The tenant's regulatory exit: what Health Canada requires
The licence belongs to the tenant, so the regulatory exit is the tenant's job. The landlord still has a strong interest in seeing it done properly, because cannabis left on site or a licence left in limbo can delay getting the building back.
- Notice of cessation. A licence holder that intends to stop all activities authorized by its licence, whether before or at expiry, must give Health Canada written notice at least 30 days before activities stop. The notice must state the expected date, how remaining cannabis will be dealt with (the name and address of any licensed buyer, or the date and location of destruction), where required records will be kept, and a contact person. After activities stop, the holder must send an update if anything changed (Cannabis Regulations, s. 36).
- Local authority notice. Within 30 days after a licence is amended, suspended or revoked, the holder of a cultivation, processing or sale licence must notify the local government, fire authority and police, and copy Health Canada (s. 35).
- No transfer. The licence cannot be assigned to the landlord or the next occupant (Torys LLP). A new operator needs its own licence for the site.
- CRA excise licence. Producers also hold a CRA cannabis excise licence. When Tantalus Labs' excise licence was not renewed in 2023, the CRA threatened to destroy inventory at its Maple Ridge facility, and the company had to seek court approval for a rapid sale (CBC News / Canadian Press). Timing of the tenant's CRA and Health Canada steps can affect how quickly the site is cleared.
A landlord can ask the tenant for copies of the cessation notice and any updates, and should not accept a surrender of the premises while cannabis remains on site.
Destruction of cannabis and cultivation waste
Only the licence holder may destroy cannabis under its licence. The method must comply with applicable federal, provincial and municipal environmental laws, must not expose anyone to cannabis smoke or vapour, and must take place in the presence of at least one of the licence holder's employees. These witness requirements do not apply to cultivation waste (Cannabis Regulations, s. 43, as amended in 2025). Destruction records must be kept for at least two years.
For the landlord, the practical points are: confirm in writing that all cannabis, including product in vaults, drying rooms and waste bins, has been sold to a licensed party or destroyed; and ask for the date, method and location of destruction so it matches the cessation notice.
Equipment, fixtures and chattels: what stays and what goes
This is where most exit disputes start. The lease should control, but where it is silent or unclear, BC courts decide whether an item is a fixture (part of the land, which usually stays) or a chattel (the tenant's property, which it may remove) using an objective test based on how firmly the item is attached and the purpose of attaching it. In Scott v. Graydon Enterprises Ltd. (BCCA, 2015), commercial blueberry plants on leased land were held to be fixtures, and the parties' intention did not decide the question. Tenants can generally remove trade fixtures during the term, but that right can be lost; in that case, an assignment in breach of the lease cost the tenant its removal rights (Lawson Lundell LLP).
Items that commonly need a decision on a cannabis site:
| Item | Questions to ask |
|---|---|
| Electrical service upgrades, transformers, panels | Who paid? Does the lease say they stay? Are they useful to the next user or oversized? |
| HVAC, dehumidification, carbon filtration | Are units bolted in and ducted? Leased from a supplier? Will a buyer value them or pay to remove them? |
| Grow lights, benches, racking | Often movable equipment, and often financed. Check for registered security interests before assuming ownership. |
| Grow-room walls, insulated panels, vaults | Built into the structure? Does the lease require removal and restoration? |
| Irrigation, water treatment, drains | Tied into plumbing? Any permits or discharge approvals that end with the tenant? |
| Fencing, cameras, access control | Who owns the hardware and the recording system? Are monitoring contracts in the tenant's name? |
Removing heavy equipment can damage floors, roofs and walls. If the tenant is removing items, the lease's make-good standard and a joint walk-through before and after removal help settle repair costs.
Building condition: moisture, mould, odour and systems
Moisture and mould. Indoor cultivation keeps humidity high for long periods. Look for mould in wall cavities, insulation, ceiling spaces and around HVAC. WorkSafeBC notes that mould can cause allergic reactions, asthma and other respiratory illness, that a trained abatement team is usually needed to remove it safely, and that the water source must be fixed to prevent regrowth (WorkSafeBC – Mould). An indoor air quality or building envelope assessment is often worth ordering before re-letting or listing.
Odour. Cannabis odour can linger in porous materials and ductwork. Filters, ducting and some finishes may need replacement rather than cleaning.
Electrical and mechanical. Have a licensed electrical contractor review panels, wiring and any tenant-installed service, and a mechanical contractor review HVAC and dehumidification. Confirm permits and final inspections exist for tenant work; unpermitted work can slow a sale or a new tenant's licensing.
Security systems. Change or remove access codes, collect keys and fobs, decide whether to keep cameras and alarm monitoring running (useful while the building is empty), and cancel or transfer contracts.
A fuller building and environmental review is covered in environmental and building due diligence.
The empty-building period: insurance, fire code and assessment
- Insurance. A building going from licensed cannabis use to empty is a change in risk. Under BC's statutory conditions, a material change within the insured's control and knowledge must be reported promptly in writing (Insurance Act, s. 29). See insuring a vacant facility.
- Fire code. The BC Fire Code requires vacant buildings to be secured against unauthorized entry (BC Fire Code 2018, Article 2.4.6.1; the 2024 edition is now in effect, per the Province of BC, so confirm current wording with the local fire authority).
- Property assessment. BC Assessment values property at market value as of July 1 and physical condition as of October 31 of the year before the roll (Property Assessment Appeal Board). A building stripped of its fit-out may be valued differently on the next roll.
- Tenant holding over. If a tenant stays after the lease ends, it can be liable for double the yearly value of the premises for the holdover period (Commercial Tenancy Act, s. 15).
Landlord checklist: getting the building back market-ready
- Copy of the Health Canada cessation noticeAsk for the notice sent at least 30 days before activities stop, and any later update.
- Written confirmation that no cannabis remainsCovering vaults, drying and storage rooms, and waste, with destruction dates and locations.
- Local authority noticesCopies of the tenant's notices to the municipality, fire department and police about licence changes.
- Fixtures schedule agreedA written list of what stays, what the tenant removes, and the restoration standard.
- Security interest searchCheck whether equipment left behind is financed or leased before treating it as abandoned.
- Joint inspection and photosBefore and after removal, including roof, floors and walls around heavy equipment.
- Mould and moisture assessmentWall cavities, insulation and HVAC, with remediation by trained workers where needed.
- Electrical and HVAC reviewLicensed contractors confirm what is safe, permitted and useful to the next user.
- Security handoverKeys, fobs, codes, camera recordings and monitoring contracts.
- Utilities and heatTransfer accounts and keep heat and fire protection running.
- Insurer notifiedReport the change in occupancy and confirm vacancy conditions in writing.
- Municipal mattersConfirm the tenant's business licence is closed and check zoning for the next intended use.
- Deposit reconciliationApply the deposit or letter of credit only after costs are known and as the lease allows.
Whether equipment left behind is the landlord's, the tenant's or a lender's depends on the lease, the facts and any registered security. Before keeping, selling or disposing of anything, or applying the deposit, have a BC lawyer review the lease and the exit steps. If the tenant is insolvent, see when a cannabis tenant defaults.
How Sean can help
Once a cannabis tenant leaves, owners usually face three options: re-let to another licensed operator, convert to another use, or sell. Sean Phillips, who has worked on 276+ Health Canada licence applications since 2014, offers paid site assessments, quoted per site, that look at what the remaining infrastructure is worth to a licensed or non-cannabis user (consulting). For conversion ideas, see repurposing a cannabis facility; to discuss selling, contact Sean.