2023 ONSC 5524, 2023 ONSC 5524

CITATION : Registrar, Alcohol and Gaming Commission of Ontario v. Giesz-Ramsay, 2023 ONSC 5524 DIVISIONAL COURT FILE NO.: 151/23 DATE: 20231030 SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT RE: Registrar, Alcohol and Gaming Commission of Ontario, Appellant AND: Jodie Giesz-Ramsay , Respondent BEFORE: Lococo, Matheson and Nishikawa JJ. COUNSEL: Court M.

Peterson and Yusra Murad , for the Appellant Jack Lloyd , for the Respondent HEARD at Toronto: September 27, 2023 (by videoconference) AMENDED ENDORSEMENT Corrected decision: The text of the original endorsement was corrected on October 30, 2023 and the description of the correction is appended. October 30, 2023: paragraphs 2 and 21 were corrected to state “appeal” as opposed to “application for judicial review”.

Nishikawa J. [ 1 ] The Registrar, Alcohol and Gaming Commission of Ontario (“AGCO”) appeals a decision of the Licence Appeal Tribunal (“LAT”) dated February 3, 2023 (the “Decision”), setting aside the AGCO’s Notice of Proposal to Refuse Licence (the “Notice”) to the Respondent, Jodie Giesz-Ramsay and ordering that a licence as a cannabis retail manager be granted. [ 2 ] For the reasons below, the appeal is dismissed. The AGCO has failed to demonstrate that the LAT erred in law.

Background The Notice of Proposal to Refuse Licence [ 3 ] On November 17, 2020, the Respondent made an application to the AGCO to obtain a cannabis retail manger licence. [ 4 ] On July 8, 2022, the AGCO issued the Notice under s. 5(6) of the Cannabis Licence Act, 2018 , S.O. 2018, c. 12, Sched. 2 (the “ Act ”), proposing to refuse to the licence because of “reasonable grounds to believe that the applicant will not, in acting as a cannabis retail manager, act in accordance with the law, or with integrity, honesty or in the public interest, having regard to the past or present conduct of the applicant” as provided in s. 5(4) 1 of the Act .

The AGCO found the Respondent was not entitled to a licence as a cannabis retail manager because she operated illegal cannabis dispensaries in the past and because of her convictions in 2017 for possession of cannabis and proceeds of crime. As set out in the Notice, the Respondent had a right to a hearing before the LAT regarding the proposed refusal of a licence under s. 14 of the Act .

The Decision [ 5 ] On August 9, 2022, the Respondent requested a hearing before the LAT under s. 14(2) of the Act , seeking to set aside the Notice on the basis that her criminal record and related past conduct did not render her ineligible for a licence as a cannabis retail manager. [ 6 ] Subsection s. 15(3) of the Act provides that in setting aside a proposal or decision, the LAT may substitute its opinion for that of the Registrar.

After a two-day hearing, the LAT set aside the Notice and directed the AGCO to issue a cannabis retail manager licence without conditions to the Respondent. [ 7 ] In the Decision, the LAT observed that pursuant s. 5(5) of the Act , the honesty and integrity provisions of the Act do not prevent the issuance of a licence to an applicant, even if they have been convicted of or charged with a prescribed offence in relation to cannabis under the Controlled Drugs and Substances Act, S.C. 1996, c. 19 . The LAT concluded that the AGCO failed to demonstrate

reasonable grounds for belief that the Respondent would not, acting as a cannabis retail manager, act in accordance with the law, or with integrity, honesty or in the public interest, having regard to her past or present conduct. [ 8 ] In detailed reasons, the LAT considered the evidence submitted by both parties. The LAT heard testimony from witnesses, who were examined and cross-examined, including the Respondent. The LAT noted that the Respondent acknowledged her convictions and sentence and provided the AGCO with a copy of the transcript of the guilty plea proceedings.

The LAT found that the Respondent “repeatedly” expressed remorse for her actions and emphasized that if she received a licence, she would comply with any terms and conditions. [ 9 ] The LAT further found that the AGCO failed to submit any evidence that the Respondent could not or would not comply with a specific condition on her licence or with the requirements of any of the duties and responsibilities of a retail cannabis manager as set out in the Act and regulations. Analysis The Parties’ Positions [ 10 ] On appeal, the AGCO submits that the LAT erred in law in two key respects: (

i) in failing to apply the correct standard of proof under s. 5(4) 1 of the Act ; and (ii) in making findings of fact based on irrational inferences. In essence, the AGCO’s position is that, given the extent of the evidence of the Respondent’s past conduct as a cannabis activist, which included civil disobedience and convictions in connection with operating illegal cannabis dispensaries, the LAT could not have reached the Decision without making an error of law.

