Starting a new retail business venture involves a considerable amount of work in advance, including obtaining the necessary zoning and development permits from the local municipal authority. In the cannabis retail industry, there are even more challenges, as there are unique rules and regulations which apply to this industry specifically. Securing commercial retail space can take time, as can obtaining the necessary licences to operate a cannabis retail location. Municipal bylaws set out the regulations concerning zoning and development as they apply to the cannabis industry, which can be especially stringent. For example, Edmonton Zoning Bylaw 12800 sets out a regulation that a cannabis store may not be established within 200 metres of another cannabis store.
In a recent case heard by Alberta’s Court of Appeal, this bylaw created an issue for an applicant seeking a development permit to open a new cannabis retail location in Edmonton. Below, we will review the decision and the Court’s findings, as well as provide an overview of cannabis retail requirements in Alberta generally.
Applications for Cannabis Retail Licenses Submitted
In January of 2020, a business entity, MSI, made an inquiry with the City of Edmonton’s Zoning and Development Branch about the possibility of acquiring a cannabis retail licence to operate at 12305 118th Avenue. However, MSI was advised that any application would be refused automatically due to an existing development permit for another cannabis retail location within 200 metres of the proposed address. The existing permit was set to expire on April 24, 2020, and so MSI was advised to wait until then to apply for a development permit.
In March of 2020, another individual, IB, submitted a change of use application to convert an existing convenience store to a cannabis retail shop, located 117 metres from the site of the existing development permit which was set to expire the following month. Soon after IB submitted his application, the Development Branch was informed that the site of the original permit would not be used for a cannabis retail location after all. Upon learning this, the Development Branch cancelled the original permit.
On April 15, MSI contacted the Development Branch to follow up on its original inquiry and was told the existing permit was still in effect. The next day, the Development Branch issued a cannabis retail permit to IB.
MSI contacted the Development Branch again on April 24 and was told that a new permit had been issued to IB for a location within 200 metres of MSI’s proposed site, and so MSI’s application would be rejected.
Permit Cancellation Appealed at the Subdivision and Development Appeal Board in de novo Hearing
MSI appealed the decision before the Subdivision and Development Appeal Board, claiming the Development Branch had no jurisdiction to cancel the existing permit before its expiry, and therefore it had no jurisdiction to issue a permit to IB on April 16th.
The Board held a de novo hearing. In a de novo hearing, the Board was not required to examine the original Development Branch decision for legal error. Instead, the Board could consider the matter in light of the law and facts in place at the time of the hearing. Since the original permit had been set to expire on April 24th and the hearing was held in June, the permit was expired at the time of the hearing. As a result, there was no impediment in granting the permit issued to IB on April 16th. MSI appealed the decision to the Court of Appeal.
Legal Error Cannot Be Cured by de novo Hearing
The Court of Appeal held that while de novo hearings are generally preferred to expedite the resolution of land use disputes, they cannot be used to cure certain legal errors.
In the case at hand, the Court found that not only did the Board’s decision not cure the legal error made by the development officer, but it also perpetuated it. In normal cases, the Court would have set aside the decision of the Board and remitted the matter back for reconsideration. However, in light of the unique facts of the case, the Court cancelled the IB permit and indicated that both IB and MSI, along with any other interested party, were free to reapply for a permit to the Development Branch.
Cannabis Retail in Alberta: The Basic Rules
If you are looking to open a cannabis retail location in the province of Alberta, several regulations must be met under Alberta Gaming, Liquor, and Cannabis (AGLC). The regulations can be subdivided into three categories:
- Municipal
- Business
- Retail
While the specifics of the regulations, particularly the municipal rules, will vary depending on the jurisdiction, cannabis retailers in Alberta can expect to encounter these issues anywhere in the province. In addition to the rules set out below, applicants will also be subjected to criminal background checks as well as required to pay several fees, including a $400 application fee and a $700 annual licencing fee.
Municipal Cannabis Retail Rules in Alberta
To obtain a cannabis retail licence from AGLC, the applicant must first receive municipal approval from the applicable municipal authority. Applicants must ensure they have met the local requirements pertaining to:
- Cannabis licencing
- Zoning restrictions
- Land-use regulations
Notably, cannabis retail locations will not be permitted within 100 metres of a health care facility or school anywhere in the province.
Business Cannabis Retail Rules in Alberta
In addition to the above, any business seeking to obtain a cannabis retail licence in Alberta must be incorporated in Alberta or registered in Alberta if incorporated in a different province. Further, the business must be separate from any other business entity and only incorporated to operate a cannabis retail business. Lastly, the business must have title in or be a party to a lease for an approved commercial space.
Retail Cannabis Rules in Alberta
Cannabis retail locations must observe the following rules, no matter where in the province they are located:
- The physical space must have the following components:
- A shipping and receiving area that is separate from any other nearby businesses
- A point-of-sale area
- A secure storage area
- An alarm system and a video surveillance system
- Secure product displays
- Retailers are only permitted to purchase cannabis products through Alberta Gaming, Liquor, and Cannabis
- Stores may not operate between 2:00 a.m. and 10:00 a.m.
- All cannabis accessories must be approved for sale
- Minors are not permitted in a store at any time, even if they are accompanied by an adult
- Staff must request government-issued photo ID for any customer who appears to be under 25 years of age
- Retailers may not sell cannabis to any customer who appears intoxicated
Edmonton Licencing Fees for Cannabis Retail Decreased Significantly as of January 17th
In an attempt to curb black-market sales of cannabis, the Edmonton city council approved a 90% reduction in the licencing fee for cannabis retail operators in the city, which took effect on January 17th of this year. The council hopes that reducing the fees associated with operating a legal cannabis shop would allow business owners to charge lower prices, making the legal market more competitive with the black market. According to Councillor Scott McKeen:
If we’re going to have legal cannabis sales and consumption, one of the goals should be to reduce and eventually eliminate the black market. If we have legal cannabis costing much more than black market cannabis, then we’ve got a problem.
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