MEDICAL MARIHUANA: ONGOING IMPACT OF NEW FEDERAL LEGISLATION. Local Government Management Association Conference. June 12, 2014

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1 MEDICAL MARIHUANA: ONGOING IMPACT OF NEW FEDERAL LEGISLATION Local Government Management Association Conference June 12, 2014 Presented by: Kathryn Stuart & Colin Stewart

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3 1.0 Changes to Federal 1.1 Licences Marihuana for Medical Purposes Regulation ( MMPR ) came into force April 1, 2014 MMPR permits licensed producers to produce large quantities of medical marihuana and operate as a business as opposed to growing for one or two individuals Regulation allows licensed producers to possess, produce, sell, provide, ship, deliver, transport and destroy marihuana Drying is included in the meaning of production

4 1.0 Changes to Federal 1.2 Personal Production Licences Personal production licenses are no longer issued and have all expired as of March 2014 March 21, 2014 decision of Federal Court has granted applicant Allard and all personal use production licensees ability to continue to grow until federal court makes final decision hearing in 2015

5 1.0 Changes to Federal 1.3 Notice to Local Governments Applicants must submit a notice to the local government The notice must include: name the date they will submit the application to Federal Minister of Health activities for which the licence is sought address of the site each building within the site which the applicant proposes to use to conduct those activities

6 1.0 Changes to Federal 1.4 Issued Licence Under s.26 of MMPR the Federal Minister of Health may issue a licence which will include: name of the licensee address permitted activities possibly the maximum quantity of dried marihuana that may be produced under the licence in a specified period

7 1.0 Changes to Federal 1.5 MMPR Requirements All production and storage is to take place indoors Security measures specified by Health Canada relating to: Controlling access to the facilities Controlling access to restricted areas of the facility Visual monitoring of the facility and perimeter of the site Intrusion detection systems No customer attendance mail or shipping service only Odor Controls

8 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.1 ALC Says MMGF is a Farm Use The Agricultural Land Commission Act ( ALCA ) defines farm use as: an occupation or use of land for farm purposes, including farming of lands, plants and animals and any other similar activity designated as farm use by regulation, and includes a farm operation as defined in the Farm Practices Protection (Right to Farm) Act.

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10 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.2 Not All Activities of the MMGF would be Consistent with Farm Use ALC bulletin says: Accessory uses must be necessary and commensurate with primary function of land/property to produce an agricultural product Small business office, testing lab, processing and drying, packaging, shipping areas, cloning rooms allowed as part of farm use Stand alone research and development facility is not a farm use

11 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.3 If Land is in ALR, can Local Governments Prohibit MMGF Use? No, section 46(2) of the ALCA requires that every local government ensure its land use bylaws are consistent with the Act, the Regulations, and orders of the Commission Under 46(2), a land use bylaw that is inconsistent with this Act, the Regulations or an order of the Commission is, to the extent of the inconsistency, of no force or effect

12 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.4 If MMGF is in ALR, Can Local Governments Regulate it? Yes, section 46(6) of the ALCA says a bylaw imposing further restrictions on farm use is not by that reason alone inconsistent with the Act What would be considered inconsistent? Examples are: allow use not permitted by ALCA and Regulations use that impairs or impedes intent of ALCA and Regulations

13 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.4 If MMGF is in ALR, Can Local Governments Regulate it? (con t) Local government bylaws may regulate but not prohibit certain farm activities Section 2(2) of the Agricultural Land Reserve Use, Subdivision, and Procedure Regulation 171/2002 sets out farm uses for the purposes of the Act that may be regulated but must not be prohibited by any local government bylaw (except a bylaw under s.917 of the Local Government Act)

14 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.4 If MMGF is ALR, Can Local Governments Regulate it? (con t) A number of these activities would presumably apply to a MMGF including: Farm retail sales if all the farm product offered for sale is produced on the farm on which the retail sales are taking place storage, packing, product preparation or processing of farm products if at least 50% of the farm product being stored, packed, prepared or processed is produced on the farm

15 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.5 What Land Use Bylaw Provisions Regulate without Prohibiting? Setbacks Minimum site areas Maximum size of buildings/structures Density

16 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.6 Farm Practices Protection (Right to Farm) Act ( Right to Farm Act ) Right to Farm Act defines farm business and operation Farm operation includes carrying on a farm business of growing, producing, raising and keeping of animals or plants, including mushrooms, or the primary products of those plants or animals On its face, includes MMGF

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18 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.6 Farm Practices Protection (Right to Farm) Act ( Right to Farm Act ) (con t) Where in ALR or on land where farm use is permitted and normal farm practice is followed: Farm business is not liable in nuisance from odour, noise, dust etc. Farm business cannot be prevented by injunction from operating

