On June 24, 2015, Vancouver became the first Canadian city to regulate medical marijuana dispensaries. We provided an overview of these amendments here.

Currently, businesses seeking to comply with the municipal regime are undergoing a multi-stage review in hopes of being approved for operation. This post explains what to expect from that process and discusses prominent issues going forward.

Review Process

Preliminary Applications

The preliminary application deadline for a development permit was August 21, 2015. The City received 176 applications by this deadline, 69 of which were in the compassion club category.

Existing outlets that did not submit applications will be closed. Those that submitted a late application will be held pending review of applications received on time. Late applicants may not operate without a business licence.

Stage 1 Review (Locational)

At this stage, the City will consider only whether applications comply with zoning regulations. Medical marijuana-related businesses can only locate in a permitted commercial zone and must be at least 300 metres from schools, community centres, neighbourhood houses, facilities serving vulnerable youth, and other medical marijuana-related businesses.

Applicants with existing businesses who fail to proceed beyond this stage can continue to operate at their current addresses for six months while securing a zoning-compliant site. This grace period is conditional on adherence to “exemplary business practices.” This appears to refer to the licensing by-law requirements such as prohibitions on allowing smoking or minors on site, and the display or sale of edibles.

Applicants seeking to relocate should be aware that where a sensitive use (e.g. a school) does not yet exist, but has received a development permit, that use is considered approved. Therefore, businesses cannot relocate to within 300 metres of that approved sensitive use.

If an applicant complies with zoning requirements, but a sensitive use is subsequently built within 300 metres, the applicant can continue operating as a “non-conforming use” under s. 568 of the Vancouver Charter.[1] This means that although the medical marijuana-related use no longer conforms to bylaw requirements, it may continue subject to limits on expansion, discontinuance of the use, and major fire damage.

Stage 2 Review (Inspections & Declustering)

Applicants within 300 metres of another medical marijuana-related business are evaluated and are ranked using a points system. The successful applicant will be the one with the fewest points. In the event of a tie, a lottery will determine the winner. See our previous post on this topic for a breakdown of this points system.

This “declustering” process applies only to existing businesses that applied by the August 21, 2015 deadline. Going forward, businesses within 300 metres of an already approved medical marijuana-related business will be denied approval.

Stage 3 Review (Compliance & Permitting)

Applicants that proceed to this stage can apply for a development permit and business licence, and building and trades permits if necessary. The fee for a compassion club business licence is $1000 annually. Medical marijuana-related retail businesses will pay a $30,000 annual licence fee, the highest amount charged to any business category. For comparison, the Pacific National Exhibition pays the next highest licence fee at just over $16,000.

Businesses that are refused a development permit have recourse to the Board of Variance and must be able to demonstrate hardship. Those refused a business licence, possibly due to a Police Information Check, can appeal the decision to City Council.

Controlling a Budding Industry

At the time these bylaw amendments were passed, there were about 100 dispensaries in Vancouver. While growth suppression is an obvious side-effect of the regulatory regime given its zoning restrictions, the exact nature of this impact is still unknown. In June, it was reported that the City’s carrying capacity would be reduced to about 94 dispensaries. However, one Vancouver city councillor recently predicted only 15 businesses would survive this first review. At this rate, it remains to be seen how many business licences will ultimately be handed out and what effect this process will process will have on those accessing medical marijuana.

Although dispensaries are most numerous in Vancouver, other municipalities will be watching the licensing and permitting process as it unfolds. For instance, the City of Victoria recently announced its intention to explore the regulation of medical marijuana-related businesses.

The impacts of this new regulatory framework are diverse and constantly evolving. We will continue to monitor these issues and provide updates as new developments arise.