What Landlords Need to Know
Until the Cannabis Act comes into effect and legalizes/regulates access to cannabis, it is still technically illegal to operate a Retail Cannabis Store - and anyone operating such a store can hypothetically be charged with possession for the purposes of trafficking. For Landlords, that means that if you knowingly lease your premises to someone, knowing that they will be operating as a Cannabis Dispensary prior to April 1st, 2018, there could be potential liability. In much the same way, any Tenant operating a Retail Cannabis Store without a Licence after this date would invite that same liability onto the Landlord.
Accordingly, where a lease is being entered into, and your Tenant hasn’t yet received a Retail Cannabis Store Licence, the Agreement should be made on a conditional basis. This will afford the Landlord a certain amount of protection from liability.
In addition, a Landlord needs to be satisfied that a Tenant will be operating a Retail Cannabis Store in compliance with the relevant Legislation, Regulations and Bylaws – whether they be on a Federal, Provincial, or Municipal level. The Lease Agreement must accordingly address all of these issues.
Contrary to situations where building are leased in order to be used as a Doctor’s Office or a convenience store, a Retail Cannabis Store will likely be subject to Public Interest concerns. This concept has long-existed with respect to Liquor Licence matters, and it requires the careful balancing between the right to operate a business and the right to enjoy one’s property. The unavoidable reality is that the community in which your property is located will likely be vocally opposed to the fact that your premises are being used for the purpose of Cannabis sales. This is, of course, understandable. Not everyone supports the concept of legalizing Cannabis use. Moreover, many will be concerned about the possibility for public nuisance or malfeasance that has (rightly or wrongly) come to be associated with public cannabis use. In order to avoid complications with local Resident Groups, it’s important that the Lease include proper security and safety protocols. Showing your neighbours that your Tenant has a system in place to address and deal with their concerns is always the first step in repairing or otherwise maintaining your relationship with the neighbourhood at large.
Obtaining a Licensed Retail Cannabis Store Licence will likely necessitate advertising as part of the application process. As such, and by virtue of this, the Residents and the community as a whole will get to have a say in the Licensing process. A proactive approach combined with a willingness to meet the needs of your community will make the process that much more efficient, and will help Applicants to avoid situations wherein their applications are delayed or outright rejected.
We at Vassos Law LLP have been helping landlords deal with specialized licensed premises for 30 years. When it comes to Leasing to a Cannabis Retail Store, we are perfectly suited to guide you through this precarious process in order to ensure that your rights are protected.