The short answer
In BC, growing cannabis is a farm use of land in the Agricultural Land Reserve (ALR), so it does not need Agricultural Land Commission (ALC) approval. But local governments can prohibit some forms of it, mainly indoor growing in concrete-based buildings built after July 13, 2018. Separately, cannabis production does not qualify land for farm classification with BC Assessment, so a cannabis operation on its own does not earn the farm tax class. These two systems, land use and property tax, use different rules and are often confused.
This page explains both, and what changes when a cannabis grower leaves an ALR property.
How the ALR rules treat cannabis production
The ALC's Information Bulletin 04 explains that since February 22, 2019, the ALR Use Regulation treats all forms of lawful cannabis production as a farm use. As a result, cannabis production in the ALR does not contravene the Agricultural Land Commission Act even without Commission approval (ALC Information Bulletin 04).
What the regulation does is limit which forms of cannabis production a local government may not prohibit. Under section 8, a local government cannot prohibit lawful cannabis production that happens:
- outdoors in a field;
- inside a structure with a base consisting entirely of soil; or
- inside a structure that was built, or lawfully under construction, before July 13, 2018 for growing crops, and has not since been altered to increase its base or change the base material.
Everything else, most notably a concrete-floored building or greenhouse built after July 13, 2018, is still a farm use but can be prohibited by local bylaw. The bulletin's summary is that local governments "may regulate or prohibit certain kinds of cannabis production, though may not prohibit all forms" (ALC Information Bulletin 04).
Other ALR rules that still apply
- Fill and soil removal. Placing fill or removing soil to build a cannabis structure generally requires a notice of intent or application to the ALC unless narrow conditions are met, including a total area of 1,000 m² or less for a farm structure. Construction and demolition waste, including concrete and asphalt, may not be used as fill in the ALR (ALC Information Bulletin 04).
- Processing. Storing, packing, preparing and processing farm products is a farm use if at least 50% of the product is produced on that farm (or by a co-operative the owner belongs to) (ALR Use Regulation, s. 11). A processing plant relying mostly on outside biomass falls outside that designation.
- Structures must be necessary. The bulletin notes that a structure must be proportionate to the farm use it serves (ALC Information Bulletin 04).
What local governments can do on ALR land
Local zoning still applies on ALR land, alongside the ALC rules. A local government can regulate cannabis production in the ALR (siting, setbacks, building size) and can prohibit forms of it that section 8 does not protect. It cannot allow something the ALC rules prohibit.
As an example of how this looks in practice, the City of Vernon's December 2018 zoning amendments allowed cannabis growing in its A1 agricultural zone within the ALR, with a minimum 50 m separation from properties where residential is the principal use, and in the I1 Light Industrial zone within enclosed buildings (City of Vernon). Rules change, so always check the current bylaw for the specific property. The BC zoning guide explains how.
To confirm whether a parcel is in the ALR, the ALC publishes ALR maps, and past ALC applications and decisions for a property can be searched through the ALC application and decision search.
Non-farm use applications to the ALC
The general rule is that a person must not use agricultural land for a non-farm use unless it is permitted by the Act or regulations or approved by the Commission (Agricultural Land Commission Act, s. 20). This matters when an owner wants to put a former cannabis building in the ALR to a non-agricultural use, such as general warehousing, manufacturing unrelated to on-farm product, or a data centre.
How the process works
- The owner applies through the ALC portal using a BCeID.
- The application goes first to the local government. If the local government does not authorize it to proceed, the process ends there and part of the fee is returned.
- If forwarded, the ALC decides. It may approve, approve with conditions, refuse, or refuse but allow an alternate proposal, and gives written reasons.
The ALC says most decisions are communicated within 60 to 90 business days of receipt (ALC – Application Process). The fee for a non-farm use application is $1,500, split $750 to the local government and $750 to the ALC (ALC – Fees and Payment).
What the Commission weighs
The ALC's stated priorities are preserving agricultural land and encouraging farming. It looks at the land's agricultural capability regardless of current use, whether the proposal could happen on non-ALR land instead, and consistency with local plans and bylaws. It notes that "once agricultural land is lost, it is rarely ever reclaimed to agricultural use" (ALC – What the Commission Considers). Owners should not assume an existing concrete building makes approval more likely.
