Special Council Meeting to be held at City of Penticton Council Chambers 171 Main Street, Penticton, B.C. Tuesday, July 19, 2016 at 3:00 p.m.

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1 Agenda Special Council Meeting to be held at City of Penticton Council Chambers 171 Main Street, Penticton, B.C. Tuesday, July 19, 2016 at 3:00 p.m. 1. Call Special Council Meeting to Order 2. Adoption of Agenda 3. Business Licence Suspension Appeal #1. THAT Council receive this report for the purpose of considering whether: a) the suspension of the City of Penticton business licence for the Rush In and Finish Café (City of Penticton Business Licence No ), as set out in the April 28 th, 2016 letter from the City s Building and Permitting Manager, should be upheld; and b) whether the business license for the Rush In and Finish Café at 248 Westminster Ave W, Penticton, BC, should be cancelled. AND THAT Council provide Mr. Jukka Laurio, owner and operator, or other representative of the Rush in and Finish Café, with an opportunity to be heard in relation to this report and the recommendations contained in it. #2. THAT after providing Mr. Jukka Laurio, or other representative of the Rush in and Finish Café, with an opportunity to be heard by Council, Council consider: a) whether the suspension of the City of Penticton business licence for the Rush In and Finish Café (City of Penticton Business Licence No ), as set out in the April 28 th, 2016 letter from the City s Building and Permitting Manager, should be upheld; and b) whether the business license for the Rush In and Finish Café at 248 Westminster Ave W, Penticton, BC, should be cancelled. 4. Adjournment

2 Council Report Date: July 19, 2016 File No: 248 Westminster Ave. W. To: Eric Sorensen, Chief Administrative Officer From: Ken Kunka, Building and Permitting Manager Subject: Rush in and Finish Café, Appeal Suspension of Business Licence/Cancellation of Business Licence Staff Recommendation #1. THAT Council receive this report for the purpose of considering whether: a) the suspension of the City of Penticton business licence for the Rush In and Finish Café (City of Penticton Business Licence No ), as set out in the April 28 th, 2016 letter from the City s Building and Permitting Manager, should be upheld; and b) whether the business license for the Rush In and Finish Café at 248 Westminster Ave W, Penticton, BC, should be cancelled. AND THAT Council provide Mr. Jukka Laurio, owner and operator, or other representative of the Rush in and Finish Café, with an opportunity to be heard in relation to this report and the recommendations contained in it. #2. THAT after providing Mr. Jukka Laurio, or other representative of the Rush in and Finish Café, with an opportunity to be heard by Council, Council consider: a) whether the suspension of the City of Penticton business licence for the Rush In and Finish Café (City of Penticton Business Licence No ), as set out in the April 28 th, 2016 letter from the City s Building and Permitting Manager, should be upheld; and b) whether the business license for the Rush In and Finish Café at 248 Westminster Ave W, Penticton, BC, should be cancelled. Background On March 13, 2015, the Rush in and Finish Café (BL#14771 ), operated by Mr. Jukka Laurio, was issued a City of Penticton Business Licence to operate a business at 248 Westminster Ave W. The business description in the business licence is Food & Beverage Coffee/Doughnut Shop - Coffee Shop & Café.

