2018 Cannabis Legalization

This Note is part of a series of Notes on key City issues to update City Council at the start of its 2018 – 2022 term.

Issue description

Residents have been able to purchase legal cannabis online through the Ontario Cannabis Store since October 17, 2018. A legal private retail model for recreational cannabis is expected to be in place in Ontario by April 1, 2019. Retailers will be required to obtain provincial licences and meet requirements set out by provincial legislation and regulations to sell cannabis. Municipalities are permitted to pass a resolution to opt-out of having cannabis retail stores operate in their boundaries; this resolution must be made before January 22, 2019.

Status

The Federal Government has legalized cannabis in Canada through the passing of Bill C-45, the Cannabis Act. This Act legalized the distribution, sale, and consumption of cannabis as of October 17, 2018. On December 17, 2017, the Province enacted the Cannabis Act, 2017 and Road Safety Statute Law Amendment Act, 2017, as well as updated the Smoke-Free Ontario Act, 2017 to regulate the sale and distribution of cannabis in Ontario.

On October 17, 2018, the Province of Ontario enacted the Cannabis Statute Law Amendment Act, 2018. This Act amended the Ontario Cannabis Act, 2017 and created the Cannabis Licence Act, 2018 to permit the Ontario Cannabis Retail Corporation (OCRC) and private retailers licensed by the Alcohol and Gaming Commission of Ontario (AGCO) to sell recreational-use cannabis in Ontario. The Cannabis Act, 2017 was also renamed the Cannabis Control Act, 2017. On November 16, 2018, the Province enacted regulations to provide additional rules for the licensing and operation of private cannabis stores.

This new provincial legislation permits Council to pass a resolution to opt-out of provincially-licensed cannabis retail sales by January 22, 2019. If Council does not pass a resolution to opt-out, licensed retail stores will be able to operate within the City and the decision cannot be changed after January 22, 2019. However, if Council passes a resolution to opt-out, it may lift the prohibition at a later date. City staff will present Council with a report prior to January 22, 2019, for a decision on this matter. The Province has indicated that the amount of provincial funding that a municipality will receive to assist in cannabis legalization will be tied to whether that municipality has opted-out or not.

The production and sale of medical cannabis continues to be regulated exclusively by the Federal Government.

Background

The federal Cannabis Act (Bill C-45) legalized the distribution, sale, and consumption of cannabis. Consumption of cannabis for medical purposes has been permitted since 2001 under various statutes, currently under the Access to Cannabis for Medical Purposes Regulation (ACMPR).

On October 2, 2017, City Council adopted a series of recommendations formalizing the City’s position on legalization and requesting that the federal and provincial governments consider community impacts and provide adequate tools, resources, and guidance to the City for legalization (see “Municipal considerations,” below).

Provincial Legislation and Regulations

In Ontario, private cannabis retailers are required to obtain provincial licences and meet requirements set out by provincial legislation and regulations.

The new provincial legislation and regulations:

  • Do not allow municipalities to designate cannabis retail sales as a separate land use from any other form of retail.
  • Exempt cannabis retail stores from municipal licensing requirements.
  • Establish the OCRC as the exclusive wholesaler and distributor to private retail stores.
  • Establish the OCRC as the exclusive online retailer of cannabis.
  • Establish the AGCO as the provincial regulator authorized to grant store licences.
    • Retailers will need a Retail Operator Licence, Cannabis Retail Manager Licence and Retail Store Authorization.
    • The AGCO will have the authority to enforce compliance; this includes revoking licences from stores that fail to comply with the conditions set by the Province. The AGCO will not enforce against illegal storefronts selling cannabis without a provincial licence. Enforcement will continue to be the responsibility of local law enforcement and municipal bylaw enforcement.
    • Prior to issuing retail store authorization, the AGCO will provide a 15-day notification period to receive public input for a proposed site. When reviewing feedback from the public notice process, the AGCO will consider matters related to protecting public health and safety, protecting youth and restricting their access to cannabis, and preventing illicit activities related to cannabis.
  • Do not allow the number of retail licences to be capped.
  • Prohibit sales and transfers of the licences, and set a market concentration limit of 75 stores province-wide per operator.
  • Restrict a cannabis retail store from being located within 150 meters of public and private schools.
  • Require that stores are standalone – that is, they cannot be a part of a store or added to stores that sell other products, including pharmacies and stores selling alcohol.
  • Prohibit anyone under the age of 19 from accessing a cannabis retail store location.
  • Permit stores to sell only cannabis accessories and legally-sourced cannabis.
  • Limit hours of operation to between 9:00 a.m. and 11:00 p.m. on any day, consistent with alcohol retail.
  • Allow Licensed Producers to operate one store onsite at a production facility.

