab a bite to eat from your favourite sushi place down the street. It's a warm, clear night and you pass the local businesses which give your neighbourhood its sense of character. An organic coffee shop. A marijuana dispensary. A vintage bookstore. Another dispensary. Maybe the grocer has those strawberries you like. Yeah, that sounds good. Yet another dispensary. A fourth dispensary. A fifth dispensary – this one with a clever name. Were there always this many?

It's a topic being discussed among residents, businesses, and local governments. A product that was illegal a short time ago is now widely available to the public and with it, comes increased private distribution. But are there now too many cannabis dispensaries? Before January 22, 2019, municipalities could have opted out of cannabis retail stores within their municipal boundaries.1 Some of those that did not elect to do so, along with their residents, are now left wondering what their options are.

To some extent the concern may be illusory. Are there truly an inordinate number of dispensaries or are we simply noticing them more because, until very recently, they were never around? There's rarely as much discussion when multiple restaurants or clothing stores open in a certain area and there are entire neighbourhoods built around those industries. Why shouldn't cannabis retailers be given the chance to explore what volume an area can sustain, just like any other business hanging up their shingle?

Still, regardless of whether we should be concerned, many people are. And one of the main questions to come up is whether municipalities can do anything about the volume and density of cannabis shops showing up in their communities? The answer, in short, is that while there is a route to having their concerns heard, their right to be heard doesn't mean they have a right to be obeyed.

Procedurally, to become a licensed cannabis store, one must send an application to the Registrar under the Alcohol and Gaming Commission of Ontario.2 Before approving an application for a license, the Registrar must provide notice to the municipality within which the business will be run, which may then make written submissions against granting the license.3 These submissions need to address whether issuing the license is in the public interest, based on the needs and wishes of residents.

Nothing in the Act, however, compels the Registrar to take action as a result of the municipality's submissions. What that means is that a municipality and residents of a particular community may end up screaming into the void since the only other avenue for a municipality to prevent or restrict the establishment of cannabis stores, through the establishment of by-laws, is prohibited if they have already opted-in.4

The Registrar makes the final decision about licensing approval, based on enumerated factors in the Act, including the broad language of "any other circumstance that may be prescribed."5 They may also attach conditions to the granting of the licence. Ultimately, the determination of whether to reject the licensing may come down to a municipality persuading the Registrar that the cannabis store in question is against the public interest. The Registrar's decisions can be subject to further review if one side or the other is dissatisfied with the result.6

...there are still some absolute restrictions on issuing a license.

Despite the municipalities having little control over the Registrar's decision, there are still some absolute restrictions on issuing a license. For example, storefronts cannot be located within 150 metres of schools (as defined in the Education Act).7

In British Colombia, a recent case8 held that a strata, which is an entity similar to a condominium corporation in Ontario, can pass by-laws to prevent a potential licensee from undertaking cannabis-related activities.Though this case has not been applied in Ontario, it suggests that a condominium corporation may be able to pass by-laws to restrict cannabis stores from opening on their property, for example, within the common areas of a lobby or in street-level retail locations.

Potential objections to the proliferation of cannabis stores are still being explored. The widespread availability of legal cannabis is a new phenomenon, limiting the amount of available research on its effect on public health. A study published in the Journal of Cannabis Research found that the number of stores increases the likelihood of some sociological groups to co-use cannabis and nicotine.9 However, as data continues to be gathered, the public health implications will be better understood.

On the other hand, municipalities embarking on a campaign of "pearl-clutching" fears that cannabis retailers will contribute to the downfall of society and the creation of skid rows will likely be poorly received by the Registrar. We are far past the days of Reefer Madness. There is ample evidence that cannabis is regularly consumed responsibly by members of various socio-cultural groups, ages, backgrounds, and across almost every demographic. Municipalities seeking to oppose a given application would be wise to avoid unfounded fears and focus on demonstrable data of potential harm or impacts on the public interest. It is near certain that the applicants themselves will come armed with their own data of the innocuous nature, or even benefits, of a dispensary in the community.

It remains to be seen what kind of arguments municipalities will advance which could be effective to persuade the Registrar and control the density and volume of cannabis stores appearing in their communities. Perhaps evolving key public health indicators will form the basis of an argument that a given decision by the Registrar should be reviewed. On the other hand, the continued financial viability and market for cannabis products will also speak for itself and may bolster arguments that these retailers ought to be treated no differently than other licensed establishments like bars or lottery retailers, which may exist in higher volumes in certain areas with no detriment to the community. Accordingly, the best control on the number of stores may be economics. For the time being, however, the chances of cannabis retailers continuing to open with some regularity and volume will be high. Very high.

  1. Cannabis Licence Act, 2018, S.O. 2018, c. 12, Sched. 2, 2018, S.O. 2018, c. 12 - Bill 36 at s. 41(1) [The Act].
  2. Ibid at s. 3(1).
  3. Ibid at s. 4(9).
  4. Ibid at s. 42. See also Red Hill Cannabis Inc. et al v Hamilton (City) where a city by-law restricting cannabis production facilities was upheld.
  5. Ibid at s. 4.
  6. Reynolds v. Registrar (Alcohol and Gaming Commission), 2019 ONSC 5571 at para 37.
  7. The Act at s. 4(12). See also Sticky Nuggz Inc. v Alcohol and Gaming Commission of Ontario, 2020 ONSC 5916.
  8. Kunzler v The Owners, Strata Plan EPS 1433 2020 BCSC 576.
  9. Shih, R.A., Tucker, J.S., Pedersen, E.R. et al. Density of medical and recreational cannabis outlets: racial/ethnic differences in the associations with young adult intentions to use cannabis, e-cigarettes, and cannabis mixed with tobacco/nicotine. J Cannabis Res 3, 28 (2021).

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