3 On April 28 th, 2016 a letter from the City s Building and Permitting Manager was hand delivered to Mr. Laurio at the Rush In and Finish Café, advising that the business licence could not be supported for renewal on the grounds that recent investigations suggested that the sale of marihuana was taking place on the premises, an illegal activity that violated the conditions of the business licence under the City s Business Bylaw Mr. Laurio was also advised by the same letter that his business licence would be suspended indefinitely effective May 6, 2016, until he could provide proof that illegal activities on the premises had ceased. Mr. Laurio was also advised of his right to appeal the Building and Permitting Manager s decision under section 13 of the Business Licence Bylaw. Mr. Laurio subsequently requested an appeal to Council of the Building and Permitting Manager s decision. The following list is an overview of events leading to the April 28 letter: July 15, Jukka Laurio submitted an application for a Business Licence to operate a business within an adjacent store front space located at 256 Westminster Ave W (Site Map - Attachment A) under the name Herbal Green Apothecary, to distribute aromatics, oils, tinctures and toiletries. An initial review of the application by planning, building and fire department raised concerns regarding the processing of concentrates (letter from Herbal Green dated September 16, 2015 Attachment B) and led to the conclusion that a building permit would be required for the work being carried out in the premises. No building permits or business licences have been issued to date for the premises at 256 Westminster Ave W. March 21, A joint inspection by building inspector and bylaw enforcement officer was conducted to review business activity at 256 Westminster Ave W. It was observed that a business was operating in contravention of the Business Licence Bylaw and Building Bylaw (no business licence had been issued, and building work had been performed within the premises without a building permit). It was also observed that the sale of cannabis products was being advertised and what appeared to be cannabis products were being sold within the premises. (Attachment C Photos) March 24, 2016 A Building Permit deficiency letter was sent to the applicant for the business licence for 256 Westminster Ave W. directing that no business activities take place on the premises until remedial works were completed and a business licence issued. (Attachment D - Letter). April 7, 2016 City staff attended at the premises at 256 Westminster Ave W and observed a sign posted on the premises advising of a temporary closure for the purpose of completing upgrades to bring the building into compliance with the building code, and indicating that service will be available next door in the café at 248 Westminster Ave W (Rush In and Finish Café) until renovations are completed (Sign Attachment E). Further action was taken by City staff to ensure patrons were not allowed into the Herbal Green premises to use an existing ATM machine. The Herbal Green premises are currently restricted from general public use by owner. April 26, 2016 Bylaw enforcement staff returned to the Rush In and Finish Café premises and confirmed that cannabis products were being sold at the premises. Bylaw enforcement staff were provided with a list of cannabis products for sale. (Menu - Attachment F) April 28 th, 2016 The Business Licence Suspension letter was delivered. (City Letter - Attachment G) May 02, 2016 A Notice of Appeal was received from Jukka Laurio (Appeal -Attachment H), outlining grounds of appeal of the business licence suspension. Council Report Page 2 of 22

4 May 10, 2016 A letter confirming receipt of the Notice of appeal was delivered to Mr. Laurio (Attachment H) June 17, Site visit by Bylaw Enforcement confirmed that sales of marihuana products are still taking place at subject property. (Site Visit photo -Attachment I) City Regulations Business Licence Bylaw No Business Licence Bylaw No.2012 ensures that businesses are operating in compliance with the City s Zoning Bylaw, conform to safety regulations for workers and patrons, and that the operation of a business does not become a nuisance to surrounding businesses and residences. Section 3.3 of the Business Licence Bylaw states: All Premises from which an applicant for a Business Licence proposes to carry on or conduct any Business in respect of which a Business License is required to be held pursuant to this Bylaw, shall comply with all relevant Bylaws of the City before a Business Licence is granted; and the applicant shall upon request produce such certificates or letters of approval as may be required by Federal, Provincial or City authorities with respect to the Business. Business Bylaw No Refusal, Suspension or Cancellation of Business Licence Under the Community Charter, section 60(2), a business licence may be suspended or cancelled for reasonable cause. Before council considers suspending or canceling a business licence, council must give the licence holder notice of the proposed action and an opportunity to be heard (Community Charter section 60(3)). The Community Charter authorizes Council to delegate the authority to suspend or cancel a licence (section 60(4)), but in that case the holder of the licence is entitled to have Council reconsider the matter (section 60(5)). The Business Licence Bylaw includes the following provisions: 12.2 A Business Licence may be suspended or cancelled, by the Manager or Council, for reasonable cause including, but not limited to, failure to comply with a term or condition of a Business License or failure to comply with this or any other Bylaw of the City Before suspending or canceling a Business Licence, the Manager shall: give written notice to the holder of the Business Licence indicating that the Business Licence is suspended or cancelled and that the Business must cease operation within 7 days of the date of the written notice. The written notice shall indicate the reasons for the suspension or cancellation and provide instructions to the Business Licence holder for the removal of the suspension or cancellation of the Business Licence give the date and time of a show cause hearing and invite the Business Licence holder to attend the hearing to speak before Council regarding the suspension or cancellation of the Business Licence. Council Report Page 3 of 22

