Regulators urged to include so-called grey market in marijuana legalization

Feds has proposed licensing program that includes micro-cultivation licences for small-scale growers

If it wasn’t for the scent, customers who wandered into Eden Medicinal Society would be forgiven for thinking they had entered a boutique health store rather than a marijuana dispensary.

The distinctive fragrance greets shoppers at the door. It wafts from jars filled with bright green British Columbia bud lining spotless glass shelves. Flat-screen monitors on gleaming white walls display prices of golden hemp flower paste and mocha THC syrup.

Behind the counter stands Vanessa Dandurand, the 30-year-old store manager with an encyclopedic knowledge of cannabis and many dedicated return customers.

“For so many of our clients, this can be the only positive interaction they have all day. Their other stops today might be the pharmacy to pick up their prescription. It might be their doctor who tells them their cancer isn’t getting any better,” she said.

The dispensary operates in the so-called grey market, or the portion of the marijuana industry that has both illegal and legal elements. Federal law bans selling weed over the counter, but Vancouver and Victoria have granted business licences to more than two dozen pot shops, including this Eden location.

With legalization looming this summer, the fate of the licensed weed stores remains hazy. While the province has said it will allow both private and public shops, it has not released its full slate of regulations nor made clear how existing dispensaries will be incorporated.

There are a dizzying number of questions for the province to consider, said Kerry Jang, a Vancouver councillor and co-chair of a provincial-municipal committee providing input on B.C.’s marijuana regulations.

“If you were to roll in the current existing cannabis shops, right now they’re selling a lot of illegal product. We know under the federal rules they have to sell only product that’s grown by a licensed producer, so what happens to the old product?” he asked.

“Is it destroyed? Are they allowed to sell it until the stocks are gone, or is it turned over, or do they have to get rid of it before they get a provincial licence?”

Eden purchases its cannabis from small growers who hold Health Canada licences under the federal medical marijuana law, said community outreach co-ordinator Denise Brennan.

Currently, the law only allows these licence-holders to grow for their own use or act as a designated grower for specific people. But Brennan said Eden plans to help its producers apply for micro-grower licences under the new legal regime.

“It would make a lot of sense, in general, for independent dispensaries to continue along with their partnerships with micro-growers,” she said.

The federal government has proposed a licensing program that includes micro-cultivation licences for small-scale growers, but the regulations have yet to be finalized.

Canada should follow the lead of U.S. states that have successfully transitioned existing dispensaries into the legal market, said Jeremy Jacob, president of the Canadian Association of Medical Cannabis Dispensaries.

In California, stores licensed by the local government were allowed to stay open until their application for a state licence was approved or denied, while Colorado gave priority to existing medical marijuana businesses and producers when it began licensing for recreational sales, he said.

“They captured a whole bunch of the existing market and simply regulated it,” said Jacob. “They gave a head start to small business.”

Jacob co-founded The Village dispensary, which he says is on track to receive a business licence from Vancouver. Co-founder Andrea Dobbs said she’s concerned about the federal government’s plan to take an extra year to legalize edible products.

WATCH: Province, Feds see lots of work ahead of marijuana legalization

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“I met a man yesterday who has been given two months to live,” she said. “A year is a long time when you have a life-threatening ailment.”

Vancouver launched its licensing regime in 2015 after the number of illegal dispensaries in the city grew to nearly 100. Stores must pay a $30,000 annual fee and be located at least 300 metres away from schools, community centres and each other.

Many unlicensed locations closed, but others have stayed open and racked up tens of thousands of dollars in unpaid fines. The city began asking for court injunctions against unlicensed stores in 2016, but a test case won’t be heard in court until September.

Jang said he hopes provincial regulation speeds up the process of shutting down illegitimate shops.

“We’re saying to the province: you have to be able to act on enforcement quickly,” he said, adding he hopes to see a system similar to what’s in place for alcohol.

“The provincial liquor inspectors can go out and say, ‘This bar is selling to underage kids. We’re going to take away your licence and shut your doors.’ And there’s no buts about it. That’s it. It’s over.”

B.C.’s Public Safety Ministry will announce details of the marijuana retail model in early February and enforcement is a key consideration, a spokesman said.

“One of our top priorities is keeping the criminal out of the non-medical cannabis business,” he said. “In addition, an important part of implementing the new regulations will be public education and information.”

A study published in the International Journal of Drug Policy last year surveyed more than 440 people who used cannabis and found they preferred buying it from dispensaries to growing it at home or getting it from a dealer.

The data was collected in 2011, under a different medical cannabis regime, but it still sheds light on the relationships dispensaries have with patients, said co-author Zachary Walsh, who teaches psychology at the University of British Columbia.

“Across the board, people really seemed to value the service dispensaries were offering,” he said. “There was certainly a strong bond between dispensary customers and proprietors.”

Laura Kane, The Canadian Press

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