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"Obtaining Licenses and Permits Under the Cannabis Act: What We Know So Far" published in the Minden Brief

Jun 12, 2017

Obtaining Licenses and Permits Under the Cannabis Act: What We Know So Far

By: Matt Maurer

While there is much to be said in the yet-to-be-drafted regulations, the overall framework for the procedure for obtaining licenses and permits under the Cannabis Act is in place. Today we take a look at what we know so far.

What Licenses and Permits May Be Available?

The Cannabis Act gives the Minister the power to “Issue, renew, or amend licenses and permits that authorize importation, exportation, production, testing, packaging, labeling, sending, delivery, transportation, sale, possession or disposal of cannabis or any class of cannabis.”

In order to carry out this power, the Cannabis Act gives the Minister permission to:

  • Establish different classes of applications;
  • Establish conditions, by class of application or otherwise, that must be met before or during the consideration of an application;
  • Establish an order, by class of application or otherwise, for the consideration of applications; and
  • Provide for the disposition of applications.

Interestingly, the Cannabis Act specifically provides that if the Minister changes the rules that it applies to applications then the new rules will apply in respect of any existing application where no final decision has been made.

What Information will be Required in the Applications?

Much of this is still yet to be determined. The Cannabis Act provides that an application must include all of the information required by the Minister. Since the government has not yet set out the information that will be required in respect of each different kind of application, we do not yet know the full specifics. However, we do know that:

  • The Minister will prescribe the form and manner by which applications must be submitted and all applications will need to comply with the directive(s);
  • The Minister is specifically authorized to seek financial information from the applicant which would include, in the case of organizations, information about its shareholders or members as well as who controls the organization (whether directly or indirectly); and
  • The Minister is authorized to request any additional information that pertains to the information contained in the application that is necessary for the Minister to consider the application.​

Successful Applications and Fees

If an application is successful any license or permit given will be subject to the conditions that will be set out in the still-to-be-drafted regulations. The Minister also has the power to impose any additional conditions on a license or permit, over and above what is prescribed in the regulations, that the Minister deems appropriate.

Getting a feel for what the fees might ultimately be is challenging. Canvassing fees in some other jurisdictions does little to assist. In Victoria, B.C., a municipal cannabis business license can be had for as little as $500. A hundred kilometers away in Vancouver, a business license from the municipality can cost up to $30,000 per year. Down south in Arkansas, permit fees can be $100,000 per year.

Reasons for Rejection

Applications can be rejected either as a class or on an individual basis.

Class Rejections

The Cannabis Act allows the Minister to fix a date for the termination of a class of applications after which time every application of that class is terminated if a final decision has not yet been made in respect of an application. If an application is terminated as part of a class rejection, then the application fee must be returned to the applicant and the applicant has no right of recourse against the government for its failure to consider the application prior to the date fixed by the Minister.

Rejections on an Individual Basis

The Cannabis Act sets out specific reasons by which the Minister may refuse to issue, renew, or amend a license or permit. Those reasons include if:

  • doing so is likely to create a risk to public health or public safety, including the risk of cannabis being diverted to an illicit market or activity;
  • there are reasonable grounds to believe that false or misleading information or false or falsified documents were submitted in, or in support of, the application;​
  • the applicant has contravened in the past 10 years a provision of the Cannabis Act, the Controlled Drugs and Substances Act or the Food and Drugs Act or any regulation made under any of those Acts;
  • there are reasonable grounds to believe that the applicant has contravened in the past 10 years; (a) an order made under the Cannabis Act, the Controlled Drugs and Substances Act or the Food and Drugs Act, or a condition of another licence or permit issued to the applicant under any of those Acts;
  • the applicant is: (a) a young person (under 18); (b) an individual who is not ordinarily resident in Canada, or (c) an organization that was incorporated, formed, or otherwise organized outside Canada
  • a security clearance in respect of the application has been refused or cancelled;
  • the Minister is of the opinion that it is in the public interest to do so; or
  • any prescribed grounds for refusal exist.

Unlike a class rejection, if a license or permit is refused on an individual basis then the Cannabis Act requires the Minister to send written reasons for the rejection to the applicant. Rejection of an application could therefore be challenged in the courts on the basis of judicial review.

There is still a long way to go before we will know the intricacies of the various permits and their application processes. Keep checking my blog at canadacannabislegal.com for updates on federal regulations and provincial and municipal legislation and regulations.

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