Business Licensing Requirements May Assist in Limiting Marihuana Storefronts – Abbotsford (City) v. Weeds Glass & Gifts Ltd.

A recent decision by the Supreme Court of British Columbia has reinforced the fact that municipalities are under no obligation to license illegal (albeit popular) businesses in their jurisdictions.  In the decision Abbotsford (City) v. Weeds Glass & Gifts Ltd., 2016 BCSC 135, the Court issued an order to the City of Abbotsford granting an injunction against the Respondent that prevented it from operating its business in Abbotsford on the grounds that it did not hold a valid business licence.

The facts of the case are as follows:  The Respondent operated a retail storefront that sold marihuana and marihuana products in the City of Abbotsford – an activity that is illegal under the federal Controlled Drugs and Substances Act.  When the Respondent applied to the Abbotsford (the “City”) for a business licence, the application was refused on the basis that the Respondent had failed to comply with section 5.9 of the City’s business licence bylaw, which provided that:

“Every person who carries on a business in the City, shall comply with all bylaws of the City and all applicable laws, rules, codes, regulations and orders of all Federal or Provincial authorities having jurisdiction over such a business.”

To ensure compliance with this provision the business licensing bylaw also gives the City’s licence inspectors the authority to require business licence applicants to provide proof of certification or qualification required by a federal, provincial or local government authority with jurisdiction over a business.  The Respondent was unable to comply with section 5.9 and could not provide license inspectors with proof of certification under any federal act (like, for example, the Marihuana for Medical Purposes Regulation).  Accordingly, the City rejected its business licence application.

Despite its lack of business license, the Respondent continued to operate its storefront, which eventually led to the City seeking a court-ordered injunction.  The Court found no reason to refuse the order as it was very clear that the City was trying to enforce a valid bylaw that the Respondent continued to breach.  Interestingly, the Court concluded by saying to the Respondent that “if and when the law changes” some of the Respondent’s arguments could create an appropriate defense to the City’s action.

In some senses, the Abbotsford decision represents a fairly straightforward case of a court granting an injunction that allows a municipality to compel compliance with its bylaws.  This said, the Court’s comments addressing some of the Respondent’s arguments about the perceived “unfairness” of targeting marihuana retailers may serve as a red flag for municipalities seeking to more finely control marihuana storefronts in the event that these businesses are no longer prohibited by federal laws.

There may soon be a time that, due to changes in the federal laws governing the sale of marihuana, municipalities will have to look for new ways to appropriately regulate marihuana retail operations.  Changes to the federal legal landscape regulating the sale of marihuana could make it much more difficult for municipalities to refuse business licences for operations like “Weed, Glass, and Gifts”, and local governments should consider reviewing their land use and business licensing bylaws to ensure that, if legalized, they would be ready to proceed with bylaw amendments to determine the location and licensing regulations for marihuana retail operations.  This will help ensure that they, like any other business or use, are appropriately regulated and sited.  Such forward thinking will help to reduce any negative impacts that a unique new player to the retail scene could have on local governments and the people they serve.