Lack of retail cannabis fueling the illegal market in B.C.’s major cities: store owners

Pitt Meadows Mayor Bill Dingwall said he would be most interested in a government store. (B.C. government)

A lack of retail cannabis outlets in many Lower Mainland cities, including Pitt Meadows, is allowing the black market to thrive, according to indutry leaders.

Pitt Meadows is among many cities in the Lower Mainland that have yet to allow cannabis to be sold in a retail store. Surrey, Burnaby and Richmond are others which haven’t allowed these stores within their municipalities. Others, including Abbotsford and Langley Township, are just processing business applications from potential vendors.

It’s a problem, says Muse Cannabis CFO Mike McKee, who is in the process of opening a store in Maple Ridge. It’s one of more than 320 now open in B.C.

His company has had preliminary discussions with the City of Pitt Meadows, but he said city council needs to reach a point where it is willing to step away from its ban on retail cannabis outlets in the city, enacted in the fall of 2018.

“I am happy to let other communities make all the mistakes for the next 18 to 24 months,” said then-mayor John Becker. “Then if we want to go down that road, fine, we can pick some best practices.”

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McKee said that approach has allowed illegal cannabis producers and vendors to continue to flourish, two years after legalization.

It has also allowed minors to continue to find cannabis easily accessible. Statistics Canada reports the number of teens aged 15-17 using cannabis has fallen since legalization, and McKee said there is research to suggest legal sales reduce use by teens.

“It (retail cannabis) does push out the black market – and they’re not regulated and have no issue selling to minors,” he said.

He sees Canadians as ultimately preferring legal products.

“Nobody would go out and buy their gin from someone brewing it in their bathtub, and it will be that way with cannabis.”

A company is allowed a maximum of eight cannabis retail locations by law, and Muse has had little problem finding communities where they can do business, without doing battle with an unwilling city council.

“We’re focused on the path of least resistance,” he said.

“People are consuming cannabis in your neighbourhood now, the question is do you want it sold by a legal retailer, or keep it in the black market?

Pitt Meadows Mayor Bill Dingwall said the last council took a “wait and see” approach, but the present council may now be willing to consider a retail cannabis outlet. Because Pitt Meadows is so close to Maple Ridge’s retailers, as well as those in other cities, he doesn’t believe his city’s approach has fostered a black market.

Dingwall admits he is not in a hurry to put the issue on a city council agenda, but said the reason has nothing to do with his career as an RCMP officer, which saw him serve as Superintendent of the Ridge Meadows detachment.

“Even with my background I don’t have a problem with it, now that it’s legal,” said Dingwall.

However, his personal opinion is the city would be better served by a Liquor and Cannabis Regulation Branch (LCRB) store.

“For me, I’m not interested in private retail. I would rather have a government store here,” he said, acknowledging other city council members may feel differently. “That’s where my comfort level would be, if and when retail marijuana comes to Pitt Meadows.”

For now, Pitt Meadows has a bylaw prohibiting cannabis retail in the city.

“Until council decides they want to change it, that will stay in place,” said Dingwall.

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Jaclynn Pehota is a Maple Ridge native who now serves as the executive director of the Association of Canadian Cannabis Retailers.

Her group has done extensive outreach and education of city hall staff members regarding legalization, but has found the response is “not fulsome.” The problem, she said, is no strong financial incentive for municipalities to participate. So far, the province has not been willing to share cannabis taxes with cities.

“That’s something that would motivate municipalities to participate,” she said. “They view it as an administrative burden with no benefit.

“We’ve got to carrot these municipalities.”

Legalization was touted as an economic opportunity, but cities are on the sidelines.

“Municipalities have the largest impact on this sector, but they were left out of the conversation the most,” she said.

According to Pehota, the product quality in legal cannabis stores is “quite exceptional,” and the prices are close to par with the unregulated market.

However, an estimated 75 per cent of cannabis consumed in B.C. is sold through the black market. Retailers have to compete with illegal vendors who, in Vancouver, will deliver the product to a customer’s door in 20 minutes, she said. A simple Google search will turn up dozens who are willing.

“That’s hard to compete with,” said Pehota. “We need the tools to compete in a meaningful way.

“There’s huge potential we haven’t captured yet.”

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