Licence Appeal Tribunal

Safety, Licensing Appeals and Standards Tribunals Ontario

Tribunal d’appel en matière de permis Tribunaux de la sécurité, des appels en matière de permis et des normes Ontario

Date: 2019-11-25

Appeal of a Notice of Proposal by the Registrar under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996, pursuant to the Liquor Licence Act, R.S.O. 1990, c. L.19 - to Refuse to Renew a Licence

Between:

Tri-Echo Restaurants Inc. o/a 237 Restaurant & Lounge (The)

Appellant

-and-

Registrar, Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR: Patricia McQuaid, Vice-Chair

APPEARANCES:

For the Appellant: Tamar Friedman, Counsel

For the Respondent: Faye Kidman, Counsel

Heard in Toronto: October 16, 2019

REASONS FOR DECISION AND ORDER

BACKGROUND

1This is a hearing before the Licence Appeal Tribunal (the “Tribunal”) arising out of a Notice of Proposal to refuse to renew a liquor licence issued by the Registrar, Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 (the “Registrar”). In the Notice of Proposal dated August 30, 2019, the Registrar alleges that Tri-Echo Restaurants Inc. o/a 237 Restaurant & Lounge (the “appellant” or “237”) is operating an illegal cannabis dispensary and cites s.6(2)(d) under the Liquor Licence Act (the “Act”); that is, that the past/present conduct of 237 or its principal, affords reasonable grounds for belief that its business will not be carried on in accordance with the law and with integrity and honesty. The appellant states that there is, in fact, a cannabis retail store operating out of its premises, but asserts it is not an illegal operation and therefore there is no basis for the refusal to renew its licence under s. 6 (2) of the Act.

2The Registrar also issued an Order of immediate suspension of the liquor licence on August 30, 2019. The hearing commenced on September 23, 2019 to address that Order. The hearing was adjourned, at the appellant’s request, to October 16th, and after hearing submissions from the parties, the Tribunal made an order that the immediate suspension would remain in place until the conclusion of the hearing. At the close of the hearing on October 16th, after hearing further submissions from the parties, I ordered that the immediate suspension would remain in place pending the release of my final decision in this matter.

RESULT

3After carefully considering the evidence and submissions, and for the reasons set out below, I direct the Registrar to carry out the Notice of Proposal.

EVIDENCE and ANALYSIS

4Five witnesses testified at the hearing: Darryl Marwick and Don Anderson, Alcohol and Gaming Commission of Ontario (“AGCO”) compliance officials and Devin Sookdeo, manager of liquor licence eligibility at the AGCO, Lawrence Tjan, the sole shareholder and director of the appellant and Courtney Campbell from the Lawful Cannabis Coalition (the “Coalition”). Based on their testimony, there is no dispute on the following facts.

1. Liquor has not been sold and served at 237 since January 1, 2019 though the signage for 237 still appears on the exterior of the premises.

2. Inside the premises, various signs for 1 Tonamara Cannabis Boutique (“1 Tonamara”) are visible throughout. The Bar 237 logo still appears on what could be characterized as the service bar and the liquor licence is still on display.

3. Various cannabis products are offered for sale in the appellant’s premises. There is no alcohol on site. None of the employees are employees of 237, which actually has no current employees. The persons on site work for 1 Tonamara.

4. 237 has been leasing the premises to 1 Tonamara since January 2019.

5. 1 Tonamara is not an authorized cannabis retailer through the provincial regulatory regime. Mr. Tjan was not aware of this fact when he began leasing the premises to 1 Tonamara in January 2019.

6. The Coalition claims the “rights of a natural person” to supply and sell cannabis in edible, recreational and medicinal forms. 1 Tonamara is a brand and member store of the Coalition.

7. Mr. Tjan filed an application for renewal of the liquor licence on July 10, 2019. At no time between January and August 2019 when Mr. Marwick attended at the premises, did Mr. Tjan advise the AGCO that liquor was no longer being sold and served at the premises.

