Dear Herb: Post-legalization, what can we expect to see happen to the dispensaries that are open now? — Concerned Cannabis Consumer
Dear Concerned: Just when you thought you found a nice place to buy your weed, along comes legalization!
Nobody knows exactly how many cannabis dispensaries are operating in Canada today. In big cities such as Toronto, I've seen them pop up in one location, only to close and reopen down the street a few weeks later. I've visited Canadian retail dispensaries that openly advertise what they're selling to anyone who walks by. I've also seen dispensaries hiding in plain sight with no signage whatsoever, relying on word of mouth and customer discretion to stay under the radar.
Some dispensaries in Canada, especially more established operations on the west coast, use the "compassion club" model. They focus on medical cannabis patients, and operate on a members-only basis with a strict intake process. Other dispensaries will sell weed to anyone who walks in. (The grimiest Canadian dispensary I've ever seen was no more than a fantastically stoned dude selling questionable weed through a hole in the wall.)
Then there are the online dispensaries, which are even more of a black box — it's impossible to know how much cannabis those websites are selling over the internet. Based on my regular discussions with Canadian cannabis users, though, I'm confident those online operations are doing a booming business. I've even seen a company that sells turnkey online dispenaries and supply solutions to would-be black market entrepreneurs.
As far as the federal government is concerned, selling cannabis from retail or online dispensaries is illegal. In reality, the application of that law depends largely on local authorities, creating a patchwork landscape of dispensaries across the country. In some places, law enforcement have been aggressive about targeting dispensaries. In others, the police seem to be waiting for the legalization dust to settle before enforcing the law.
A number of municipal governments in British Columbia have chosen to license and regulate marijuana dispensaries in their jurisdictions despite federal prohibition. In Vancouver, for example, "medical marijuana-related businesses" can apply to operate in commercial zones under special regulations enacted in 2015. Of course, there are still Vancouver dispensaries that don't play by those rules, but at least local authorities have some kind of criteria to separate the "good" dispensaries from the "bad" ones.Advertisement
Now to your question, Concerned: What happens to all the dispensaries after legalization?
As with most aspects of legalization, it depends on where the dispensaries are located. The government of British Columbia is explicitly opening its competition for private cannabis retailers up to existing dispensaries, with an eye to bringing those illegal businesses into the legal fold. So if you live in B.C., it's entirely possible that your local dispensary could join the legal regime.
B.C. aside, though, I think the future looks rather bleak for most existing retail cannabis dispensaries in Canada.
After legalization, law enforcement will be able to use the new crimes created by the federal Cannabis Act to prosecute dispensary operators. Under that law, an adult who illegally sells cannabis could face up to 14 years in prison. To me, that seems like a fairly powerful incentive to close down your illegal dispensary.
Of course, not all illegal dispensary operators will shut their doors after the Cannabis Act comes into force. Some of them will continue selling cannabis illegally, just like they're doing right now. In my opinion, those dispensaries will face a few new obstacles.
First, they're going to have much more competition. With new, legal cannabis stores slated to open just as soon as legalization kicks off, shoppers will have more options for buying weed than ever before — and many of them might prefer the legal route. The price and quality differential between illegal and legal cannabis stores will play a role in this, of course.
Second, provincial governments with cannabis retail monopolies (Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island) will be highly motivated to snuff out any illegal competition. Even the provinces allowing private retail will be under pressure to show they're in control of the cannabis market. I predict a period of enforcement blitzes by police across Canada in the months following legalization.
I think the more risk-averse dispensary owners will likely close up their shops right before legalization is enacted. But other, more enterprising types are already adjusting their black market business models for the future: at a recent cannabis industry expo in Toronto, I found a local retail cannabis dispensary telling customers about their plan to close their stores and move to an online-only model.
In other words, it looks like some existing cannabis dispensaries aren't going gentle into that good night. Instead, they'll rage against the dying of the light (by launching a black market website).
Until next week, dear readers, remember: not all dispensaries are created equal.
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