Strata Alert: Cannabis Dispensary Evicted

Cannabis Dispensary Evicted

 

Paul G. Mendes, Partner
Phone:  604-685-4894
Email:  pgm@lmlaw.ca

 

 

In the recent case of 1028840 B.C. Ltd. v The Heritage Dispensary Clinic Society, the BC Supreme Court ordered the eviction of a cannabis dispensary that had been renting a commercial strata lot.

The lease in this case contemplated the tenants conducting the business of naturopathic therapy and the distribution of medical-use cannabis under valid permits and licenses.  The lease also required the tenants to comply with all applicable laws, by-laws and regulations relating to the operation of the business, including Strata and City of Vancouver bylaws.

The owner of the commercial strata lot sought to evict the dispensary because they did not have the relevant licenses and permits to operate a legal dispensary. The strata also began fining the owner for breaching the standard bylaw against using a strata lot for an illegal purpose, among others.

The landlord put the dispensary on notice of the breach of the tenancy agreement but then waived the breaches by continuing to accept the rent. A landlord is generally deemed to have waived their right to end a tenancy when they accept rent with full knowledge of the breach.

However, the breaches of the lease continued and the landlord subsequently started issuing receipts stating that the rent cheques were being accepted as compensation for “use and occupation only”. The Court ruled that the continuing breaches of lease terms prohibiting how the commercial strata lot may be used survived the waiver. Thus, the landlord could continue to enforce those terms of the lease.

The Court ordered the dispensary owners be evicted, ruling that:

The Tenants in this case do not hold any permits or licenses from Health Canada.  They do not hold any business license from the City.  Each day HDCS is open for business selling marijuana to its customers, the Tenants are breaching the criminal laws of Canada, the City of Vancouver bylaws, the strata bylaws applicable to the premises they occupy, the standards of conduct regulated by the College of Naturopathic Physicians (in the case of Dr. LaForge), and the express terms of the Lease with the Landlord.  These are continuing breaches of a serious and serial nature that, as a matter of both law and public policy, ought not and are not subject to any continuing waiver by a Landlord beyond any period for which the payment of rent has been accepted.

This case is helpful to commercial owners seeking to evict tenants for breaching terms of a lease prohibiting illegal activity and a reminder to tenants operating cannabis dispensaries that they should review the terms of their leases before signing and ensure that they are in compliance.

The case may also be helpful to a strata seeking to evict an owner or tenant for illegal activity, notwithstanding that the breaches of the bylaws were not the Court’s primary focus in this case.

The legality of cannabis dispensaries is set to change dramatically this year once the Federal Government changes the criminal laws surrounding cannabis. As such, commercial landlords and strata corporations may need to consider updating their leases and bylaws, respectively, to provide for how they wish to regulate cannabis dispensaries on their properties.

Likewise, cannabis dispensaries should review their leases and the other legal requirements of their businesses as the regulatory environment around them changes.

WHAT WE DO:  Lesperance Mendes has been advising strata corporations and strata property owners on strata law matters since 1997. If your strata is considering a windup, or if you are looking for independent legal advice concerning a possible windup of your strata, contact Paul G. Mendes, partner, at 604-685-4894 by email at pgm@lmlaw.ca.

 

THIS ARTICLE IS NOT LEGAL ADVICE:  This article provides general information and should not be relied on without independent legal advice.