5Mr. Tjan testified that in the past, 237 had rented the space on a nightly basis for various DJ events. On those occasions, liquor would be sold and served through the caterer’s endorsement on the liquor licence. He explained that he had decided to “pause” the restaurant business of 237 and was approached by Mr. Campbell to rent his space for 1 Tonamara. Neither Mr. Tjan or 237 has involvement in 1 Tonomara. When asked why he did not surrender the liquor licence given that 237 had not been actively engaged in the business of selling liquor since January 1, 2019, Mr. Tjan stated that he wanted to keep the liquor licence in good standing so that he would have the option of selling and serving alcohol in the future.

6Mr. Sookdeo testified that when a liquor licence is granted, it attaches to a premise, in this instance, 237 Queen St. East in Brampton. It is in effect at the premises 24 hours a day, seven days a week, though the hours for the sale and service of alcohol are from 9 a.m. to 2 a.m. At all times, a licensee is expected to abide by the Act and its regulations. A licensee may not operate year-round, if, for example, it has a seasonal licence which must be approved by the AGCO. Otherwise, if a licensee is no longer actively engaged in the sale and service of alcohol, it is required to surrender the licence pursuant to s. 56 of Regulation 719/90 which states: A licence holder who ceases to operate the business shall immediately surrender the licence to the Registrar. Mr. Sookdeo stated that the onus is on the licensee to keep the Registrar informed regarding any changes in the business.

7As noted above, the Registrar relies on s. 6(2)(d) of the Act in refusing to renew the licence and, in particular, alleges that 237 is operating an illegal cannabis dispensary. It is clear on the facts that 237 is not operating the cannabis store though it is renting the premises to 1 Tonamara. Mr. Campbell asserts that 1 Tonamara, though not authorized to sell cannabis by the AGCO, is not operating illegally. He is strongly of the belief that the Coalition has a legal right to sell cannabis. Based on the evidence before me, I have concluded that it is not necessary for me to determine the ‘legality’ of the cannabis retail business operating from the 237 premises when deciding whether the Registrar’s proposal should be confirmed.

8The fact is that 237 is no longer operating as a licensed establishment selling and serving alcohol and, based on Mr. Tjan’s evidence, there is no current intention to resume operation as a licensed bar and restaurant. Indeed, this was reiterated by counsel appearing for the appellant on the first day of hearing on September 23, 2019. In closing submissions on October 16th, appellant’s counsel stated the evidence was that 237 was simply renting out the premises on a nightly basis, as it had done in the past under its caterer’s endorsement. That analogy is not compelling given the evidence before me. Mr. Campbell’s evidence was that in late 2018, the Coalition was searching for a location from which to set up a retail location and 237 met their requirements. Rent deposits were given to Mr. Tjan in January 2019. The photographs in evidence depict an ongoing retail business at the location, such as signage, including a sign indicating that a robbery prevention program is in place, security measures such as panic alarms, display cases and significant amounts of cannabis products. This is not a nightly pop up store. It is a retail operation that has been in operation since January 2019 and continues, unaffected by the Order of immediate suspension of the liquor licence.

9The sale and service of alcohol is a highly regulated business of which Mr. Tjan was aware. But he has ceased operating the business and failed to advise the Registrar. An opportunity to inform the Registrar about changes to the business presented itself at the time of his renewal application, but he did not do so.

10Section 56 of Regulation 719/90 is clear: a licence holder who ceases to operate the business shall immediately surrender the licence. I find that Mr. Tjan’s conduct, as the owner of 237, in failing to abide by the obligations under the Act, both in keeping the Registrar informed of changes to the business and then, in not surrendering the licence pursuant to s.56, affords reasonable grounds for belief that the business will not be carried on in accordance with the law and with integrity and honesty.

ORDER

11For the reasons set out above, I direct the Registrar to carry out the Notice of Proposal to refuse to renew the liquor licence of Tri-Echo Restaurants Inc. o/a 237 Restaurant and Lounge.