Neighbourly buds: Key Takeaways from the P&S Holdings Ltd. Decision

Is the federal Minister of Health required to hear a third party's opposition to a proposed medical marijuana facility? The Federal Court recently answered this question in P&S Holdings Ltd. v Canada, 2015 FC 1331, holding that third parties generally do not have a right...

Is the federal Minister of Health required to hear a third party's opposition to a proposed medical marijuana facility? The Federal Court recently answered this question in P&S Holdings Ltd. v Canada, 2015 FC 1331, holding that third parties generally do not have a right to participate in the medical marijuana licensing process at the federal level.

International Herbs Medical Marijuana Ltd. ("International Herbs") applied to become a licensed producer under the Marijuana for Medical Purposes Regulations ("MMPR") with its proposed facility (the "Facility") in Delta, British Columbia. International Herbs' neighbour – the United Association of Journeymen and Apprentices of the Plumbing & Pipefitting Industry of the United States and Canada, Local Union 170 (the "Union") – strongly opposed International Herbs' application (the "Application"). The Union asserted that the Facility would have a negative impact on its trade school and restaurant, and would increase crime and traffic in the area. Although International Herbs had anticipated that the Facility would be ready for pre-licensing inspection by mid-2015, it put its plans on hold pending the outcome of this litigation.

The Union objected to the zoning approval granted to International Herbs at the applicable public hearing and wrote to the Minister of Health to outline its concerns with the project. The Union requested participatory standing from the Minister to be heard during Health Canada's consideration of the Application but received no response. The Union then sought standing by filing an application for judicial review with the Federal Court.

The Federal Court found that the Union did not have a right to participate in Health Canada's decision-making process and dismissed the application for judicial review. Considering the strict regulatory requirements and municipal zoning processes already in place, the Court held that the Minister had no obligation to grant the Union standing to be heard. The ruling suggests that the process in place under the MMPR adequately serves the public interest and that interested parties should voice concerns within stakeholder input forums that exist outside of the MMPR, such as municipal public hearings regarding zoning. This decision provides an element of predictability and stability within the MMPR as companies can generally rely on the processes in place without fear of potential detrimental third party intervention.

The decision of P&S Holdings Ltd. provides us with three key takeaways:

Importance of Municipal Compliance

The decision highlights the importance of compliance with bylaw and zoning regulations during the MMPR licensing process. Delta's bylaws prohibited medical marijuana facilities in its jurisdiction unless an applicant received site-specific approval from the municipality. International Herbs followed these requirements, and the Union was given the opportunity to oppose the application at that time.

Despite the Union's strong opposition, it failed to put forward sufficient concrete evidence to support its position. The Court cited this open process and the fact that there was no evidence that local authorities had concerns with the Application as reasons for denying the Union's application for standing. The Court's emphasis on the local zoning process highlights the importance of companies seeking to become licensed producers under the MMPR being diligent in working with municipalities and local stakeholder to ensure they comply with local requirements and gain stakeholder support.

Continued Ministerial Discretion to Consider Third Party Concerns

The MMPR requires the Minister to refuse licensing in certain situations including on the basis that it would pose a risk to public health, safety and security. Considering this, the Court noted that there might be instances where the Minister may wish to consider submissions from third parties, however there is no obligation on the Minister to do so.

Increasing Legitimacy of the Regulated Medical Marijuana Industry

The P&S Holdings Ltd. decision can also be viewed as an example of the Courts' rejection of the stigma surrounding medical marijuana. The Court rejected the Union's baseless allegations that a medical marijuana production facility would de facto degrade safety, desirability or environmental quality, as the Union failed to provide concrete evidence to support these claims.

Justice Mactavish's resistance to the Union's general speculative concerns is promising as it demonstrates that the courts will not be moved by unsubstantiated claims against proposed licensed medical marijuana facilities that have complied with the requirements of the MMPR and other applicable law simply on the basis that such facility will produce marijuana.

Careful advance consideration of regulatory, commercial and operational risks will help licensed producers and applicants avoid unforeseen pitfalls. At Bennett Jones we have a team of experienced and dedicated professional advisors that can help you navigate the MMPR regulatory regime and minimize risk so that you can focus on growing your business.

-Hugo Alves, Michael Lickver, Vladimir Klacar and Ian Thompson

Featured image of the UA Piping Industry College of British Columbia, Delta BC. Image via piabschool.ca

In this article

Join the Conversation