Consumption of Cannabis

Bill 36 also amended the rules governing the consumption of cannabis. The new rules:

  • Make the Smoke-Free Ontario Act, 2017 (SFOA) apply to the smoking and vaping of cannabis, both medical and recreational.
  • Prohibit the smoking of cannabis in the same places where the smoking of tobacco and the use of electronic cigarettes are prohibited. Smoking cannabis in motor vehicles is also prohibited.
  • Permit the Province to designate persons, such as Toronto Public Health (TPH) enforcement staff, to enforce the restrictions on smoking and vaping of cannabis in public places under the SFOA. TPH received this authority on the day of legalization, October 17.

This means that individuals may smoke or vape recreational and medical cannabis in a private home; in a residential unit or its balcony (depending on building rules); in many outdoor public places (e.g. sidewalks); in designated guest rooms in hotels, motels or inns; residential boats or vehicles fitted with permanent sleeping accommodations and cooking facilities when parked or anchored and meet other criteria; and in controlled areas in:

  • Long-term care homes
  • Certain retirement homes
  • Residential hospices
  • Provincially-funded supportive housing
  • Designated psychiatric facilities or veterans’ facilities

However, other laws and policies may apply to restrict cannabis use in these places, such as municipal bylaws (e.g. the Parks Bylaw), condo bylaws, lease agreements, and the policies of employers and property owners.

The Act prohibits the smoking of tobacco and cannabis as well the vaping of any substance in all enclosed workplaces and public places as well as some outdoor designated areas.

Places where smoking and vaping is prohibited include:

  • In all enclosed workplaces and public places (the inside of any building/structure/vehicle to which the public or employee has access).
  • Playgrounds and public places within a 20-metre radius of their perimeter.
  • Sporting areas and adjacent spectator areas and public places within a 20-metre radius of their perimeter.
  • The outdoor grounds of a primary or secondary school and public places within a 20-metre radius of the perimeter of the school’s grounds.
  • The outdoor grounds of a community recreational facility and public places within a 20-metre radius of the perimeter of the facility’s grounds.
  • Restaurant and bar patios (excluding some Royal Canadian Legions) and public places within a 9-metre radius of the perimeter of the patio.
  • The outdoor grounds of a hospital and public places within a 9-metre radius of hospital entrances/exits.

The Province has introduced legislation to amend the City of Toronto Act, 2006 to further clarify the City’s authority concerning establishing more restrictive rules for smoking cannabis.

There are no provisions in the new legislation to allow for cannabis lounges or other enclosed areas and spaces where members of the public are allowed to smoke or vape cannabis.

Illegal Storefronts

Cannabis cannot be legally purchased through any retail store in Toronto without a provincial licence. The Cannabis Control Act, 2017 provided enhanced enforcement tools to address illegal stores, including the ability to close them more expediently. These tools are available for police services to implement along with municipal bylaw officers who are able to receive a designation from the Province for this specific purpose. Municipal Licensing and Standards (MLS) applied for and received the designation on November 7, 2018, for 13 officers who now have the same enforcement powers as police services under this Act. MLS continues to work in partnership with the Toronto Police Service on the continued enforcement activities against illegal cannabis storefronts.

