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Cannabusiness: The greening of a grey economy

Down in North Vancouver’s Lower Lonsdale, just a couple of blocks in from the neighbourhood’s bustling main drag, the LotusLand Cannabis Club’s storefront proudly displays its green logo in a stripe across the front windows.

Down in North Vancouver’s Lower Lonsdale, just a couple of blocks in from the neighbourhood’s bustling main drag, the LotusLand Cannabis Club’s storefront proudly displays its green logo in a stripe across the front windows. The words “British Columbia’s finest,” almost look official.

Inside, through a set of double doors that help keep the smell of marijuana off the street, there’s a chalkboard with daily specials behind a large gleaming display counter. The light and airy atmosphere feels a bit like a high-end coffee or chocolate shop. Except it’s not. On top of a low table in a seating area, there’s a tray with Zigzag rolling papers.

“Indica, sativa or hybrid?” one of the staff asks a man who’s walked in off the street. For a mid-week afternoon, there’s a steady stream of customers.

Some are buying regular bud, others choosing from an array of “edibles” including brownies, granola and Nanaimo bars.

“If you can eat it, they’re going to put marijuana in it,” said Steve Morrow, the manager of the store on shift this afternoon.

Cookies behind the counter sell for $11.

“We only recommend you take tiny bites of that,” said Morrow. “We recommend you only take an eighth of a piece.”

Strains of marijuana behind the counter are colour coded to indicate a sativa or indica – or a hybrid – strain.

Moby Dick is a popular sativa. “It’s supremely energetic. Very clear-headed. It’s good for getting stuff done,” said Morrow.

So is the Purple Space Cookies indica hybrid. “The vast majority of people who shop here consider it one of the best strains,” he said. “When we get that one in, people go crazy.”

LotusLand is one of two storefront marijuana shops on this street alone and one of five currently operating in the City of North Vancouver.

Most have opened in the past year and a half, buoyed by the federal government’s promise of legalized marijuana.

Selling marijuana from any retail storefront – for either medicinal or recreational purposes – is still illegal in Canada, and decisions about how it will eventually be distributed haven’t been made yet.

But with legalization on the horizon and a reluctance to crack down aggressively on pot shops, a number of retail owners have been prepared to take a risk in order to get a toehold on the North Shore.

“A lot of this is testing new frontiers,” said Michael Wuest, owner of the Weeds store at 991 Marine Drive near MacKay Road.

Wuest’s was the first storefront to open up on the North Shore, in April 2015. Wuest’s background is in the hotel and restaurant business and in natural foods stores. The Weeds store in North Vancouver came about after he met Don Briere, a B.C. pot pioneer who’s been described as the “Tim Horton’s of cannabis.” Briere, now in his mid-60s, was once a prolific marijuana grower, and was jailed for those activities.

These days Briere’s pot empire includes franchising Weeds stores to local owners like Wuest.

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Michael Wuest outside his Weeds store on Marine Drive. photo Lisa King

There is competition in the marijuana market. LotusLand, for instance, is part of another chain run by the Vancouver-based pot entrepreneur Robert Davis.

There have also been links between the WeeMedical dispensary on East First Street in North Vancouver and the Green Tree marijuana dispensary chain.

Wuest said the idea behind Weeds is to get marijuana out into the open, along with making a profit. “We want people to come in and talk with us and see what we have to offer,” he said. “We don’t hide anything. We don’t black out our windows.”

In Wuest’s store, there is steady foot traffic checking out the tincture-infused drinks in the cooler, the colour-coded plastic totes of Pink Kush and Rock Star. Behind the counter, an employee is diligently making “pre-rolls” or joints, that sell for about $6 each, with the aid of a hand roller.

Wuest describes the current state of marijuana laws as “a grey area.”

Getting in on the ground floor of regulation is part of what the current storefronts are about, he acknowledges. “Why wouldn’t we?” he said. “We wanted to be ahead of the curve.”

