Advocates warn dispensaries’ deadline will push millions of marijuana dollars back underground

This Friday (April 29) is the deadline for illicit marijuana dispensaries to shut their doors or risk steep city fines

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This Friday (April 29) is the deadline for illicit marijuana dispensaries to shut their doors or risk steep city fines and other disciplinary measures.

The city estimates there are about 80 storefronts selling cannabis that will be affected by the order to close. By the Straight’s calculation, that means $10 million to $29 million could be forced back into Vancouver’s underground economy every month.

“It’s an enormous amount,” said Jodie Emery, owner of Cannabis Culture and long-time advocate for drug-policy reform. “People have always found a way to find pot, whether it’s a corporate-looking storefront or a shady dealer in an alleyway. Which would the government prefer we have? By saying ‘We want to shut down these shops’, it’s saying the government prefers the alternative, and the alternative is shady street-level dealing.”

The Straight’s estimate for unsanctioned sales begins with the conservative assumption that each storefront moves between one and three pounds of marijuana per day at an average price of $60 for a quarter-ounce. Those rough numbers (confirmed as realistic by several dispensary operators interviewed) were then multiplied to obtain sales per month. Annually, it equates to $114 million to $343 million that the city could return to the black market and organized crime. Some operators guessed that the annual figure could be as high as $750 million (based on shops selling an average of five pounds per day in smaller amounts with higher profit margins).

Emery suggested that marijuana dealers with a bricks-and-mortar location have an extra incentive to pay taxes on all of that money and keep operations aboveboard. She said that’s what the city is taking away.

The deadline is the latest step in a regulatory process that began when Vancouver adopted a legal framework for marijuana businesses in June 2015. In a telephone interview, Vision Vancouver councillor Kerry Jang defended the city’s decision to close many storefronts.

“I think the money is already underground,” he said. Jang questioned how many dispensaries are paying the full amount of taxes they’re required to.

“That’s why we are very supportive of legalization,” he said. “To get that money from the underground, to take out as much organized crime as we can, and to really have an account of what really goes through.” (The federal government plans to table legislation to legalize recreational marijuana in the spring of 2017.)

Jang noted that the city’s process will end with about 20 dispensaries left s tanding. He argued that this number strikes a balance on accessibility.

Interviewed earlier this month, Andreea Toma, the city’s director of licensing and property-use inspections, told the Straight the deadline doesn’t mean police will begin busting through doors the morning of April 30. She explained the city plans to take a measured approach that considers a business’s standing in the community. Since then, however, authorities have struck a harsher tone.

On April 26, the city issued a media release stating that only seven dispensaries have received development permits while another 13 are under review. The release warns that only those 20 locations are allowed to continue selling marijuana after April 29.

Meanwhile, there are 44 dispensaries denied permits that have filed appeals with the variance board. Those hearings are scheduled to run through to November. The city’s release emphasizes that those locations should close and will not be exempt from enforcement measures such as fines should they continue to operate after April 29.

A map no longer maintained by the Straight shows that in May 2015, there were 86 marijuana dispensaries illegally operating within the City of Vancouver. The city has set an April 29, 2016, deadline for all but 20 of them to close.

The president of the Canadian Association of Medicinal Cannabis Dispensaries, Dieter MacPherson, told the Straight by phone that a resurgence of a black market is an inevitabile result of supply and demand.

“When these stores shut down and the market is pushed back into unregulated, nonstorefront businesses, then we see all sorts of additional risks,” he said. “So they may be doing themselves a disservice in the long run by limiting it to so few dispensaries.”

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