A federal court judge found there was "no basis" for allowing Drabinsky's application for judicial review to proceed.
James O'Reilly, who heard arguments on the case in September, said the Order of Canada advisory council, its secretary general and the Governor General, who administers the honour, treated Drabinsky fairly.
"In my view, the council and the Governor General respected the applicable procedures, and provided Mr. Drabinsky a fair chance to make submissions opposing the termination of his Order of Canada," he wrote in a ruling released this week.
"Therefore, there is no basis on which to overturn the Governor General's decision."
Drabinsky — who was released to a Toronto halfway house in late 2012 after serving part of his five-year sentence — had asked the court to declare the decision of the Order of Canada advisory council unlawful.
He wanted the court to order the council to consider more submissions from him, since he was out of prison, about why he should get to keep the honour he received in 1995.
His lawyer had argued that the way in which Drabinsky was stripped of his Order involved a "denial of natural justice.''
John Koch had said it wasn't clear if the advisory council adequately reported on its findings when recommending to the Governor General that Drabinsky be stripped of the order, and suggested the Governor General was "misadvised" that the council had considered all evidence in the case.
But a lawyer for the council argued the advisory council's process was fair and involved ample consideration of Drabinsky's arguments.
The advisory council also argued the court had no power to review decisions about granting honours.
O'Reilly found, however, that "a decision terminating an appointment to the Order of Canada can be challenged in court, but only on narrow grounds."
He further concluded that Drabinsky had been treated fairly.
Drabinsky and business partner Myron Gottlieb were convicted in 2009 for a book-cooking scheme that ultimately resulted in the demise of Livent Inc., the company behind such hits as "Phantom of the Opera'' and "Ragtime.''
The council's review of Drabinsky's Order of Canada was triggered by a letter from a member of the public, who wrote that if the Livent fraud isn't behaviour that undermines the order then "I really don't know what is.''
A criminal conviction does not mean automatic removal from the order.
The council wrote to Drabinsky in the summer of 2012 saying they were considering removing him from the order and asked him for submissions, but he said he couldn't access all necessary documents since he was still incarcerated.
Drabinsky's lawyers asked for an extension until January 2013, when Drabinsky expected to be out on day parole and in a better position to assemble the materials he wanted to provide to the council. The council granted him a one-month extension.
The court ruling noted that Drabinsky sent in 17 pages of written submission and "voluminous supporting documentation," including a copy of his autobiography, "Closer to the Sun.''
O'Reilly also pointed out that in making those submissions, Drabinsky did not explicitly request the council to grant him a further extension of time to make additional submissions.
"Rather, he said he reserved the right to do so, even though there was no apparent legal basis on which he could have asserted such a right," the judge wrote, adding that it was up to the council to determine if it had all relevant evidence it needed.
"His only legitimate expectation was that those submissions would be reviewed by the council and taken into account in its recommendation to the Governor General. And they were."