Historically, when purchasing a property in Ontario, it was not uncommon for a vendor to represent and warrant in the agreement of purchase and sale that the property had never been used as a cannabis "grow-op". It looks like such a representation and warranty is becoming a thing of the past.
As the cannabis industry matures, an increased number of newly licensed producers, retail store licensees and those manufacturing ancillary cannabis products (and edibles, once legalized) will be looking to purchase production facilities, retail storefronts, commercial properties and factories. Prior to the purchase of a property for cannabis business use, there are a number of key items one should consider.
In the normal course, when a purchaser enters into an agreement of purchase and sale to purchase a property, the agreement of purchase and sale will either be (i) conditional for a specific number of days' or (ii) a firm deal with no conditional period. In the first scenario, the agreement will be conditional upon the purchaser satisfying itself after conducting due diligence of the property and/or obtaining financing.
In the case of a conditional agreement, a purchaser ought to determine the following items during the conditional period. In the case of a firm agreement, the purchaser ought to determine the following items prior to executing an agreement of purchase and sale:
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