Cannabis industry and its employees

While the legalization of recreational cannabis is just around the corner, for the many companies that produce cannabis in Canada, the road to legalization began many months, and in some case years ago. Over the past few years, we have seen significant growth in the cannabis industry and this has naturally resulted in more cannabis-related jobs. A recent Globe and Mail article¹ notes that employers had a 50% jump in cannabis-related job postings between April and early May of this year.

While there has been much discussion regarding cannabis in the workplace and its effect on health and safety, little attention has been given to the circumstances of the employees who actually work in the cannabis industry. This article explores the employment standards considerations that apply specifically to employees working in the cannabis industry.

Federally or Provincially Regulated Employees?

Even though the laws that make cannabis legal are federal, employees working in the cannabis industry are subject to provincial employment standards. In MedReleaf Corp. and UFCW, Re,² the Canadian Industrial Relations Board refused to hear a union's application to certify the employees of MedReleaf under the Canada Labour Code due to a lack of jurisdiction. The union asserted that since the employer was subject to a strict federal regulatory framework, its business of cultivating, farming and harvesting cannabis made it a federal undertaking. The Board concluded that the essential nature of MedReleaf's operation was a commercial operation of a local nature that produced and sold a medical product. Although the federal government provided the employer with the license to do this, that did not change the nature of the business. MedReleaf's operations were within the jurisdiction of the province. The BC Employment Standards Tribunal also made a similar finding a few months later.³

Employment Standards in Ontario for Employees Growing Cannabis

While the objective of the Employment Standards Act, 2000 (Ontario)⁴ (the "ESA") is to provide employees with a right to minimum standards in the workplace, there are exemptions to various rules based upon the type of employee and the industry they work in. For example, not all employees are entitled to overtime pay or have the same rules regarding their hours of work.

How does the ESA apply to employees working in the cannabis industry?

In short, the existing case law does not provide a definitive answer.

As a starting point, courts and administrative tribunals consistently hold that, as remedial legislation, the ESA and its regulations should be read expansively, while exemptions should be narrowly construed. This supports the argument that employers should not endeavor to exclude employees from ESA minimums unless it is "clear and obvious".⁵

Regulation 285/01 (the "Regulation") provides some interesting exemptions to the ESA that may be applicable to employees growing cannabis, although the terms "cannabis" and "marijuana" are not mentioned specifically.

Flower, Tree or Shrub?

Section 4(3)(a) of the Regulation states, in part:

Part VII of the Act [Hours of Work and Eating Periods] does not apply to,

(a) a person whose employment is directly related to,

(ii) the growing of flowers for the retail and wholesale trade,

(iv) the growing of trees and shrubs for the wholesale and retail trade, …

These categories of employment are also exempt from Parts VIII (Overtime Pay) and X (Public Holidays) under the ESA.⁶ What then constitutes a flower, a tree or a shrub? Does a cannabis plant fall within this exemption?

Typically, we do not think of cannabis as a flower in the colloquial sense, like a daisy. The term "flower" is described in the online Oxford Dictionary⁷ primarily as "[t]he seed-bearing part of a plant, consisting of reproductive organs (stamens and carpels) that are typically surrounded by a brightly coloured corolla (petals) and a green calyx (sepals)".

The Ontario Labour Relations Board ("OLRB") in MedReleaf Corp v UFCW⁸ referred to the term "flowers" in its decision when describing how cannabis is grown and how MedReleaf's medical marijuana business operated.⁹ However, in that case, the Board focused on whether MedReleaf's employees were subject to the Labour Relations Act, 1995 or the Agricultural Employees Protection Act, 2002.

If we take a more scientific approach, cannabis is a form of flowering plant. The editors of the Encyclopaedia Britannica describe a flower as:

the reproductive portion of any plant in the division Magnoliophyta (Angiospermae), a group commonly called flowering plants or angiosperms. As popularly used, the term "flower" especially applies when part or all of the reproductive structure is distinctive in colour and form. … Regardless of their variety, all flowers have a uniform function, the reproduction of the species through the production of seed. The flower is the characteristic structure of the evolutionarily highest group of plants, the angiosperms.

