Despite the recent legalization of cannabis in Canada, it does not mean that the drug can be openly sold. From province-to-province, provincially-operated stores or provincially-licensed stores are the only ones able to sell cannabis. That said, many private businesses without licenses to sell the drug do so anyhow. In a recent decision from Ontario, a landlord locked out a tenant during the COVID-19 crisis after learning that cannabis was being sold there illegally.

The raid

The cannabis store was located in Brampton Ontario, with the store space being sub-leased from another business. When the Ontario government declared a state of emergency related to COVID-19 on March 17, 2020, some licensed cannabis stores were able to stay open. The plaintiff’s store closed but continued to offer delivery service and curbside pickup.

The police executed a search warrant at the business on April 21, 2020. The search warrant resulted in the seizure of 3.3kg of marijuana and four people being criminally charged, though the plaintiff and the business were not charged.

Upon learning of the events, the owner of the building changed the locks on the business and took possession of the premises. This led to the plaintiff’s application for an order granting him relief from forfeiture and re-entry into his business.

The positions of the parties

The landlord’s position is that the plaintiff is operating an illegal cannabis store, which breached the lease. However, the plaintiff argued that his business was not illegal and that both his customers and staff face irreparable harm if he is not able to resume operations and he sought relief akin to an interlocutory injunction

The court’s analysis

The court said that the main issue to be determined was whether the customers and staff of the business really did suffer irreparable harm if relief is not provided.

The court noted that the sale of cannabis in Ontario his highly regulated with licenses and authorizations needed to operate. The plaintiff did not have, nor had he ever applied for these licenses for either recreational or medical purposes.

The plaintiff argues that the licensing regime in Ontario is discriminatory and that he can offer a better service to his customers than legitimately run businesses. However, like his failure to act on obtaining licenses, the plaintiff had not taken any steps to challenge the issue. Nevertheless, the plaintiff said he should be exempt from licensing because he had never been charged for operating.

The court did not agree, writing,

“I accept that (the plaintiff’s) business employed a large number of people. His employees have all been out of work since (the landlord) changed the locks on April 21, 2020. Undoubtedly, the abrupt closure of the store has had a devastating impact on them and their families. It will be very difficult for his employees to find other work in the midst of the COVID‑19 pandemic. I am sympathetic to those who worked for (the plaintiff) and the position in which they now find themselves.”

The court ultimately found that while the plaintiff was going to face a loss of income, the income he had been making was not being earned legally, leaving no legal benefit for him to pursue.

The Advocacy Team at HMC Lawyers has litigated successfully on behalf of individual and corporate clients in all manner of commercial and civil disputes, against some of Canada’s largest national law firms.

If you would like to proactively address a potential dispute, contact us online or call 1-800-480-3534 to make an appointment. We advise clients in Calgary, throughout the province of Alberta, and across Western Cana