“They want to be there first and gain the recognition in the market,” said Werner Antwiler, a UBC professor in the Sauder School of Business, who has studied the marijuana industry. “I understand the business logic.”

There is also a risk. “They’re not playing by the rules here,” said Antwiler. “They’re kind of hoping the police and municipalities aren’t enforcing it.”

For most storefronts, the gamble has paid off so far.

Although the North Vancouver RCMP detachment is aware of the pot shops, officers have taken a hands-off approach.

“There is no cookie cutter approach which would apply to marijuana dispensaries,” said Cpl. Janelle Shoihet, spokeswoman for the Lower Mainland’s RCMP E Division headquarters, in an emailed statement. “Each one has to be looked at and a risk assessment conducted, to determine what action would be appropriate and when.”

“They’re in charge of enforcing federal law,” said North Vancouver City Coun. Rod Clark. “The fact they’re not jumping up and down and having officers at the door of these establishments means somewhere in their system common wisdom has taken hold.”

Officially speaking, that view isn’t shared by the City of North Vancouver. “There’s this period of time when (marijuana storefront owners) feel they’re operating in a grey zone,” said Gary Penway, director of community development for the city. “There’s nothing really grey about it. It’s not permitted.”

When the two Weeds stores opened, “They were licensed to sell glass and gifts, not marijuana,” said Penway. “They had a condition on their business licences specifically written in to them not to sell marijuana.  . . . Then we found they started to dispense marijuana as well.”

In the case of each marijuana storefront, the municipality has notified both business owners and property owners that the operations are illegal, and has issued up to eight $100 tickets per store for operating without a business licence. Recently those fines were hiked to $400 a ticket.

One of the storefronts – the CannaClinic at 156 Third St. – subsequently closed. Most, however, did not. That’s left two Weeds stores, LotusLand, WeeMedical and the Herban Art Collective in business in the city.

“There’s sort of a mood where it is going to become legal and retail stores might become part of the distribution system,” said Penway. “The reality is we just don’t know that.”

Last week, a lawyer for the two Weeds stores argued in front of council that the city has no good reason to deny them business licences, pointing out the municipality hasn’t received complaints about people harming themselves or “things that really matter.”

Coun. Linda Buchanan didn’t agree. “What matters to me is that people are operating under the federal regulations . . . and not what we think they’re going to be,” she said.

Coun. Rod Clark said he doesn’t view the pot shops as a big deal.

“You have to sort of step back and look at the situation as a whole. The Liberal government campaigned on legalizing marijuana in the last federal election,” he said.

Clark said there’s an argument to be made for turning a blind eye to the storefronts.

“In the majority of cases, people want to go through the door because it makes their life better,” he said.

Clark said there are many municipal regulations on the books that aren’t stringently enforced. “I can’t see spending a whole lot of energy and certainly not taxpayers’ money enforcing something that we know is going to have a limited horizon,” he said.

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Strains of B.C. bud for sale at Weeds marijuana storefront. photo Lisa King

The reaction has been decidedly different in the District of North Vancouver. When the Green Tree Dispensary Society opened a storefront at 1370 Marine Dr. in September, and started advertising marijuana strains like Bubba Kush on Facebook – “Great for crushing stress while coercing happy thoughts into the brain for a great good mood feeling. 22% THC . . .” – the municipality moved in.

A cat and mouse game played out over several months, with property owner Randy Leong refusing to hand over a copy of the lease before being forced to do so by a court order.

At the end of May, the district was granted a court injunction, forcing Green Tree owner Jason Liu to close the doors and Leong – who had been receiving $3,300 a month in rent – to seek a new tenant.

Make that two of them.

Grace Dedinsky-Rutherford, a massage therapist with a specialized practice for medical patients, had been a tenant in the building for more than a decade. When the storefront first set up, Dedinsky-Rutherford said she wasn’t concerned. “Some of my clients do use medicinal marijuana,” she said. “I wasn’t being prudish about it.”