Cannabis sativa L., a species of cannabis, has a taxonomic classification under Magnoliophyta.¹⁰ This suggests that cannabis is a flower and falls within the exemptions under the Regulation.

Cannabis is described in the Encyclopaedia Britannica (in part) as:¹¹

[a] plant belonging to the family Cannabaceae of the nettle order (Urticales). By some classifications, the genus Cannabis comprises a single species, hemp (Cannabis sativa), a stout, aromatic, erect annual herb that originated in Central Asia and is now cultivated worldwide, including in Europe, southern Asia, the Middle East, India, Africa, and the Americas. …

By contrast, a "tree" under the online Oxford Dictionary is defined as "[a] woody perennial plant, typically having a single stem or trunk growing to a considerable height and bearing lateral branches at some distance from the ground" while a "shrub" is defined as a "woody plant which is smaller than a tree and has several main stems arising at or near the ground."

On these definitions, a cannabis plant is likely to be considered a flower under the Regulation, but is not likely to be considered a tree or shrub.

The determination of which employees of a cannabis producer fall within the exemption is made even less clear when the employees perform different duties. In the case of 901975 Ontario Inc. v Dunning,¹² the court focused on the actual duties performed and the percentage of duties related to growing the plants as opposed to other duties:¹³

Even if the tending of the plants in the greenhouse can be characterized as "growing" rather than maintaining the plants, I am persuaded by the Ministry that it is not sufficient to simply demonstrate that some of the work performed involves the growing of flowers, trees, and shrubs. …

None of the employees who work both cash and in the greenhouse was identified as working more than 50% of the time in the greenhouse. Nor were their specific duties in the greenhouse identified. Consequently, it was impossible to determine the amount of time that could be attributed to "growing" of plants.

Even those employees whose duties were primarily related to work in the greenhouse had significant duties which took them outside any work which could be described as the growing of plants i.e. unloading trucks, tagging/pricing materials, and customer service. These are functions that are performed in most other retail operations and cannot be said to be directly related to the growing of plants.

Producers seeking to take advantage of the exemptions should pay careful attention to the amount of non-growing work which is performed by their employees.

Retail and Wholesale Trade

The terms retail and wholesale have not received much attention in the case law. In the case of Dunning (above) the OLRB found that the employer's business did not involve growing for the retail and wholesale trade but that the employer, operating a garden supply centre, was the retailer.¹⁴ However, this does not necessarily mean that a grower and retailer are mutually exclusive. Where cannabis is being sold to the public for use or consumption (i.e. retail sales) or in larger quantities for future sale by a retailer (i.e. wholesale) then the exemption should apply.

Seeds and Herbs

There is also exemption language that may apply under section 2(2) of the Regulation, which states:

Subject to sections 24, 25, 26 and 27¹⁵ of this Regulation, Parts VII, VIII, IX, X and XI of the Act¹⁶ do not apply to a person employed on a farm whose employment is directly related to the primary production of eggs, milk, grain, seeds , fruit, vegetables, mapl Cannabis Industry and Its Employees - Newsletter (002)e products, honey, tobacco, herbs , pigs, cattle, sheep, goats, poultry, deer, elk, ratites, bison, rabbits, game birds, wild boar and cultured fish [emphasis added].

There is no reported case law on what constitutes an "herb", though we may gain some insight by referencing its definition:¹⁷

1. Any plant with leaves, seeds, or flowers used for flavouring, food, medicine, or perfume. …
2. Botany Any seed-bearing plant which does not have a woody stem and dies down to the ground after flowering.

The term "herb" may have different meanings depending on the context. For example, in a commercial sense, we may think of it as a plant used for cooking (e.g. sage or rosemary), though it could also refer to an "herbaceous" plant. Based on the Encyclopaedia Britannica's description of cannabis (see above), it is also classified as an "erect annual herb". Looking at the list of items within section 2(2), the common theme among them is that they are intended for consumption, which also suggests cannabis may come within this exemption as an herb.

