What should a BC landlord know before leasing to a cannabis tenant?

Updated September 2026 · General information, not legal or tax advice

Who holds the licence, and what the landlord signs

In almost every case the tenant, not the landlord, applies for and holds the cannabis licence. The landlord's role is narrower but still formal, and it differs between federal production licences and BC retail licences.

Federal cultivation, processing and medical sales licences

If the applicant does not own the proposed site, Health Canada asks for a signed declaration from the owner. Each owner or co-owner declares that they own the site and that they are "fully aware of, and consent to, the activities with cannabis authorized by the licence being applied for being conducted on this site" (Health Canada – Prepare your information). A landlord who signs this is confirming consent to the licensed activity, so the lease and the declaration should line up: same legal owner names, same address, same scope of activity.

Before applying, the tenant must also give written notice to the local government, the local fire authority and the local police force or RCMP detachment, naming the applicant, the licence class sought and the site address (Cannabis Regulations, s. 7). After a licence is issued, amended, suspended, reinstated or revoked, the licence holder must notify those same local authorities within 30 days and copy Health Canada (s. 35). These are tenant obligations, but a landlord can ask in the lease for copies. A copy of a suspension or revocation notice is an early warning that the tenant's business, and its rent, may be at risk.

BC cannabis retail store licences

For a retail store, the provincial Liquor and Cannabis Regulation Branch requires proof of the right to occupy the location: ownership, a lease, an agreement to purchase or lease, or another arrangement such as a sublease. A lease must be valid for at least 12 months from licence issuance, and the local government or Indigenous Nation must recommend that a licence be issued before the branch will consider it (Province of BC – Apply for a Cannabis Retail Store licence).

The licence does not stay with the building

The Cannabis Act and its regulations do not provide for transferring or assigning a cannabis licence (Torys LLP). If the tenant leaves, the licence does not pass to the landlord or to the next occupant. That affects how the building is valued and sold later; see selling a licensed facility.

Permitted use and licence-compliance clauses

A general "any lawful use" clause is a weak fit for a regulated tenant. Topics a landlord's lawyer will usually want to work through:

• Defined use. Tie the permitted use to the specific licence class and activities, so a change in activity (for example, adding extraction) needs landlord consent.
• All approvals, not just Health Canada. Production tenants typically also need a CRA cannabis excise licence and a municipal business licence; retail tenants need the provincial licence and a local government recommendation. Zoning and, for farmland, Agricultural Land Commission rules must allow the use. See zoning and local government and ALR and farm classification.
• Licensing period. Licensing can take time. The lease may need conditions, a deadline for the licence to issue, and a rent structure for the pre-licence period, plus what happens if the licence never issues.
• Reporting. Copies of licences, amendments, inspection results, notices of suspension or proposed revocation, and CRA excise notices, delivered within a set number of days.
• What counts as default. Whether suspension or revocation of a licence is itself a default, and whether the tenant gets time to cure.

One BC-specific trap for rural and greenhouse sites: under the Land Title Act, s. 73, leasing part of a parcel of land for a term longer than three years is treated as a subdivision and needs subdivision approval. The rule does not apply to leasing a building or part of a building, but ground leases for outdoor or greenhouse growing on part of a larger parcel can be caught.

Security clearances, physical security and change of control

Health Canada requires security clearances not only for a corporate licence holder's directors and officers, but also for individuals who exercise or can exercise direct control over it, and the directors and officers of controlling corporations (Cannabis Regulations, s. 50). When one of those individuals is replaced or added, the licence holder must notify Health Canada within five days (s. 34).

That matters to a landlord because a share sale of the tenant can change who stands behind the lease without any formal assignment. Change-of-control language, notice to the landlord, and whether guarantees survive a change of control are worth specific attention.

Physical security rules also shape the building. For standard cultivation, standard processing and sale licences that allow possession, the site must be designed to prevent unauthorized access, the perimeter must be monitored by visual recording devices, and operations and storage areas need restricted access, a physical barrier and camera monitoring (Cannabis Regulations, ss. 62-70; several of these provisions were amended in 2025, so the current text should be checked). Site-plan changes that require new security measures need Health Canada approval before they are made (s. 33).