But then the heavy smell of marijuana bud began permeating her office every day, giving her headaches and making her nauseous, she said.

Her patients also started feeling uncomfortable as fights broke out outside the storefront. “There were a lot of unstable people who were frequenting the place,” she said.

After six months of complaining to the landlord with no result, Dedinsky-Rutherford moved her practice – two months before the court shuttered the dispensary.

Carol Walker, chief bylaw officer for the District of North Vancouver, said the municipality will continue to take action against any dispensaries that open illegally.

In West Vancouver, there have been a couple of inquiries about marijuana storefronts, but nobody has applied for a business licence or opened up a store, said spokesman Jeff McDonald.

“It’s like any other kind of business. You need good people to run it and you need good product and you need a good location,” said Wuest, who adds population density and proximity to transit probably play as big a role as the political climate in storefronts opening in the city.

Ultimately, though, it’s a political decision whether to force the pot shops to close – or not.

“Given that there will be new regulations coming probably within the year, there’s a limit to how much in legal costs municipalities want to spend,” said Penway.

At Ray Nikiel’s Weeds store on East First – a storefront set up next to a Szechuan restaurant and a beauty spa – a customer on a recent afternoon considered which strain of “the flower” to buy, eventually settling on Pink Kush.

Bags of bud come in one-gram, four-gram or 11-gram sizes.

It’s a far cry from high school kids buying “eighths” behind the smoke pit.

Selling grams is part of an attempt to avoid the associations of the black market. “Joints,” made behind the counter by employees, have become “pre-rolls,” sold individually for $5 to $7 each.

Owners are cagey about both how much pot they sell and where it comes from. There’s good reason for that, as it’s not legal for either licensed growers or others to sell marijuana to storefronts.

“There’s a variety of sources, which I can’t get into,” said Wuest. “I’m one of the main buyers for this company. We do due diligence on everything we buy.”

Wuest said all his marijuana comes from B.C. “There are people growing everywhere,” he said. “It’s not hard to find.”

Large licensed producers are supposed to supply marijuana only to those who are approved by Health Canada to use it. In the wake of court decisions, others have licences to grow their own pot, or to grow it in a limited way for other medicinal users.

It’s possible those suppliers are selling to dispensaries, said Neil Boyd, a Simon Fraser University criminologist who has studied marijuana legalization.

It’s also likely some storefronts are being supplied by the black market, he said.

Figuring out who will be allowed to supply a legalized marijuana industry is one of the details yet to be worked out in the next year.

Medicinal use of marijuana has been the foot in the door to respectability for a plant once demonized as “the devil’s weed.”

Storefront operations in North Vancouver continue to embrace the medicinal side. Most refer to their stores as “dispensaries” and their products as “medication.”

Marijuana has been promoted medicinally as combating nausea and stimulating appetite in cancer patients undergoing chemotherapy, easing joint and chronic pain, helping with epilepsy seizures, sleep, anxiety, multiple sclerosis and a host of other ailments, including cancer tumours.

Handouts in the Weeds store on East First give detailed information about cannabinoids (CBD), one of the active ingredients in marijuana used in medicinal products that is not psychoactive.

There are also recommended doses for products like “Phoenix Tears” – a highly concentrated oil.

Sonya Donnelly, a cancer patient, is one of those who use marijuana medicinally.

“My doctor recommended it,” she said during a visit to LotusLand. “It makes me want to eat and it also takes the nausea away.”

Donnelly takes marijuana both through edibles and by smoking it. “It helps tremendously,” she said, adding, “I think it should be legalized.”

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A pot pipe, along with several "edibles" for sale at Weeds on East 1st Street. photo Paul McGrath

Marijuana has legitimately been linked to beneficial effects on a number of medical conditions. But because pot has been illegal, research through the gold standard of randomized double blind placebo studies has been limited.

In some cases, stores make claims for their products “for which they have no evidence,” said Dr. Patricia Daly, chief medical health officer for Vancouver Coastal Health.

