Transferring a cannabis retail licence in British Columbia

In British Columbia the statute expressly lets the general manager transfer a licence from a licensee to a different person on application. The Liquor and Cannabis Regulation Branch (LCRB) administers that power. Its guidance says a Cannabis Retail Store licence can be transferred to a new licensee, subject to a limit on how many such licences one licensee may hold or have an interest in. A transfer is still an application, with an assessment of the buyer, so approval is not automatic. This guide follows the steps in order and flags what the Act allows the LCRB to refuse.

The seller starts it

Under the LCRB’s process, the current licensee must start the transfer in the liquor and cannabis licensing portal by submitting the proposed licensee’s business name and email address. The proposed licensee is then notified and asked to proceed with the transfer application. The LCRB starts processing the application after the proposed licensee confirms its information and pays the transfer fee. Because the seller opens the file, the purchase agreement should say who submits what, by when. A buyer who cannot get the seller to start the portal step cannot start its own application.

Who can receive the licence

The LCRB says the proposed licensee must be a standalone business, giving as examples a private or public corporation, a sole proprietorship, a partnership, a society or non-profit corporation, an Indigenous Nation, or an extra-provincial company registered in British Columbia. The proposed licensee does not have to be a citizen or resident of British Columbia or Canada, but it must not be a federally licensed producer of cannabis. The Act goes further: the general manager must not transfer a licence to or for a federal licence holder, its agent, a person so connected to or financially interested in one that, in the general manager’s opinion, the person is likely to promote that holder’s cannabis, or a person who has arranged to sell one federal licence holder’s cannabis to the exclusion of another’s, except for prescribed classes of licence. Check the buyer’s ownership against that wording.

Fit and proper, and the associates

Before transferring, the LCRB must determine that the proposed licensee is fit and proper to hold the licence. The assessment includes security screenings and financial integrity checks. The application asks for information about the applicant and its associates, including directors, direct and indirect shareholders and partners, consent to screening, and a declaration of financial, business or family connections to federally licensed producers and to retail licence holders or applicants. Approval may be accelerated if the proposed licensee already holds a Cannabis Retail Store licence. Anyone with a stake in the buyer, including a lender or investor who would become an associate, should expect to be asked about their own backgrounds and finances, so tell them early.

Premises, limits and the seller’s record

The Act sets other grounds that bear on a store sale. Unless the regulations exempt the class of licence, the applicant must be the owner of the establishment or have an arrangement the general manager finds gives enough control over it to comply with the requirements for establishments and is of satisfactory duration, so lease terms matter. The general manager must not transfer a licence if, in the general manager’s opinion, doing so would be contrary to the public interest, or (except in prescribed circumstances) would take one person or group of related persons over the prescribed number of licences. Among other grounds, the general manager may refuse to transfer a licence that carries an unpaid fine or monetary penalty, or a suspension that has not ended. Ask the seller for its compliance history and for confirmation that nothing is outstanding.

Stock and security interests

The LCRB notes that cannabis inventory can be sold to an applicant for a Cannabis Retail Store licence as part of a licence transfer or sale. The LCRB’s transfer page does not explain how a lender’s security fits in, so look for it yourself. In British Columbia a lien is a notice of a legal claim that can be registered against personal property as security for a debt or loan, and the province offers a search for personal property liens. Search the seller and the store’s name before closing, and make discharge of anything the buyer is not taking over a closing deliverable. See asset sale for how an asset purchase differs from a share purchase.

Questions to ask before signing

• Will the seller open the transfer in the portal, and by what date, and what happens if the LCRB asks for more information?
• Does the buyer, or anyone connected to it, have a link to a federally licensed producer that the declaration would have to disclose?
• Does the transfer keep the buyer within the limit on licences one licensee may hold or have an interest in?
• Does the lease give the buyer the control over the premises that the Act requires, for a satisfactory period?
• Does the LCRB treat a change in the seller’s own shareholders differently from a transfer to a new licensee, and which does this deal use?