Despite the fact that cannabis plants produce seeds, it is unlikely that this exemption would apply. In Butt, Re,¹⁸ Referee McNish took a strict interpretation of the word "seeds" (applying regulations pre-dating the ESA):¹⁹

After considerable thought, I have concluded that gladioli corms are not seeds for the following reasons.

I believe that in ordinary everyday usage, the word "seed" and the words "corm" or "bulb" cannot be thought of as synonymous. They are separate words and are not interchangeable. I believe that the legislature meant by "seeds" those smaller granular embryos which come from the flower above the ground. The gladiolus itself grows seeds from its flower as distinguished from the below ground corm. Various dictionary definitions of "seed" were read but these were not exact enough or consistent enough with each other to be of much use in this hearing. …

The referee in this case also questioned whether, in such a case, the employees were primarily employed for the purposes of producing "seeds" (i.e. corms) or growing flowers (i.e. the gladioli) because the two practices were interrelated. While this question was not answered in the decision, a similar problem would be faced when trying to argue that cannabis is exempt due to the production of seeds.

It is possible that cannabis could fall within the section 2(2) exemption, though its classification as an herb is more speculative than as a flower.

The "Farming" Requirements

Despite the limited case law on the topic, what is certain is that "farming" need not be performed in the traditional sense (i.e. outdoors on a plot of land) in order to qualify as an exemption under the Regulation. In Rouge River Farms Inc. v Director of Employment Standards,²⁰ the OLRB accepted that it should implement a narrow perspective as to what constitutes a farm: a farm must have a nexus or connection to the location where the product is grown or raised, consistent with the plain and ordinary meaning of the term. However, the OLRB also noted that this requirement captured many of the modern examples of farming, such as greenhouses and indoor marijuana operations.

In order to fall within the farm worker exemption, an employee must be directly related to the primary production of an agricultural product,²¹ meaning, "any step in the production or growing process prior to a change in the form or state of the product."²² Therefore, an employee who works for a cannabis company, but as a member of the marketing department is not subject to the exemption. A similar finding was made by the BC Employment Standards Tribunal in Anthony, Re²³ where the employee's status as a farm worker was overturned because only part of his duties related to cultivating cannabis plants while the majority of his time was spent doing construction and security work.²⁴

Further, the primary production work must be done where the growing occurs,²⁵ such that an employee working at an off-site location would also not be subject to the exemption. The OLRB has also specified that the employee's work must involve "hands on contact" with the products in accordance with the principle of narrow interpretation. For example, the employee in the case of Harmaniak v JC Fresh Farms Ltd²⁶ was not subject to the Regulation because the employee made decisions about fertilizer, irrigation and pest management using computerized systems and equipment, which was not directly related to primary production of the items grown at the farm.²⁷ On this basis, the OLRB ordered the employer to pay outstanding vacation and statutory holiday pay. These findings are consistent with the general practice that exemptions should be applied narrowly.

Summary

While we do not have any definitive case law on the topic, it is likely that employees who are directly involved in the growing of cannabis plants for retail or wholesale trade will be exempt from certain provisions of the ESA. Cannabis plants are likely flowers under the ESA and, therefore, the employment standards pertaining to hours of work, eating periods, overtime pay and public holidays would not apply to those employees. Whether such employees would also be exempt under minimum wage and vacation with pay provisions pursuant to section 2(2) of the Regulation is less clear, and may depend upon whether the producer's business is focused on the production of seeds. It is important to remember that there is no "one size fits all" solution, and different outcomes may apply for different cannabis producers depending upon the specific nature of their operations.

As more companies enter this growing industry, we anticipate that the OLRB and courts will provide increasing commentary on the topic.

For more information on cannabis and how it affects your workplace, please contact a member of the Employment, Labour and Equalities Group at Gowling WLG.

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