More rigorous research and standardized doses would be among the benefits of legalization, she said. “People should know what they’re getting.”

Daly said she’s not worried about pot shops opening up. “Marijuana is widely available whether or not you sell it from retail outlets,” she said.

But there is still concern in the medical community about possible adverse health impacts of marijuana, particularly on youth or people with psychiatric illness. Some doctors have linked marijuana to development of psychotic symptoms and schizophrenia in youth who are at risk of mental illness.

Those physicians are concerned pot is being promoted to those most at risk, said Daly.

“It’s more harmful on the developing brain. It can affect cognitive development,” said Daly.

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Dr. Patricia Daly, chief medical health officer for Vancouver Coastal Health. photo supplied

Since legalization in some American states, edibles have in particular been linked to increases in childhood poisonings.

That is concerning given some of the edible products – marijuana gummies shaped like Lego bricks, for instance – that are currently being sold from storefronts could appeal to children, said Daly. “This is what tobacco companies used to do years ago with candy cigarettes,” she said.

In the City of Vancouver, edibles are officially banned from pot shops, except for oils and tinctures.

“Right now at storefront outlets on the North Shore they are selling those products,” said Daly.

A strong education program is something doctors want to see with any legalization plan, she added.

“We have to acknowledge that when you make a substance legal, do you normalize it and increase use?” she said. “The two most powerful psychoactive substances are alcohol and tobacco, which are the two legal products. They’re both much more widely used than any illegal substance.”

The line between medical and recreational use of marijuana is already blurry. Some storefront operations require customers to declare medical conditions they are using marijuana for. Most don’t, or consider a symptom like “stress” more than adequate.

“Where do you draw the line?” said Nikiel. “Someone goes home and downs a couple of beers to relieve stress. Is that medicinal? If someone goes home and smokes a joint, is that medicinal? I would say yes. What’s the difference?”

“If someone goes home and puts back a 40-ouncer, you’re past the medicinal stage. It’s the same thing with weed.”

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Weeds store owner Ray Nikiel checks one of the marijuana infused drinks for sale in the cooler. photo Paul McGrath

For marijuana dispensaries, a key issue still to be decided is how pot will be distributed. Sale in government pot stores, in liquor stores, in drug stores and in small storefronts are all possibilities and it will be up to the province to make final decisions.

Bowinn Ma, the newly elected NDP MLA for North Vancouver-Lonsdale, said no decisions have been made yet, although veteran MLAs Carole James and Mike Farnworth did visit Washington State last year to find out how legalization had been put in place there.

“We’re still open to all the various options,” she said. “We’re still in the process of studying best practices.”

Marijuana dispensaries like those in North Vancouver are just one group lobbying to get a piece of the action.

“All the big drug stores want it. The liquor stores want it . . . and we want it,” said Nikiel. “We started it and we’re doing it for the right reasons.”

There are already debates about what is appropriate. A federal task force examining the issue recommended against putting pot in liquor stores, although some see that as unnecessarily cautious.

“In Caulfeild there’s a liquor store next to a pharmacy,” points out Boyd. “Nobody’s suggesting that’s a problem.”

From a health perspective, “My position would be it’s much better in a government outlet,” said Daly – because government outlets have better controls on preventing purchase by minors.

Nikiel said it makes more sense to him to allow people who are already familiar with marijuana and with pot customers to sell it. “That’s more helpful than to walk into a store and deal with a random pharmacist or beer seller,” he said.

Boyd’s guess is there will be a hybrid model across the country – which will include some government outlets and some smaller private storefronts.

Ultimately it will be up to both the province and municipalities to make that decision. “It’s a big pie and suddenly everyone sees that and they want to jump in and get a little crumb for themselves,” said Nikiel.

Those who have long been a part of the push for legalization say there should be a place for them after July 1, 2018.

“It’s easy to jump on the train once it’s going, but it’s hard to get it going,” said Nikiel. “When you’re pushing the train, it’s a lot harder than jumping on it when it’s moving.”