Raids and regulations: gray-market transition troubles for British Columbia cannabis retailers

Photo by Aditya Chinchure on Unsplash

Two weeks after Canada legalized marijuana, businesses in British Columbia that applied for cannabis licenses remain in the dark about when their applications could be approved.

Dozens of businesses had been operating in a legal gray area for years, sanctioned by municipalities but technically illegal in the eyes of the federal government.

Of the 173 cannabis retail license applications for privately owned stores received by the Liquor and Cannabis Regulation Branch, only 73 have been referred to local governments for approval, and still none have been approved.

Some, such as Evergreen Cannabis Society on Vancouver’s West Side, have taken a business-as-usual stance in the meantime.

“We have been told by the city that we can stay open during the transition process,” said Mike Babins, co-owner of Evergreen.

Babins has been operating under a Vancouver business license since 2015 but diligently worked his way through the long and arduous cannabis retail store licensing requirements. Having met all those requirements, he’s allowed to stay open while awaiting final approval.

But he also has removed all products that do not meet Health Canada’s approval and is selling only accessories such as vaporizers, pipes, papers and grinders.

For other operators, the road has been much bumpier.

On Oct. 17 – the day cannabis was legalized across Canada – police raided two Vancouver Island businesses, one of which was operating under a medical marijuana dispensary license from the municipality. Up to 5,000 Canadian dollars ($3,821) in product not approved by Health Canada was seized and the owner was fined CA$575.

That store – The Port Alberni Cannabis Club – remains open, minus any products not approved by Health Canada.

To open or close?

Eggs Canna, which had also been operating under a Vancouver business license, voluntarily closed the doors of its three shops in the city while awaiting provincial and municipal approval of its licenses.

On the other hand, the Village Bloomery, which focuses “primarily on the therapeutic and medicinal benefits” of its cannabis products, remains open.

“We’re taking a common-sense approach, just like the government is,” said co-owner Andrea Dobbs, whose shelves are stocked only with legal paraphernalia and books.

“We have compliancy issues to contend with, but our products will all comply. We respect the process, and if we had to shut down right now, we would. I’m not going to jeopardize (her business).”

Babins, meanwhile, said the transition to the regulated fold “hasn’t been a walk in the park.”

“We’re constantly having to go challenge rules, sit before the board of variance, legal fees for this, more forms to fill out for that, more fees for this,” he said.

“(But) compared to a lot of people, I’m a lot more positive; you won’t hear grumbling from me. It’s taken time, but it is going very well.”

Two weeks after legalization, he has yet to receive his license.

Don Briere, who owns 19 Weeds shops across the country, closed eight of his 12 outlets in British Columbia.

The four that remain open continue to sell flower, concentrates and edibles and also offer a shatter consumption lounge – all without a license.

Briere said he continues to fight laws he believes are “unconstitutional.”

Severe competition

Proprietors in the midst of transitioning to the legal market are also bracing for severe competition as product variety becomes more uniform in the regulated system.

“I see it as a challenge because every store is going to be carrying pretty much the same kind of merchandise,” said Sandra of the Green Panda Dispensary, requesting anonymity.

Green Panda closed its two Vancouver stores on the eve of legalization while it awaits license approval.

“It’s going to be similar to private liquor stores, so I’m not quite sure how the competition’s going to go,” she said.

“There will be a big change in inventory, things we’re not going to be able to sell. And all the flower is going to have to come from one source, a government (-approved) grower.”

Stores operating in the legal market will not be allowed to sell edibles or other infused products until next fall.

That means stores that transition into the legal market will face competition from illicit sales of those products for at least a year.

“Disallowing concentrates and edibles is definitely going to create a black market,” she said.

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