5 Federal Legislation 13.1 Any Person, who wishes to appeal a decision of the Manager as it pertains to the authority exercised by the Licence Inspector under this Bylaw, may appeal to have Council reconsider the decision by giving written notice of appeal to the Corporate Officer. Such written notice of appeal shall state the grounds upon which the appeal is made. Upon receipt of a written notice of appeal the Corporate Officer shall set a time and a place for a hearing of the appeal pursuant to the Delegations section of the Procedure Bylaw. After hearing the appeal, Council may confirm, vary or set aside such decisions made by the Licence Inspector, as it may deem appropriate. Health Canada issues licences to growers and distributors of marihuana under the Marihuana for Medical Purposes Regulations (MMPR). Authorized licensed producers are listed on the Health Canada website. There are currently 7 in British Columbia, and the Rush In and Finish Café is not licensed in British Columbia to produce or sell medical marihuana. Neither the Marihuana for Medical Purposes Regulations (MMPR) nor any Health Canada regulations authorize the sale of marijuana for medical purposes through a storefront operation. A dispensary business selling marihuana from a store front operation contravenes the Controlled Drugs and Substances Act. Financial Implications The continued unlawful sale of marihuana and cannabis products at the Rush in and Finish Café may require continued and ongoing use of City resources as a result of continued complaints from members of the public and surrounding businesses. Analysis The sale of marihuana and related products at the Rush In and Finish Café is in violation of the Controlled Drugs and Substances Act of Canada. The City does not issue business licences for unlawful or criminal activities. Bylaw Services staff have prepared a report outlining the circumstances surrounding the violation of the business license granted through the sale of marihuana. (Bylaw Enforcement Occurrence Report- Attachment K). Further, City staff and the RCMP have responded to the following calls for services since the business has been in operation; including: increased disturbances, an arson attempt, high traffic of short stay patrons causing traffic congestion and parking issues, property damage, vandalism/graffiti, drug paraphernalia/needles, loitering, smoking, garbage /dumping. Mr. Laurio has provided an appeal of the previous suspension decision (Attachment G) outlining that: The Licence Inspector is erroneous in his conclusion that illegal activities are taking place in the Rush In and Finish Café (The Café) The Café fulfills the mandate of the Supreme Court in regard to an individual s right to medicinal products and their right to accessibility to those products The products in the Café are from legitimate, recognized and appropriately licensed business Council Report Page 4 of 22

6 The end consumers have a legal entitlement to whatever products they are purchasing Council may receive additional information from Mr. Laurio in support of his position at the hearing. City staff have reviewed Mr. Laurio s grounds of appeal with the City s legal advisors, and can advise Council that: The sale of marihuana and cannabis products is illegal and a criminal offence under the Controlled Drugs and Substances Act ( CDSA ); The courts in Canada have carved out a limited constitutional exemption from the prohibitions under the CDSA for persons who need marihuana for medical purposes; The federal government responded to court decisions by enacting the Marihuana Medical Access Regulations (the MMAR ), and more recently the Marihuana for Medical Purposes Regulations (the MMPR ), in order to regulate access to marihuana for medical purposes; Under the MMAR, individuals could apply for and obtain authorizations to possess marihuana for their own medicinal use, and could obtain licences allowing them to produce their own marihuana, or to produce marihuana through a designated person; The purpose of the MMPR was to transfer exclusive responsibility for the production and distribution of marihuana to commercial producers and distributors licensed by the federal government; The MMPR were challenged in court as being too restrictive. In 2014, the Federal Court of Canada granted an interlocutory order under which the plaintiffs in that court case the Allard case - could continue to possess and grow medical marihuana under the licences they had previously been issued under the MMAR; On February 24, 2016, the Federal Court of Canada ruled in the Allard case that the MMPR were unconstitutional, but stayed the effect of the order for 6 months to allow the federal government to respond. The MMPR continue in effect as of the date of this report, and the Rush in and Finish Café is not a licensed grower or distributor under the MMPR; The interlocutory court order made in the Allard case allowing individuals to continue to possess and produce marihuana under previously issued authorizations continues in force; No court decision has approved the unregulated sale of marihuana and cannabis products from store front operations such as the Rush in and Finish Café. Even if the MMPR are unconstitutional, the sale of marihuana and cannabis products at the Rush in and Finish Café continues to violate the Controlled Drugs and Substances Act. The April 28 letter that was hand delivered to Mr. Laurio communicated the decision of the Building and Permitting Manager to suspend the business licence effective May 6, The Rush in and Finish Café has continued to operate despite the notice of suspension, and given Mr. Laurio s appeal, no steps have been taken to enforce the suspension. Both the Business Licence Bylaw and the Community Charter provide Council with the authority to suspend or cancel a licence for reasonable cause. Reasonable cause has been interpreted in previous court decisions as including the presence of criminal activity on the premises, and negative impacts of the business, including undesirable behavior by the customers of the business, on neighbours and the surrounding community. The April 28, 2016 decision to suspend the business licence was based solely on the fact that marihuana was being sold from the premises. Rather than deciding whether the April 28 licence suspension decision should be upheld, Council may instead take into account this report and all other information presented at the hearing, and may consider whether there are reasonable grounds for cancellation of the business licence for the Rush in and Finish Café. The pros of cancelling the business licence are: Council Report Page 5 of 22

