Ontario cannabis plan would remove municipalities’ direct control over store locations

Ontario’s gambling and alcohol regulator will decide where cannabis stores will be located and how many each municipality will get under the proposed cannabis legislation introduced at Queen’s Park this week.

The plan leaves a stark choice for more than 400 cities, towns, townships, parishes, hamlets and villages across Ontario that have been given a deadline of Jan. 22 to either opt in or opt out of cannabis retail. If they opt out, the provincial government says they can change their mind later. But if they opt in, the legislation says their decision will be “final and may not be further reversed.”

“It’s all or nothing,” said Trina Fraser, an Ottawa-based lawyer with a focus on clients such as licensed medical cannabis producers, investors and cannabis clinics. “It’s either we opt out and there are none, or we opt in, and then the province basically tells us where they’re going to go and how many we’re getting.”

The Tories’ new plan, which prohibits municipalities from designating cannabis retail as a separate land use from general retail or creating any of their own licensing regimes, is part of a dramatic policy shift announced in July. The Ontario PCs scrapped the former Liberal government’s plan for government-run stores in favour of private brick-and-mortar retailers. When a store is proposed under the new legislation, the municipality and its residents would be given 15 days to offer commentary. But, ultimately, the decision will rest with the Alcohol and Gaming Commission of Ontario.

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“If municipalities and local residents feel that the concentration is too high or there are issues related to the store location or the particular applicant, they have an opportunity at that time to speak directly to the AGCO and to bring those concerns,” Attorney-General Caroline Mulroney told reporters on Thursday.

There are still details to work out in the coming months, such as the required buffer zone between stores and schools, slated to be settled by December.

Ms. Fraser fears that the removal of municipalities’ direct control over store locations and concentrations will negatively affect those who are still weighing whether to opt in. Some municipalities, such as Richmond Hill and Markham, had already vowed to opt out before the new legislation was introduced. Jamie McGarvey, president of the Association of Municipalities of Ontario, said some municipal governments may have areas where they definitely don’t want a retail store. “That will be important to their decision making on whether to opt out or not," he said.

“The truth is, this is new ground for everyone," he added. "Compared to the other orders of government, municipal government will bear the greatest impact in terms of legalized cannabis on the ground.”

The provincial government is continuing its consultations with Ontario municipalities in the wake of the proposed legislation, and some municipalities are already planning to offer up their concerns. Ottawa Mayor Jim Watson plans to speak with Ms. Mulroney next week about “certain provisions,” his office confirmed. Hamilton Mayor Fred Eisenberger said in an interview on Friday that the provincial government “ought to provide more latitude to municipalities,” citing issues such as control over locations and numbers of stores.

As well, he expressed concern about the potential revenue municipalities will lose out on if they can’t create their own licensing systems for cannabis retail outlets. “Given the potential impacts, additional costs in terms of enforcement, policing issues, public health issues, I think they ought to allow for municipalities to level significant licensing fees for those who want to set up shop,” he said. (Ontario has pledged to share some of the federal excise duty it receives from recreational cannabis with municipalities who opt in, if its cut exceeds $100-million in two years.)

The timing of the provincial move is also complicated by the throng of municipal elections under way across Ontario. Amber Bryant-Peller, assistant to the mayor of Kingston, said that the city’s position on retail cannabis will “ultimately be a question for the next council.” Some current mayors have said they won’t opt out, including Mayor John Tory of Toronto and Mr. Watson of Ottawa. Mr. Tory told reporters it wouldn’t be practical for a city the size of Toronto to opt out altogether, but he wished they had more time to prepare, and expects Toronto to be compensated for the added expenses of bylaw and police enforcement.