The city of Hamilton, Ontario is annoyed that a legal indoor cannabis farm sometimes smells. 

Bylaw officers, who previously thought the building on Kenilworth Avenue North was vacant, issued a zoning violation notice. So the owner got himself a lawyer.

Since the tenants have a valid MMAR licence, they believe the federal licence overrides the municipal bylaw. The city disagrees.

But, because the building and surrounding area sometimes smells like cannabis, some local residents have complained and now municipal politicians are involved.

“Some mornings, it’s all you smell down the whole street,” Jessica Albers, a local resident, told the Hamilton Spectator.

The cannabis farmers have since made changes to deal with the odour externality, but the “war” with the city is still on.

A local business owner, Robin Foster, says whether the grow-op is legal or not, it shouldn’t be allowed on Kenilworth Avenue.

“We’re on the way up here on Kenilworth and that [business] is not the kind of thing we need… They should put in a bakery instead.”

This isn’t a complex issue. The solution is evident, but, to paraphrase Sherlock Holmes, we often see but do not observe.

First, it goes without saying that putting in a bakery instead of a cannabis farm is a personal value held by the owner of Bob’s Scuba Shop.

If the local taxpayers that live and work on Kenilworth Avenue actually owned the capital value of the neighbourhood, perhaps through a private street company where they were all shareholders, then the issue would resolve itself.

The owner of the building would either be in violation of a contract he would have with the neighbourhood company, or the shareholders would be neglecting to uphold their end of the agreement by forcing the owner and tenants out without due process.

But, since this kind of power is delegated to politicians and bureaucracies whom we share a “social contract” with (read: no actual contract), the “solution” is political manoeuvring instead of real, concrete steps that would reasonably resolve the conflict for all parties.

That is to say, whether the former-strip club should be reverted back to a strip club, kept as a cannabis farm, turned into a bakery, or something else entirely, would be the prerogative of the local residents.

Second, I live near a brewery. Every once in a while I smell the hops and, oh boy, do they stink. I couldn’t imagine being hungover in the neighbourhood when that smell permeates.

I also used to live in Hamilton and, on hot summer days, the city reeks like sulphur. And I’m not unfairly criticizing, I have fond memories of Hamilton and sometimes I really do miss the place. But denying Hamilton’s unique smell is intellectually dishonest.

Likewise, in any city or town, if you live close to a McDonalds or KFC, then those particular smells are prevalent.

The point is that smells constitute an externality, where the consequence of commercial activity affects other parties not directly involved.

Traditionally, externalities were covered under private property rights. For example, if a train or factory left soot all over my front lawn, I could go to a judge and have an injunction slapped on this activity.

Since industrialization was much harder when polluters were subject to legal liabilities, governments gradually chipped away at the common law traditions that served us well up to that point.

Now, externalities aren’t taken into account when determining the costs of goods or services. If a McDonalds moves into your neighbourhood and stinks up the place, the problem is political.

There is no simple answer to combat the smells on Kenilworth Avenue since the street and neighbourhood are in the commons and controlled by politicians and bureaucrats.

But, if and when private property is recognized as the foundation of free societies, then Kenilworth Ave. residents and businesses may find that, through a third-party arbitrator, both sides have agreed to results in a lack of a winner-takes-all format, encouraging the disputing parties to seek common ground, and, since both parties must agree to any solution, they may find a reduced likelihood that either side will wish to reopen the dispute.

That’s how you deal with smell.