Canadian Lawyer

22 F E B R U A R Y 2 0 1 7 w w w . C A N A D I A N L a w y e r m a g . c o m only way that marijuana can be bought and sold in Canada is under medical marijuana legislation through autho- rized licensed producers and licensed cultivators. "So, if a retail marijuana out- let is receiving its inventory of marijuana from an authorized producer, then the producer is breaking the law by selling to the retailer rather than to registered indi- viduals with prescriptions through the mail," he says. "Additionally, the retailer is breaking the law because it's selling to consumers in a retail store environment when the sale should be directly between the authorized producer and the patient, again by mail." Like many lawyers, Wilson suggests retailers resist setting up shops and land- lords refuse pot retailers as tenants until the legislative framework is fully in place and the rules become clear. But Kirk Tousaw, whose Vancouver Island practice focuses on cannabis- related issues, says the budding billion- dollar industry is waiting to fully bloom with the blessing of the federal govern- ment. He suggests the new, legal infra- structure build upon the existing one that has developed over the years and not only be immune to penalization but also be sanctioned. He points to the many B.C. communities that are selling business licences to pot dispensaries, imposing a series of restrictions within which they must operate. "What you've seen over the last three years is a real coming out of shadows and into the light of the cannabis industry in this country popularized mainly by the spread of dispensaries," says Tousaw. "The consumers are responding in a real mas- sive way to the emergence of dispensaries. And that I think says a lot about public acceptance." Many of these shops, he adds, have three- to five-year leases in place and forced closure could result in an empty storefront, a breached lease and implica- tions upon the landlord, including forfei- ture of property. But Tousaw sees a solid argument to be made in defence of a landlord caught in this situation. As the Woodstock generation ages, there should be no surprise that there's a waiting demand for legal pot. In fact, many are simply not waiting. Health Can- ada reports that the number of people accessing medical marijuana legally has tripled in the past year. Nearly 100,000 Canadians armed with prescriptions reg- istered to buy the potent weed through a licensed grower at the end of September. A year earlier, that number was just above 30,000 people. Until full legalization is rolled out and legislation is in place, the shops can be considered illegal and the validity of the leases remains in question, adds Robert Eisenberg. "This whole regime is really in a state of flux," says Eisenberg, whose prac- tice at WeirFoulds LLP in Toronto focuses on commercial leasing. While the dispensaries are not cur- rently operating legally, it is only a matter of time that they may be above board. But the marijuana supply chain is dependent upon how the provinces, and, in turn, the municipalities decide to approach legal- ization. How they react may well result in the elimination of some of these shops, leaving landlords, some with leases, in the lurch. The early indication is that many of these shops have a chance to survive legal- ization. The task force on legalized recre- ational marijuana suggested in a report released in mid-December that the selling of pot be restricted to storefront shops and by mail order and not be sold in conjunc- tion with cigarettes and alcohol. It further suggests wholesale distribution and retail operations be regulated by provincial and territorial governments in close collabora- tion with municipalities. And that may well set the stage for further restrictions. When Colorado legal- ized marijuana, municipalities were given the opportunity to opt out. While the Rocky Mountain state's larger communi- ties have allowed dispensaries, municipal councils of some of the smaller communi- ties decided against allowing them. "We actually had something very simi- lar here in Colorado," says Sam Kamin, the Vicente Sederberg Professor of Marijuana Law and Policy at the University of Den- ver, of the many shops that appeared in anticipation of legalization. "It sprung up without laws and then the law adapted to the situation." Some of the shops that pre-existed legalization were able to adapt to the tran- sition and remained, while others relo- cated or simply shut down. One of the challenges, observes Kamin, is that regula- tion of marijuana is evolutionary, develop- ing with time, and expensive for both the regulator and the regulated. And that's an expense that not all retailers are willing to shoulder. The application for a permit itself includes proof of state residency, a criminal records check and a requirement that the operations must be secure and include video surveillance of the facil- ity. So many of the shops that pre-existed legalization no longer exist. "There's lots of minutiae that have to be taken care of," he adds. Although Colorado has served as a model for other jurisdictions, how legal- ization rolls out nationally in Canada is still murky. But if Colorado serves as an example, the process is not likely to be swift, says Kamin. Task force recommendations Canada's cannabis legalization task force offered a series of recommendations on how the federal government should approach making recreational marijuana legal. Many storefront shops have already been established in anticipation of legal- ization. If the government approaches the suggestions on how marijuana can be distributed, some of the stores may well continue to exist. The task force suggested consumers should be able to access cannabis safely, minimizing potential risks and reducing an illicit market. It also suggested: • Storefront retail stores with limits on density and location and appropriate distance from schools, community centres and parks; • Stores have trained and knowledgeable staff; • Marijuana also be available through mail order.

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