The AGCO asks that the Decision be set aside, and an order be substituted directing the Registrar to carry out the Notice by refusing the Respondent’s application for a licence as a cannabis retail manager. [ 11 ] The Respondent submits that the AGCO cannot demonstrate an error of law but, rather, seeks to have this court reweigh the evidence that was before the LAT. Standard of Review [ 12 ] Pursuant to s. 11(3) of the Licence Appeal Tribunal Act, 1999 , S.O. 1999, c. 12, Sched. G , an appeal of a decision of the LAT may be made on a question of law only.

The parties agree that because the appeal is restricted to questions of law, the applicable standard of review is correctness: Canada (Minister of Citizenship and Immigration) v. Vavilov , 2019 SCC 65 , [2019] 4 S.C.R. 653, at paras. 36-37 . Did the LAT Apply the Wrong Standard of Proof? [ 13 ] The AGCO takes the position that in applying s. 5(4) 1 of the Act , the LAT erred by applying a standard of proof on a balance of probabilities as opposed to the “reasonable grounds to believe” standard.

The AGCO submits that the evidence of the Respondent’s past criminal convictions, public defiance of the law, and promotion of her illegal cannabis dispensaries amply met the “reasonable grounds to believe” standard. The AGCO submits that had the LAT applied the proper standard of proof, it could not have concluded that there were not reasonable grounds to believe that the Respondent would not act in accordance with the law. [ 14 ] I disagree that the LAT applied a standard of proof on a balance of probabilities or a standard higher than that required by s. 5(4) 1 of the Act .

The LAT, citing the Court of Appeal’s decision in Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. , 2013 ONCA 157 , correctly noted that the “reasonable grounds for relief” standard of proof is lower than proof on a balance of probabilities.

The LAT recognized that the standard requires “more than mere suspicion and an objective basis for the belief based on compelling and credible information.” [ 15 ] The AGCO’s submission suggests that once it had adduced evidence of the Respondent’s past convictions and activity, the LAT was compelled to find that the “reasonable grounds to believe” standard was met. This submission fails to take into consideration the substantial evidence that the Respondent adduced before the LAT.

The LAT found that despite the Respondent’s past criminal convictions and conduct, she had demonstrated a change in perspective regarding the necessity of complying with the law, as evidenced by her testimony and her conduct since her convictions. In applying the “reasonable grounds to believe” standard, the LAT was entitled, if not required, to weigh the entirety of the evidence before it, including the Respondent’s past or present conduct. [ 16 ] The LAT did not err in law by applying a higher standard of proof than that required by s. 5(4) 1 of the Act .

Nor did the LAT misapply the “reasonable grounds to believe” standard which, in any event, would have constituted an error on a question of mixed fact and law (rather than an error of law) that would not be subject to appeal. Did the LAT Make Irrational Inferences Amounting to An Error of Law? [ 17 ] The AGCO, relying on this court’s decision in Yatar v. TD Insurance Meloche Monnex , 2021 ONSC 2507 (Div. Ct.), at para. 28 , aff’d 2022 ONCA 446 , leave to appeal granted, [2022] S.C.C.A.

No. 310, submits that the LAT erred in law by making a finding of fact on a material point where the factual finding was based solely on an irrational inference.

Specifically, the AGCO submits that the LAT erred in law by making the irrational inference that the Respondent’s past pattern of publicity and transparency in her illegal activities indicates a high probability that she will comply with her legal obligations in the future. [ 18 ] The LAT found that there was no dispute that the Respondent “knowingly and deliberately engaged in a course of conduct that she was aware to be illegal.” The AGCO submits that given this fact, it was irrational for the LAT to infer that the transparency with which the Respondent carried out her illegal activities was indicative that she would act in compliance with cannabis laws in the future. [ 19 ] Again, the AGCO’s submission fails to take into account the large volume of evidence that was before the LAT and that it

relied on in its analysis, including the Respondent’s testimony. The evidence in support of the inference that the Respondent would comply with cannabis laws included the following: the Respondent’s guilty plea and compliance with the terms of her release and sentence; her involvement in legal endeavours in support of cannabis legalization; her repeated expressions of remorse; her recognition of the risks of unregulated sources of cannabis; and her commitment to complying with applicable laws.

The LAT found that transparency was the defining feature of the Respondent’s past conduct, not only with respect to her past illegal activities but throughout the licensing application process. In my view, the inference made by the LAT was not irrational, but was a reasonable one based on the evidence that was before it. [ 20 ] For the foregoing reasons, I find that the AGCO has failed to demonstrate any errors of law on the part of the LAT. Conclusion [ 21 ] Accordingly, the appeal is dismissed.

Further to the parties’ agreement on costs, no costs are ordered. “Nishikawa J.” “I agree: Lococo J.” “I agree: Matheson J.” Released: October 4, 2023 Re-released: October 30, 2023