7 The City will show that there is a consequence for non-compliance with City of Penticton bylaws. The City will show that it does not support the operation of unlawful business activities. The City has shown due diligence in taking steps to attempt to achieve compliance with City bylaws. The City will be setting policy and precedent for dealing with other non-compliant and unlawful operations within the City. The cons of allowing the current business operations to continue are: Disgruntled/discouraged business owners who choose to comply with City bylaws Potential for increase in crime and nuisance in the community Potential exposure to claims for failing to enforce licensing requirements in the event that a consumer or neighbouring property is negatively affected Taking similar action against other businesses operating in violation of City regulations will become more difficult, May encourage other marihuana dispensaries to open, which in turn could cause a nuisance to surrounding business and residents. In conclusion, and subject to Council s consideration of all information presented at the hearing, staff requests that Council consider cancelling the business licence for the Rush In and Finish Café. Alternate recommendations 1. Refer back to staff for further review as specified by Council. Attachments Attachment A Site Map 248 and 256 Westminster Ave W. Attachment B Proposed concentrate processing Herbal Greens Attachment C Business operation photos Herbal Greens Attachment D Building Permit Deficiencies Herbal Greens Attachment E Relocation of operations sign Herbal Greens Attachment F Menu Rush In and Finish Café Attachment G City Letter Attachment H Letter of appeal from business owner Attachment I City confirmation letter Attachment J Product Menu photos Rush In and Finish Cafe Attachment K Bylaw Enforcement Occurrence Report Respectfully submitted, Ken Kunka Building and Permitting Manager Approvals Director Chief Administrative Officer ES Council Report Page 6 of 22

8 Attachment A 248 Westminster - Site Map C6 Zone Subject Property 248 Westminster Ave W 256 Westminster Ave W Council Report Page 7 of 22

9 Attachment B Concentrate Production Process Council Report Page 8 of 22

10 Council Report Page 9 of 22

11 Attachment C Business Operation photos Westminster Ave W Council Report Page 10 of 22

12 Attachment D Building Permit Deficiency Letter Council Report Page 11 of 22

13 Council Report Page 12 of 22

14 Attachment E Relocation Sign 256 Westminster Ave W Council Report Page 13 of 22

15 Attachment F Product list obtained from 248 Westminster Ave W Council Report Page 14 of 22

16 Attachment G Letter of Business Licence Suspension Council Report Page 15 of 22

17 Council Report Page 16 of 22

18 Attachment H Grounds for Appeal Council Report Page 17 of 22

19 Attachment I City confirmation letter Council Report Page 18 of 22

20 Attachment J Confirmation of Marihuana product sales 248 Westminster Ave W Council Report Page 19 of 22

21 Attachment K Bylaw Enforcement Occurrence Report Council Report Page 20 of 22

22 Council Report Page 21 of 22

23 Council Report Page 22 of 22