19 2.0 Medical Marihuana Growing Facility As Agricultural Use of Land 2.6 Farm Practices Protection (Right to Farm) Act ( Right to Farm Act ) (con t) Where in ALR or on land where farm use is permitted and normal farm practice is followed: (con t) Farm does not contravene a nuisance bylaw only by conducting a farm operation Keep this in mind when considering whether to regulate MMGF for nuisances Notice of the Right to Farm Act does not immunize farms from business regulations

20 3.0 Zoning 3.1 Constitutional Perspective on Local Government Zoning MMPR Production Licence identifies a physical location of the MMGF If local government land use bylaws prohibit a MMGF use for which a production licence has been issued under the MMPR, licence holder may try to argue that the federal law and licence override the local government laws

21 3.0 Zoning 3.1 Constitutional Perspective on Local Government Zoning (con t) In accordance with the case law relating to this constitutional issue, a local government law that: impairs a federal core of competence would not be enforceable impairs vital or essential part of a federally regulated undertaking would not be enforceable

22 3.0 Zoning 3.1 Constitutional Perspective on Local Government Zoning (con t) If a core competence is merely affected by a provincial law then the doctrine does not apply If a core competence is impaired then the doctrine does apply The Supreme Court of Canada defines impairment in the Canadian Western Bank v. Alberta (2007 SCC 22) decision as adverse consequences that place the core or vital part of the federal regulated undertaking in jeopardy but does not necessarily involve sterilizing or paralyzing the core.

23 3.0 Zoning 3.1 Constitutional Perspective on Local Government Zoning (con t) In Quebec (Attorney General) v. Canadian Owners and Pilots Association 2010 SCC 39 ( COPA ) the Supreme Court found that the federal government has exclusive jurisdiction regarding location of aerodromes because the place of taking off and landing is an essential part of aeronautics and aerial navigation, therefore the power to determine their location fell within the core competence of federal jurisdiction

24 3.0 Zoning 3.1 Constitutional Perspective on Local Government Zoning (con t) Land use regulations that prohibit aerodromes in certain locations impair this core competence In order to constitute impairment, the provincial law must impact the federal law in a way that seriously or significantly trammels the federal power

25 3.0 Zoning 3.1 Constitutional Perspective on Local Government Zoning (con t) The location of an MMGF site does not fall within the core of the federal jurisdiction to issue licences to applicants to produce marihuana for health purposes MMPR requires the licensee to identify the location only so they know where to inspect MMPR does not specify permitted location create a legal vacuum regarding land use if local government land use is read down

26 3.0 Zoning 3.1 Constitutional Perspective on Local Government Zoning (con t) To paraphrase the COPA decision, the ability to grant licences should not be hobbled by local interests Any zoning bylaw that prohibits all production of marihuana may hobble the ability of Health Canada to issue licences

27 3.0 Zoning 3.2 Doctine of Paramountcy Doctrine of paramountcy may still apply even if local government bylaw survives the core competence test Two-prong test: impossibility of dual compliance frustration of federal purpose

28 3.0 Zoning 3.2 Doctine of Paramountcy (con t) On either of these tests, without a total prohibition under the zoning bylaw, the doctrine of paramountcy would most likely not apply It is not impossible to comply with both zoning bylaw and MMPR There is no frustration of the federal purpose

29 3.0 Zoning 3.3 Conclusion Local government must permit MMGF on ALR land at least If local government prohibits MMGF altogether possible constitutional challenge Local government can permit MMGF in agricultural zones or industrial zones include setback requirements, maximum building size, minimum parcel size, density

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31 4.0 Implication of Permitting MMGF Use on Non-Agricultural Land Assessment authority classifies property as farm land based on the use of the property Portions of the site used for medical marihuana may qualify for farm class status Building may be split into more than one assessment property class

32 4.0 Implication of Permitting MMGF Use on Non-Agricultural Land Recent Metro Vancouver report demonstrates a 25,000 square foot warehouse on one acre of land in Richmond as Class 6 Business and Other with a $10,000 exemption would have total property taxes of $33,500 Same property as a Class 9 Farm Class Rate and Class 1 Residential Rate would have total property taxes of $395

33 4.0 Implication of Permitting MMGF Use on Non-Agricultural Land This report indicates that once an MMGF is licenced by Health Canada, an application for BC Assessment Farm Class status cannot be denied Licenced medical marihuana production facilities are treated like any other farm in terms of assessment Land does not need to be within the ALR in order to qualify for Farm Class status

34 5.0 Section 929 Withholding a Building Permit or Business Licence If zoning amendments are underway to provide specific provisions for MMGF and a building permit or business licence application for a MMGF is received that would be considered to be in conflict with the bylaw under preparation, then local government may withhold a building permit for a 30-day period and potentially further 60-day period If the zoning amendment does not proceed, the local government is liable to compensation for damages arising from withholding the building permit

35 5.0 Section 929 Withholding a Building Permit or Business Licence Business licence for a MMGF may also be withheld for 90 days if the use to which the land would be put in the business licence application would be contrary to the use that would be permitted by the bylaw that is under preparation

