The High Road: Growing Pains, The Transition From Illicit To Legal Cannabis

Recreational cannabis has been legal for almost a week now, and as expected the sky has not fallen. It’s almost like the crazed mania portrayed in the infamous 1936 film entitled “Reefer Madness” may have been a tad inaccurate. We are now in a transition period from dispensaries selling medical or illicit cannabis to attempting to obtain licenses to operate onside of the new Cannabis Act.

ACTS ON ACTS ON ACTS…

The legalization of marijuana is unfortunately not straightforward – there are overlapping pieces of legislation on the municipal level, provincial level, and federal level all attempting to regulate all aspects of the fledgling industry. On October 17, the federal government followed through on their promise and the Cannabis Act came into force. Since private business is regulated at the provincial level, British Columbia then passed the Cannabis Control and Licensing Act and the Cannabis Distribution Act. These various acts give the government some teeth to ensure illicit cannabis is not sold or produced in B.C. Because if there’s one thing that’s worse than a drug dealer in the government’s eyes, it’s a tax cheat!

ILLICIT – A FANCY WORD FOR ILLEGAL

What is illicit cannabis? Illicit cannabis is any cannabis sold, produced or distributed by a person prohibited from doing so under the current Cannabis Act, or any provincial Act. This includes any cannabis that was produced prior to legalization and was considered to be illegal.

People have liked calling this the “grey market” to imply that it’s “sort of legal”. Unfortunately, “sort of legal” belongs with unicorns, leprechauns, and good Hugh Grant movies under the heading of “Does Not Exist”.

HERE COMES THE FUZZ…

In the wake of legalization, dispensaries, and other businesses that were selling cannabis produced illegally or contrary to any prior act, may feel the urge to sell their remaining stock of cannabis. We normally hesitate to give legal advice in a column but here’s some for free - in short, DO NOT DO THIS.

But these dispensaries have been around forever – what’s the government actually going to do?

Actually, potentially a lot. The Cannabis Control and Licensing Act allows for police to seize any cannabis they reasonably believe is illicit in plain view WITHOUT a warrant. Yes, you read that right – WITHOUT A WARRANT.

If the authorities believe that you have been selling, or are in possession of illicit cannabis, they are able to fine you and seize any cannabis the authorities reasonably believe to be illicit cannabis.

However, other aspects of the legislation are more permissive, and you should know your rights, what’s required of the authorities, etc.

KNOW WHEN TO HOLD ‘EM…AND WHEN TO FOLD ‘EM

If you’re looking to become a licensed producer or distributor of cannabis, the government may appoint inspectors to conduct inspections of your shop or place of business to ensure compliance. The inspectors authorized by the minister may demand information from you related to your possession or selling cannabis. To do so they need to provide you with notice, and the information they are seeking must be relevant to what they are looking for.

If the authorities, whether police or inspectors, find what they believe to be illicit cannabis, they are able to fine you an amount, which may equal to an amount equal to 2 times the retail value of the cannabis that is alleged to be illicit. To do so, you must be served with a notice that must indicate a contravention of a specific section of the relevant act, similar to a speeding ticket.

If the police or the inspector show up, and demand to search your store or place of business, do not panic. Ask for identification, and/or a warrant. Inspectors must carry a certificate allowing them to do their job, and must produce it upon request.

1.Do

2.Do Not

Once the officer or inspector produces their credentials, cooperation is beneficial. Refusing entry or disclosure of records to the inspector could lead to them obtaining a warrant. Allow the inspection of samples and records required by the inspector.

Do not obstruct the officers, or the inspector while they are attempting to do their jobs. This means do not destroy, conceal or refuse to provide samples upon request. Further, do not provide false information or interfere in any way with the investigation. Doing so are offences in themselves and could wind up making a bad situation far worse.

UH-OH – FINE OR SEIZURE

First, stay calm and read over the notice they gave you. At this point you have two choices:

(1)Admission; or

(2)Seek a hearing

Admission

You will be provided with a waiver admitting to the contravention, accepting the monetary fine and waiving the opportunity for a hearing. By signing this document you cannot proceed to a hearing and must pay the fine within 30 days.

Seek a Hearing

In the event you wish to seek a hearing because the claims made against you are false and the cannabis you had is not illicit, you have 30 days from the date of the notice of the infraction to seek a hearing. The hearing is a way to ask that the fine and seizure be reconsidered.

To do this you must do the following:

-Submit the required form;

-Identify one or more grounds to reconsider; and

-Indicate your argument for reconsideration.

As I mentioned you have 30 days to do this. However, if you’ve missed the deadline, all is potentially not lost. You may ask for a time extension under special circumstances. You must indicate that injustice would result if you are unable to proceed to a hearing.

WHAT HAPPENS NEXT?

Upon reviewing your application, the director may do one or more of the following:

-reduce the fine;

-remove the penalty;

-dismiss your application;

If you win

In the event that you paid the fine, and it was decided that the penalty should be rescinded, the fine amount must be refunded to you. In the event that your cannabis was seized and it was determined it was indeed not illicit cannabis, it must be returned to you unless it has been destroyed. The Cannabis Control and Licensing Act allows the government to dispose of or destroy any illicit cannabis they confiscate. However, if you won your hearing and your cannabis was destroyed you will be compensated for it.

If you lose

If you haven’t yet paid the fine, you’ll be required to do so. However, if you believe the decision made in your case is incorrect, you may seek a court to review the decision through a judicial review, and you have 30 days to do so, after the reconsideration order is made. At that point it is absolutely beneficial to seek legal counsel as soon as possible.

TO SUM IT ALLLLL UP

The bottom line in all of this is that it’s going to be a whole lot easier to operate inside of the new legislation than outside of it. The government has stacked the deck in their favour in order to ensure that those who considered themselves a part of the “grey market” (remember – leprechauns and unicorns..) will quickly decide to join the legitimate industry. It’s an exciting industry that holds tons of opportunity for growth, but it won’t be without some growing pains along the way.