Cannabis producers face complex combination of environmental laws

Richard Butler, partner at Willms & Shier Environmental Lawyers LLP in Toronto, has clients operating greenhouses, orchards and other food production facilities who are converting their operations to get into the cannabis business.

“Nobody really understands, I think, the complete impact that this new industry, now in Ontario and Canada, is going to have,” he says. “Cannabis is another commodity that fits in that model but with yet unknown potential environmental impacts.”

Apart from rules for growing facilities from the Cannabis Act, waste disposal, water use and emissions from cannabis grow operations will be governed under the Ontario Water Resources Act, Pesticides Act, Nutrient Management Act and the Environmental Protection Act.

Producers will have to get permits for sewer discharge, air and noise emissions and, in these areas, Butler says the impacts on neighbours living near vast, industrial operations are to be determined.

“We've yet to see really how the Ontario Ministry of the Environment will react to some of these really interesting large-scale growers,” he says.

As vegetable and other food production facilities are renovated and made larger to accommodate cannabis, it is not clear what the impact of the production discharges will be, he says.

Since legalization occurred in California, an entire industry has sprouted up in the disposal of organic waste from cannabis production. In Canada, some of the cannabis waste is still composed of material that makes it a controlled substance under Schedule 2 of the Controlled Drugs and Substances Act, which means it must be secured and destroyed.

Butler says the disposal of the non-controlled substance waste will fall under provincial regulation under the EPA, NMA and OWRA, which has rules on how and where to dump contaminated material.

There will be confusion about whether cannabis greenhouses are treated as industrial production facilities or agricultural operations, important because odour and waste emissions could be subject to agricultural exemptions, says Butler.

Section 9.1 of the EPA says that without an environmental compliance order, no one can build anything or use any equipment or tools that will discharge a contaminant into the natural environment other than water, with the exception of “any plant, structure, equipment, apparatus, mechanism or thing used in agriculture.”

“The Ministry of the Environment needs to clarify whether cannabis would fall within that exemption,” says Jennifer Fairfax, a partner at Osler Hoskin & Harcourt LLP who practises regulatory and environmental law and litigation.

“I think we'll see a little bit of that back and forth. We won't know who exactly will be in control. Will it be the Ministry of the Environment? Or will it be an OMAFRA, [ministry of agriculture, food and rural affairs]?” Butler says.

Some producers will use greenhouses, and because they are closed circulation systems, greenhouses produce a nutrient-rich solution called feedwater, which is then used as fertilizer. Under the NMA, there are rules about how greenhouse nutrient feedwater is transported and stored, as well as provisions concerning soil sampling and analysis and application limits.

Butler also expects to see civil lawsuits from neighbouring property owners alleging adverse effects from noise, odour or other emissions, which are very common from communities with cement factories, mines and mushroom growers, which Butler says produce “pretty horrific” smells.

Operations will need to get permits and approvals if they want to draw more than 50,000 litres of water from a lake, river, pond, stream or underground and if they are discharging wastewater.

Butler says these connections to the surrounding environment will open the door to a need for Indigenous consultation.

“They may need to consider how big their facility is and who the local First Nation is, particularly if they're drawing water from the ground,” he says. “You might have heard all the battling that goes around on bottled water companies.”

If the operation is close to a municipality, the cannabis producer needs to be aware of any conflict between their municipal bylaws and provincial or federal legislation, says Giselle Davidian, an associate at Willms & Shier.

That clash was demonstrated in Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town), a Supreme Court case from 2001, in which a landscaping company sprayed federally and provincially approved pesticides in the town of Hudson, west of Montreal and was charged. They brought a motion of declaratory judgment asking the Superior Court to declare the bylaw ultra vires, but they were denied, which was affirmed by the Court of Appeal. They appealed to the Supreme Court and were dismissed.

“They're going to have to make sure that either they deal with their wastewater in a way that reduces the discharge to manageable and compliant concentration levels or they're going to need to vary their sewage discharge agreements with the municipal authorities,” says Paul Manning, principal of Manning Environmental Law and a certified environmental law specialist.

“At a local level, municipalities will very likely have something to say about the impacts of these growing facilities,” Butler says. “There's a lot of local level control of building and resource use.”

Those transforming from tomatoes and cucumbers to pot will have to upgrade their infrastructure to manage the nutrient management and waste disposal regulations as well as upgrade security systems, says Manning, who has clients that are greenhouse owners who are not involved in cannabis.

“I can see that that will be a cost, but I think the opportunity is too valuable for them to miss,” he says.