Medical Cannabis

The Federal Government has regulated the sale of medical cannabis since 2001. Under federal regulations, medical cannabis is not permitted to be sold through storefront retail. Access to federally-governed medical cannabis will continue concurrently with recreational. Health Canada requires that medical cannabis only be obtained directly from a licensed producer and delivered via mail, grown by the patient, or grown by someone designated by the patient.

Revenue sharing with cities

The Province has announced that it will provide $40 million over two years to help municipalities across Ontario with the implementation costs of recreational cannabis legalization. Under the provincial funding model, municipalities that have not prohibited provincially-licensed cannabis retail stores will receive more funding. The Province will be distributing this amount on a per household basis.

The first payment of $15 million will be made in early January to all municipalities on a per household basis, with at least $5,000 provided to each municipality. The Province has indicated that the City of Toronto’s share of the initial $15 million is $3,008,705.

The second payment of $15 million will be announced in March 2019. Municipalities that have opted-out can expect to receive a maximum of $5,000. However, municipalities that have not opted -out will receive funding on a per household basis, with at least $5,000 provided to each.

The Province is setting aside $10 million of the municipal funding to address costs arising from unforeseen circumstances. Priority will be given to municipalities that have not opted-out.

If Ontario’s portion of the federal excise duty on recreational cannabis over the first two years of legalization exceeds $100 million, the Province will provide 50 percent of the surplus only to municipalities that have not opted-out. Municipalities that opt-out by January 22, 2019, and then –reverse that decision at a later date would not be eligible for additional funding.

The Province has stated that municipalities must use provincial and federal funding to address the implementation costs that directly relate to the legalization of recreational cannabis. Examples of permitted costs include increased enforcement, increased response to public inquiries, increased paramedic and fire services, and bylaw and policy development.

Municipal considerations

Since 2016, City staff have convened an interdivisional working group to identify municipal concerns relating to the legalization of cannabis and to identify the resources and tools needed to assist the City in their role within the legalized system. Leading up to legalization, the City has identified and communicated the following municipal considerations to the Province:

  • Separation distances between retail locations and sensitive uses and limits on hours of sale.
  • No sales on university and college campuses, to align with tobacco sales restrictions.
  • No co-location of alcohol and cannabis.
  • Trained and knowledgeable staff at retail locations.
  • Safety measures within retail locations.
  • Strict rules around product display and placement and age verification.
  • Increased public education on the potential health risks of cannabis including harm reduction strategies, and cannabis legislation.
  • Guidance, support, and regulatory tools to enforce federal rules permitting home cultivation and provincial rules prohibiting public consumption.
  • Increased resources to support the broader enforcement accountability under the proposed changes to the SFOA to include cannabis smoking and vaping.
  • Additional authorities to enforce against illegal operations more expediently.
  • Revenue sharing that fully recovers the City’s costs to implementation, enforcement, education, and ongoing evaluation of the legalized regime.

Actions

The table below provides an overview of key legislative changes and other actions that have been taken by all levels of government regarding cannabis legalization.

Date Actions
October 2018 The Province’s Bill 36, the Cannabis Statute Law Amendment Act, 2018, received Royal Assent. The Act came into force on October 17, 2018.
July 2018 City Council adopted amendments updating zoning bylaw references to cannabis production facilities to align with current federal legislation.
June 2018 Federal Bill C-45, the Cannabis Act, received Royal Assent. The Act came into force on October 17, 2018.
December 2017 Provincial Bill 174, Cannabis, Smoke-Free Ontario and Road Safety Statute Law Amendment Act received Royal Assent.
October 2017 City Council adopted, with amendments, the staff report City of Toronto Recommendations for Cannabis Legalization, indicating support of provincially operated stores, and requesting a number of other enforcement tools and supports.
June 2017 Board of Health adopted, with amendments, the report Legal Access to Non-Medical Cannabis: Approaches to Protect Health and Minimize Harms of Use.
June 2016 City staff reported to Licensing and Standards Committee on the issue of illegal cannabis storefronts.
May 2016 Board of Health adopted, with amendments, Legalization and Regulation of Non-Medical Cannabis.