What do the residents have to say? Local Government required to gather the views of residents when providing recommendations to the Liquor and Cannabis Regulation Branch for proposed non-medical cannabis establishment

Administrative law – Decisions reviewed – Municipal boards – Licensing – By-laws – Resolutions – Judicial review – Legislative compliance – Standard of review – Unreasonableness

Pendergast v. Sidney (Town), [2020] B.C.J. No. 1130, 2020 BCSC 1049, British Columbia Supreme Court, July 15, 2020, J.A. Power J.

The Court concluded that the Town of Sidney failed to comply with the Cannabis Control and Licensing Act, S.B.C. 2018, c. 29 and the associated Cannabis Licensing Regulation, B.C. Reg. 202/2018, when it neglected to obtain the views of local residents when providing its comments and recommendations to the Liquor and Cannabis Regulation Branch regarding the issuance of a license to the petitioner for the proposed operation of a non-medical cannabis establishment.  The Court held that, regardless of whether the Town was recommending for or against the license to the Branch, it was required to obtain the residents’ views in the circumstances.

The petitioner wanted to operate a cannabis retail store in Sidney, British Columbia. On January 31, 2019, she applied to the Liquor and Cannabis Regulation Branch (the “LCRB”) for a license to operate a non-medical cannabis retail establishment under the Cannabis Control and Licensing Act, S.B.C. 2018, c. 29 (the “Act”) and the associated Cannabis Licensing Regulation, B.C. Reg. 202/2018 (the “Regulation”).

The LCRB sent the petitioner’s application to the respondent, the Town of Sidney (the “Town”), seeking a referral response in accordance with the statutory scheme. The Act prohibits the sale of non-medical cannabis without a licence issued by the LCRB. However, the LCRB will not issue a license unless the relevant local government, which is provided notice of the application, recommends that the licence be issued.

While the petitioner’s application was being considered by the Town, she entered into a five-year lease agreement for the location where she intended to operate the business.

On October 28, 2019, the Town passed a resolution directing Town staff to respond to the LCRB advising that the petitioner’s application for a non-medical cannabis licence should be denied. The basis of the Town’s decision was that the petitioner’s application did not comply with Town’s Policy DV-015, which it had passed in August 2019, providing guidance to the Town in making decisions related to cannabis establishments. The Policy DV-015 provided, in relevant part, that the proposed retail store must be attractive, pedestrian friendly by providing multiple points of visual interaction through doorways, have clear windows and other oriented features. At the same time, the Town also adopted a bylaw that allowed for retail sale of recreational cannabis in most of the Town’s C1 commercial zone, which was where the petitioner’s proposed store would be located.

The petitioner sought various relief as part of her application for judicial review. The key part of her relief, which was ultimately the central issue the Court considered, was whether the October 28, 2019 resolution, resolving the petitioner’s provincial application “be denied”, was illegal and unreasonable.

The petitioner’s position was that the Town was statutorily required by the Act and Regulation to gather the views of residents by publishing a notice of her application, conducting a public hearing or holding a referendum of some sort related to her application. None of this was completed by the Town – indeed, no method was employed by the Town to obtain the residents’ input. The respondent Town, on the other hand, argued that it was not required to gather the views of nearby residents before recommending against the issuance of the petitioner’s cannabis retail licence, largely relying on a statutory interpretation argument.

The Court confirmed that the standard of reasonableness applied to this issue. Starting with the Act, section 33(4) states that “… if a local government or Indigenous nation that receives notice under subsection (2) decides to give comments and recommendations, the local government or Indigenous nation must take into account any prescribed criteria and, in the prescribed circumstances, gather the views of residents of an area determined by the local government…”. Section 33(4) states that comments and recommendations made under (3) must be given in accordance with the Regulations. The Regulation sets out the “prescribed criteria” for the purpose of subsection 33(3) of the Act to include the location of the proposed retail store. The “prescribed circumstances” is that the issuance of the licence may affect nearby residents.

The Court held that there was nothing in the ordinary language or meaning of section 33(3) of the Act that suggests considering the prescribed criteria and gathering the views of the residences in the prescribed circumstances only applies when the municipality seeks to give a positive recommendation. Rather, the Act clearly states that it applies when the local government “decides to give comments and recommendations” more generally.

Further, looking at the Act and Regulation in their overall context, the Court found that only one interpretation was reasonable: residents’ views must be gathered in the prescribed circumstances and the prescribed criteria must be considered, regardless of whether the recommendation to the Town will be for or against the issuance of the licence. To this end, the Court also relied on section 13(5) of the Regulation, which says that for the purpose of section 33(4) of the Act, the comments and recommendations of the local government “must” be given in accordance with a number of requirements, which included how the views of residents were to be reported.

As such, the Court concluded that the Town, in recommending against the issuing of the licence and providing comments, was required to take into account the prescribed criteria and in the prescribed circumstances gather the views of the residents, which it did not. The Court said, based on the record, it appeared the Town did not even turn its mind to this requirement. By failing to turn its mind to this and gather the views of the residents, the Court held that the Town failed to comply with section 33(3) of the Act and s. 13(4) of the Regulation. For this reason, the Court concluded the decision was unreasonable and set it aside.

The Court remitted the matter back to the Town for reconsideration, but also made a direction that it must obtain the views of the residents in a fashion that satisfies the Act and Regulation. The Court concluded that it was inevitable that the issuance of the licence “may” affect nearby residence, so the “prescribed circumstances” applied so as to trigger the obligation to gather the views of the residents.

This case was digested by Adam R. Way, and first published in the LexisNexis® Harper Grey Administrative Law Netletter and the Harper Grey Administrative Law Newsletter. If you would like to discuss this case further, please contact Adam R. Way at away@harpergrey.com.

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