BC Assessment farm classification
Farm class (Class 9) is a property tax classification, separate from ALR status (BC Assessment – property classes). Land can be in the ALR without farm class, and land outside the ALR can have farm class if it qualifies.
Key requirements
- Apply by October 31Farm class is voluntary. New applications must reach BC Assessment by October 31 to count for the next assessment and tax year. A new owner of land already in farm class must also apply (BC Assessment).
- Qualifying agricultural useThe use must be on the list in the Schedule to the Classification of Land as a Farm Regulation and must not be an excluded use (B.C. Reg. 411/95).
- Minimum gross incomeThe farm operation must meet a minimum annual value of qualifying products sold, based on its size (table below).
- Annual reviewFarm class is granted yearly. If the land no longer meets the requirements, BC Assessment must reclassify it.
| Total area of farm operation | Minimum gross annual value |
|---|---|
| Less than 0.8 ha (1.98 acres) | $10,000 |
| 0.8 ha to 4 ha (about 2 to 10 acres) | $2,500 |
| More than 4 ha | $2,500 plus 5% of the actual value of the farm operation for farm purposes in excess of 4 ha |
(Classification of Land as a Farm Regulation, s. 5). Leased land can count, but the lease must meet the regulation's requirements, and both owner and lessee are involved in the application (BC Assessment).
Why it matters for tax
BC Assessment says farm land values are regulated and vary by region, and that the land valuation changes when a property is removed from farm class. Farm buildings other than the farmer's dwelling get an exemption in municipalities of the greater of $50,000 or 87.5% of their assessed value, and in rural areas farm buildings are exempt from general provincial tax (BC Assessment). How much a particular property saves depends on local tax rates and its own assessment.
Does cannabis production qualify for farm class?
No. The Classification of Land as a Farm Regulation lists the production of cannabis, and of substances or products derived from a cannabis plant, as an excluded use, with an exception for industrial hemp produced under the Industrial Hemp Regulations (B.C. Reg. 411/95, Schedule, s. 2). BC Assessment states that this exclusion applies from the 2019 assessment roll onward (BC Assessment – Cannabis and property classification).
BC Assessment also says that if there are other qualifying farm activities on the land or in another building, those activities continue to qualify for farm class. A property can therefore be split, with part in farm class and the cannabis operation in another class (BC Assessment; property classes).
An ALR property with a large cannabis building is not taxed as a farm on the strength of that building. Buyers and lenders reading a BC Assessment notice should check which classes apply to which parts of the property.
What happens when a grower leaves
When a cannabis tenant or owner-operator stops producing, several things can change:
- ALR status stays. The land remains in the ALR. The building can be used for another farm use (for example, another greenhouse crop or mushrooms). A non-farm use would need ALC approval. See repurposing a cannabis facility.
- Tax class may change. BC Assessment classifies property by type or use (BC Assessment), so a vacant building or a new use may end up in a different class from the cannabis operation. If the owner or a new tenant starts a qualifying agricultural use, farm class can be applied for by October 31 for the following year.
- Farms still being set up. The regulation lets land that is being developed for a qualifying agricultural use be classified as farm before it earns the minimum income, if the development conditions are met by October 31 and a farm development plan is filed (B.C. Reg. 411/95, s. 8; BC Assessment farm brochure).
- Zoning protection can lapse. If the cannabis use was lawfully non-conforming under local zoning, a continuous six-month break can end that status (Local Government Act, s. 528). The same section says normal agricultural cycles do not count as discontinuance, but whether a given gap qualifies is a legal question.
For the tenant side of a departure, see tenant exit and decommissioning. For tax effects of a sale, see taxes when selling commercial property. Classification disputes can be appealed; property owners should get advice from a BC lawyer, accountant or property tax agent for their situation.
How Sean can help
Sean Phillips, REALTOR® with Coldwell Banker Executives Realty, sells agricultural, greenhouse and cannabis properties across BC and has worked on Health Canada licensing projects since 2014. He can help owners and buyers understand how ALR status and property class affect a listing, and can coordinate with the owner's lawyer or accountant. For owners deciding what to do with an ALR facility, paid consulting (remote or on-site assessments) is available and quoted per site. To discuss a property or listing, contact Sean or read about selling a cannabis grow facility.