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Retail Cannabis Stores: Essential or Non-Essential?

Updated as of April 9, 2020.

In response to the COVID-19 pandemic, provincial governments across the country have declared states of emergency and issued orders for the mandatory closure of “non-essential” businesses to the public.

On March 23, 2020, the Ontario government made such an order under the Emergency Management and Civil Protection Act[1] (the “Act”). The order revealed a list of businesses that were deemed “essential” and would therefore be permitted to remain open. To the delight of cannabis advocates and enthusiasts, the list of businesses included recreational cannabis stores. However, following the subsequent release of grave projections by health professional about the potential impacts of the COVID-19 crisis[2], the government changed course and on April 3, 2020, released a reduced list of essential businesses which no longer included cannabis stores[3]. The effect of the revised order was that all cannabis stores in Ontario were required to close for business as of 11:59 PM on Saturday, April 4, 2020 for a period of at least 14 days.

While the government’s order required non-essential businesses to close their physical store premises to the public (to promote social distancing), it did not prevent them from offering products and services online or via home delivery; however, under the Ontario Cannabis Retail Corporation Act, the government-run retailer, the Ontario Cannabis Store (OCS),  has the exclusive right in Ontario to sell cannabis online[4]. For that reason, the government’s order forced privately-owned retailers to temporarily cease operating, thereby fueling speculation that the black market for cannabis would fill the void.

Less than one week later on April 7, 2020, and following an outcry from industry participants, the provincial government issued yet another emergency order under the Act, this time permitting cannabis retailers to offer curbside pick-up and delivery services to consumers for a 14-day period.[5] Under the order, retailers are required to keep their stores closed, and are constrained by the following rules relating to pick-up and delivery:

  • Pick-up must take place at an “outdoor area in close proximity to the retail store” (i.e. customers cannot enter the store premises);
  • Products may only be sold, picked up, and delivered between the hours of 9 a.m. and 11 p.m. (i.e. no midnight orders!);
  • Delivery must be to a “residential address” (i.e. no deliveries to the office);
  • For pick-up orders, the individual who placed the order must be the one who picks it up; and
  • Payment cannot be in cash (only online and telephone orders are permitted).

Ontario’s Premier, Doug Ford, had initially cited the concerns of mental health and addiction experts who claimed it was critical to keep certain businesses open to the public that supplied substances on which the public may be dependant. While cannabis stores were ultimately deemed not to be essential, and were therefore forced to close their doors, they have been temporarily permitted to offer products via the alternative sales channels of home delivery and curbside pick-up. Nothing has changed for patients with medical prescriptions for cannabis who will continue to be able to fill their orders directly with licensed cannabis producers online and receive their products by mail.

In another boost for the industry, on April 5, 2020, the federal government announced a $40-billion credit program under which cannabis businesses would be eligible to apply for funding from the Business Development Bank of Canada to offset the devastating financial impacts the pandemic has had on their businesses[6].

Sotos LLP helps clients navigate the complexities of doing business in the cannabis sector. As the COVID-19 outbreak continues to evolve rapidly, members of our team will remain available to assist you with any legal questions you may have.

 

 

[1]             Order Under Subsection 7.0.2 (4) - Closure Of Places Of Non-Essential Businesses, O Reg 82/20, Schedule 2, available online: https://www.ontario.ca/laws/regulation/200082.

[2]             “Canada: Ontario warned to expect 15,000 deaths from coronavirus”, The Guardian (April 3, 2020), online: https://www.theguardian.com/world/2020/apr/03/ontario-canada-coronavirus-warned-to-expect-15000-deaths.

[3]             Government of Ontario, “List of Essential Workplaces”, available online: https://www.ontario.ca/page/list-essential-workplaces.

[4]             Ontario Cannabis Retail Corporation Act, 2017, S.O. 2017, c. 26, Sched. 2, s 2(1)(a), available online: https://www.ontario.ca/laws/statute/17o26#top.

[5]             Order Under Subsection 7.0.2 (4) Of The Emergency Management and Civil Protection Act - Pick Up And Delivery Of Cannabis, O. Reg. 128/20, available online https://www.ontario.ca/laws/regulation/r20128.

[6]             “Bars, cannabis sector eligible for $40-billion credit program from government bank”, The Globe and Mail (April 5, 2020), online: https://www.theglobeandmail.com/canada/article-bars-cannabis-sector-eligible-for-40-billion-credit-program-from/

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