Hesitant municipalities and in-depth security screenings are leaving legal cannabis dispensaries in B.C few and far between

The legalization of non-medical cannabis in Canada in October of last year caused international buzz, and no one was more excited than British Columbians. Though technically illegal before October 2018, the cannabis industry in BC has been blossoming over the past few years (an estimated $5.6 billion in cannabis was bought by Canadians in 2017) and the province’s residents can finally, legally, reap the benefits.

I had a conversation with former Deputy General Manager, Licensing and Local Government Liaison Suzanne Bell about the basics of the application process for opening a licensed non-medical cannabis dispensary, why certain regulations were in place, and what the future may hold for cannabis in British Columbia. Ms. Bell describes working relentlessly, often through long and stressful hours, on the Province’s regulatory regime, approving Non-Medical Cannabis Retail Licenses before her retirement in December of 2018.

Though many British Columbians complained about the lack of legal sellers on legalization day, with only one physical store in Kamloops (compared to Alberta’s 17) and the BC Cannabis Store online, Bell stands by the in-depth application process. “We want to make sure that organized crime stays out of cannabis,” she says.

What does the application process look like, and how long does it take?

It already takes a while for potential Non-Medical Cannabis Retail Licence applicants to really get the ball rolling, as they need a business number issued by the Canada Revenue Agency, a Business BCeID from the Province, and must already own, lease, or have an agreement to lease a retail space that follows their local zoning requirements. But before the Government of BC can even entertain the idea of a Non-Medical Cannabis Retail Licence, they must have approval from the proposed location’s local government or Indigenous Nation. “The Province might be ready,” Bell says, “but the cities might not be … take Richmond for example.”

The Island City has said that they will not allow any dispensaries and will only allow one cannabis production facility to operate—and only on industrial land. Richmond is just one example of the harder-to-convince cities across the province that might make it more difficult for the retail industry to meet the demand of its consumers. The Liquor and Cannabis Distribution Branch (LCDB) cannot lawfully provide a Non-Medical Cannabis Retail Licence to any applicants within that city, because the local government of Richmond will not give the go-ahead for any dispensaries until further notice.

Ensuring that the applicant has all the documentation and approval from their local governing bodies might sound hard, but what comes after is when they meet the really exhausting process: the Security Screening and Financial Integrity Check. The Province must conduct an intense criminal background check on each applicant to ensure that there are zero ties to organized crime. The size of the organization applying for the licence will also have an effect on how long it takes for the LCDB to review their financial integrity check. For example, a “Mom and Pop shop,” as Ms. Bell described it, would take only a matter of weeks to be approved, compared to a multi-level corporation which would potentially take months, as every single person involved must be investigated to “ensure that the people we’re dealing with are the people we should be dealing with.” Bell also confirmed that until she retired in mid-December, they had not denied any applicant on the basis of ties with organized crime.

Each applicant may only operate a total of eight non-medical cannabis dispensaries in BC, and they must undergo the exact same process for each location. “Often [the organization applying] is owned by several companies,” which is exactly why the maximum was put in place—to ensure that there are no monopolies that take over, so we don’t see “Mom and Pop’s” get drowned out by larger corporations.

Why can’t I buy liquor or tobacco in the same place as cannabis?

The sale of recreational cannabis may only take place in a licensed establishment, and licensed establishments for the sale of non-medical cannabis may only sell cannabis. No liquor, no tobacco, no snacks. This decision is more political rather than a safety regulation, Bell clarified. It was put in place to keep British Columbians who don’t want to see cannabis while doing their errands happy. She says that the current NDP government has been firm with this decision, but a future provincial government may revise this aspect of the licensing agreement.

Should a future provincial government alter this aspect of the regulations surrounding non-medical cannabis sales, it would most likely resemble those regarding liquor sales. Liquor stores are allowed to sell tobacco assuming they have a Tobacco Retail Authorization (TRA) certificate, and they are permitted to sell packaged foods, like chips, as long as they don’t appear as a grocery store.

What does the future of cannabis sales look like?

Edibles are what everyone’s looking forward to—attractive in part because it is a smoke-less way to enjoy the effects of cannabis—but developing a regulatory regime won’t be a piece of cake.

“It’s going to be really interesting to see what happens with edibles because that’s the next big thing. It’s going to be tough to regulate.”

Think of it like opening a bakery—your kitchen has to be to code, everything has to be clean, etc.—but now you have the added complication of cannabis. Not only will retailers need to comply with cannabis regulations (dosage, what forms you can or can’t use, etc.) but they also need to comply with Food Safety and Security Legislation. The Province has not announced any plans to regulate edibles, but it will probably wait until the Government of Canada works their own way through it. The Government of Canada opened a two-month consultation for feedback on draft regulations on edible cannabis, cannabis extracts, and cannabis topicals from December to February. Health Canada says that those items will be available for legal sale under the Cannabis Act no later than October 17, 2019.

The general takeaway

Regulating the cannabis industry is new territory to Canada and it has proven itself a challenge to the Government of B.C., though it’s a booming industry. According to a market research report, Canadians spent almost $1.6 billion on legal cannabis in the last two-and-a-half months of 2018, and that’s with only a handful of physical locations and provincial online stores. That number can be expected to grow as the Province approves more and more storefronts for the sale of non-medical cannabis. In that same report, they forecast  that by 2022, Canada is expected to overtake California as the largest legal cannabis regime with an estimated market of $7.8 billion.

Image: Wikipedia / My 420 Tours