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37 6.0 Regulating MMGFs Through Business Licensing Powers 6.1 General Regulations Municipalities have the power to regulate business in accordance with section 8(6) of the Community Charter Section 12 authorizes the municipality to establish different classes of activities and make different provisions for the different classes established

38 6.0 Regulating MMGFs Through Business Licensing Powers 6.1 General Regulations (con t) Section 15 of the Community Charter authorizes a council to provide for a system of licences including: Establishing terms and conditions of a licence Establishing terms and conditions that must be met for obtaining, continuing to hold, or renew a licence

39 6.0 Regulating MMGFs Through Business Licensing Powers 6.2 Specific Provisions for MMGF Businesses Consider establishing a set of conditions that must be met in order for a person to apply for a business licence for a MMGF and to continue to hold or renew the business licence: Copy of licence granted by Health Canada for MMGF Outcome based conditions related to public health and safety, security of the facilities, and nuisances

40 6.0 Regulating MMGFs Through Business Licensing Powers 6.2 Specific Provisions for MMGF Businesses (con t) These might possibly include plans for the control of nuisances, such as odor Failure to follow plan provides reason for suspension or cancellation Consider the possibility of requiring compliance with the MMPR requirements failure to follow provides reason for suspension or cancellation Cannot purport to enforce MMPR

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42 6.0 Regulating MMGFs Through Business Licensing Powers 6.3 Basis for Suspension or Cancellation of Licences A municipality has the authority to suspend or cancel a business licence if the business is not managed properly or is poorly managed Evidence of being poorly managed include the creation of nuisances to the neighbourhood, public safely concerns, failure to comply with other regulatory regimes

43 6.0 Regulating MMGFs Through Business Licensing Powers 6.4 Can a Municipality Regulate a Farm Business through Business Licencing Requirements? Is an MMGF a farm business? The Farm Practices Protection (Right to Farm) Act, RSBC 1996 c. 131, defines farm business as a business in which one or more farm operations are conducted

44 6.0 Regulating MMGFs Through Business Licensing Powers 6.4 Can a Municipality Regulate a Farm Business through Business Licencing Requirements? (con t) Farm operation means any one of the following activities involved in carrying on a farm business growing, producing, raising, or keeping animals or plants, including mushrooms, or the primary products of those plants or animals Arguably then, even in an industrial zone, an MMGF is a farm business

45 6.0 Regulating MMGFs Through Business Licensing Powers 6.4 Can a Municipality Regulate a Farm Business through Business Licencing Requirements? (con t) The Right to Farm Act prohibits the farm business from being liable in nuisance for odor, noise, dust or other disturbance resulting from the farm operation, and a farmer must not be prevented by injunction from conducting that farm operation

46 6.0 Regulating MMGFs Through Business Licensing Powers 6.4 Can a Municipality Regulate a Farm Business through Business Licencing Requirements? (con t) In order to receive this protection, the farm operation must be: conducted in accordance with normal farm practice conducted in the ALR or on land which under the Local Government Act a farm use is allowed on Crown land designated as farming and not in contravention of a number of Acts including land use regulations

47 6.0 Regulating MMGFs Through Business Licensing Powers 6.4 Can a Municipality Regulate a Farm Business through Business Licencing Requirements? (con t) If the farm operation satisfies these conditions, it is not subject to a number of bylaws including bylaws made under the nuisance section of either the Community Charter or Local Government Act There is no mention in section 2 of a business licencing regulation not applying to the farm operation However, if the business regulation prohibits the creation of a nuisance there may be an argument that such a regulation is inconsistent with the Right to Farm legislation as it applies to a farm business

48 6.0 Regulating MMGFs Through Business Licensing Powers 6.5 Windset Greenhouses (Ladner) Ltd. v. Delta (Corp.) 2003 BCJ No. 839 This is a case in which the regulation of the greenhouse lighting and heating under business regulation powers was found to be inconsistent with the farm bylaws adopted under section 917 of the Local Government Act The municipality lands had been identified by regulation under s.918 of the Local Government Act as land to which sections 903(5) and 917 apply

49 6.0 Regulating MMGFs Through Business Licensing Powers 6.5 Windset Greenhouses (Ladner) Ltd. v. Delta (Corp.) 2003 BCJ No. 839 (con t) Section 903(5) prohibits a local government from exercising a power to prohibit or restrict the use of land for a farm business in a farming area identified by the Minister (currently, Langley, Abbotsford, Delta and Kelowna) Section 917 authorizes a local government to adopt farm bylaws in an area identified by the regulation The Court determined that the use of the business regulation powers defeated the purpose of the legislation

50 6.0 Regulating MMGFs Through Business Licensing Powers 6.5 Windset Greenhouses (Ladner) Ltd. v. Delta (Corp.) 2003 BCJ No. 839 (con t) A similar argument may be advanced with respect to using business licencing powers to regulate farm businesses and nuisances created by farm businesses

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