Practical lease points that follow:

• How the landlord inspects restricted areas (escorted entry, notice periods, who can enter).
• Who owns fences, cameras, access-control hardware and vault construction at the end of the term.
• Whether landlord approval is needed before the tenant alters walls or site layout to meet security rules.

Odour, power, water and building systems

Buildings where cannabis is produced, packaged, labelled, stored or tested must have an air system that filters air to prevent cannabis odours escaping outdoors (Cannabis Regulations, s. 85). Carbon filtration, dehumidification and high air-exchange HVAC are common, and all of them add load and moisture-control risk to the building.

Questions to settle in the lease:

• Electrical service. Who pays for a service upgrade or new transformer, who owns it afterward, and whether it must be left in place or removed.
• Moisture. Indoor growing puts heavy humidity into a building shell. Maintenance, monitoring and repair obligations for the envelope, roof and insulation should be explicit.
• Odour complaints. Who deals with neighbour or municipal complaints, and whether repeated complaints are a default.
• Water and drainage. Irrigation, wastewater and any treatment systems, and responsibility for compliance with local discharge rules.
• Permits. Building, electrical and mechanical permits obtained in whose name, and delivery of final inspections to the landlord.

Leasehold improvements and fixtures

Cannabis fit-outs are expensive and heavily attached to the building: grow-room walls, HVAC, racking, irrigation, lighting, vaults and security systems. Whether an item is a fixture (part of the building) or a chattel (the tenant's property) is decided in BC by an objective test looking at how the item is attached and why. In Scott v. Graydon Enterprises Ltd. (BCCA, 2015), the Court of Appeal held that commercial blueberry plants on leased farmland had become fixtures, and the parties' intention was not what decided the question (Lawson Lundell LLP).

The practical lesson is to schedule the fit-out in the lease: which items become the landlord's, which are the tenant's removable trade fixtures, which must be removed at the end, and to what standard the premises must be restored. Tenant exit and decommissioning covers what happens when that day comes.

Insurance, deposits and guarantees

Insurance. The landlord's building insurer needs to know the building is used for cannabis. Under BC's statutory conditions, an insured must promptly notify the insurer in writing of a change that is material to the risk and within the insured's control and knowledge; if not, the contract is void as to the part affected (Insurance Act, s. 29, Statutory Condition 4). The lease normally sets the tenant's coverage, limits, and naming the landlord as an additional insured. See insuring a vacant facility for what happens if the tenant leaves.

Deposits and guarantees. Security deposits, letters of credit, and parent or personal guarantees carry more weight with a cannabis tenant because many Canadian cannabis companies have entered CCAA or bankruptcy proceedings in recent years (StratCann), and insolvency law limits what a landlord can recover. See when a cannabis tenant defaults.

Collateral realities. BC's Rent Distress Act still allows distress for rent, and it gives the landlord priority over most security interests in the tenant's goods, but not over a perfected purchase-money security interest (s. 3(4)). Grow equipment is often financed or leased, and cannabis inventory can only be handled by licence holders, so distress may recover less than a landlord expects.

Summary: lease topics and where the rules come from

Default, termination and restoration

End-of-lease terms are where cannabis leases differ most from ordinary industrial leases. A licence holder that intends to stop all licensed activities must give Health Canada written notice at least 30 days beforehand, describing how remaining cannabis will be sold or destroyed and where records will be kept (Cannabis Regulations, s. 36). A landlord can ask for a copy of that notice and tie the tenant's restoration timeline to it.

Topics for the lawyer: events of default (including licence loss and insolvency), cure periods, the landlord's termination and re-entry rights, holdover rent, a decommissioning plan (removal of cannabis, security hardware, grow equipment and odour-control systems), a make-good standard for moisture and mould damage, and a final inspection before the deposit is released.

How Sean can help

Since 2014, Sean Phillips has worked on 276+ Health Canada licence applications as an independent site-evidence and licensing-readiness consultant, and sells cannabis and commercial buildings across BC. Before a landlord signs an owner's consent or lease, he can review how the building fits a prospective tenant's licence plan and what the fit-out will mean for the building's value later. That consulting is paid and quoted per site; see consulting. For a lease itself, work with a BC lawyer. To talk about a property, contact Sean.