Immense opportunities for those who successfully navigate their emerging industry
New regulatory frameworks require concise legal input
Recently a colleague suggested to Scott Allen, associate at Alexander Holburn Beaudin + Lang LLP, that the Oct. 17 legalization of cannabis for recreational purposes is one of the more unique regulatory changes to occur since the lifting of Prohibition. “And I tend to agree with that opinion,” says Allen.
“It’s a fascinating time for the Canadian legal profession and for the past year we’ve been helping a wide variety of clients navigate the unknowns associated with legalization,” he says.
Alexander Holburn has been receiving inquiries from prospective cannabis retailers and property owners about licensing and leasing, as well as from employers unclear on their obligations to their employees, while ensuring cannabis use among employees doesn’t adversely affect their businesses.
While some matters are being settled fairly easily, Allen points out that “in many cases our work can get complex, partly due to the fact that of the many unknowns regarding the provincial and municipal licensing process; for example, nobody knows how long it will take for the provincial retail licences to be issued.This becomes tricky in a scenario whereby a property owner has been approached by a prospective licensee to lease brick-and-mortar space. How long will the property sit empty? And what if the space is leased and the licensee is ultimately denied the licence? It takes expertise to draft a lease agreement that is fair to both parties.”
As for business owners concerned about the impact of employees’ cannabis use on the bottom line, Allen agrees that “legalization changes employer-employee relations because now cannabis will be multi-faceted with medically permitted use, which can potentially mean a duty to accommodate, and soon recreational use, which may evolve similar to alcohol policies. But again, effective legal counsel can help clients navigate these uncertain waters.”
Allen points out that the situation is somewhat clearer for businesses with safety-sensitive issues, such as transportation companies or use of heavy machinery. “Under these circumstances, policies can be drafted to restrict cannabis use,” he says. A trailblazer in this regard is the Canadian Armed Forces, which earlier this fall released a legally vetted series of prohibitions against cannabis use, such as no use for 28 days prior to duty for safety-sensitive positions, such as pilots.
By all counts, Alexander Holburn will still be helping clients a year from now when it is anticipated Ottawa will legalize edible and drinkable products infused with cannabis. But Allen says that by far the most substantial component of the cannabis legalization process will be a third round of cannabis products, as yet unscheduled, concerning the cannabinoid components of the plant said to have substantial medical benefits and are of immense interest to the traditional pharmaceutical and alternative medicine industries.
“In terms of business prospects, this third wave is what serious investors are really excited about rather than the THC component of cannabis, despite the latter receiving so much media attention,” he says.
“If you’re a business owner unclear about the regulatory aspects of cannabis or someone wanting to get into the business, it is important that you seek legal counsel with experience in these matters,” explains Allen.
“As for people who assume the only investment opportunities pertain to the initial wave of cannabis for recreational use, you owe it to yourself to learn as much as possible about this emerging industry because the opportunities above and beyond the retail aspect are enormous.”
Alexander Holburn’s experience in the cannabis sector encompasses work in securities, real estate, employment, governance, strata, cultivation and distribution and general business advice.