Canadian cities grapple with enforcing pot-shop boom on cusp of legalization

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Toronto has cracked down on its illegal cannabis dispensary sector, with police and bylaw officers carrying out a series of raids across the city targeting just over half of the 83 pot shops known to authorities.

The operators of 45 dispensaries were charged Thursday with several municipal infractions and could face fines of up to $50,000, the city said. It is unknown how many of these shops were raided by police and their products seized.

Earlier this month, the city sent letters to 78 property owners telling them they could face bylaw charges for leasing to dispensaries. Mayor John Tory has called it "alarming" that the illegal sector grew from just a handful of discreet shops a year ago to about 100 locations.

Stores selling cannabis products to consumers are illegal under the current law, because they operate outside of Health Canada's mail-order system for licensed medical marijuana. But communities across the country are grappling with these pot shops after they first expanded on the West Coast and the federal government promised a legalization bill for next spring.

Raiding these shops before regulating them may hurt the city, which will unveil recommendations next month on developing rules for the storefront sale of medical marijuana, according to one of the architects of Vancouver's landmark new pot-shop licensing system.

Councillor Kerry Jang, the ruling Vision Vancouver party's point man on cannabis issues, says his city's rules were based on "making sure there was adequate access to medicinal marijuana for patients who needed it."

"Our bylaw evolved around that," he said Thursday. "How Mayor Tory talked about the approach, he said he was going to take something along the lines of Vancouver's approach, but the rollout has been very different."

Consultation with dispensaries allowed Vancouver to gain important concessions from the sector – such as voluntarily stopping the sale of edible products that could attract young users, Mr. Jang said.

Enforcement in Vancouver is going well, he said, with 30 shops having closed since bylaw officers began issuing violation tickets at the end of last month and another 61 remaining subject to enforcement. Vancouver city staff say they will continue their crackdown over the coming weeks to winnow the more than 100 pot shops down to about two dozen stores that have successfully completed the new licensing process.

Vancouver's next biggest concern is keeping the drug from children and preventing the involvement of organized crime, he said. Since the city's number of pot shops started growing two years ago, police have adopted a policy of raiding the illegal stores only if they are caught selling to minors or doing business with organized crime. The force has said it takes the equivalent of three months' work by one investigator to execute a single warrant on a pot shop. After most of the force's 11 recent raids, the dispensaries reopened the next day.

Camille Cook, a Toronto cannabis activist and long-time co-owner of Vapor Central lounge, had been contemplating opening a dispensary, but said those plans are now on hold as the fallout of Thursday's raids become clear.

"It's a lot of bullying, the gorillas were rattling the cages there at first and now they're showing us their threats do carry some weight," she said, while attending a news conference at City Hall with other advocates and entrepreneurs from the dispensary sector.

"The question is: Is it going to hold up in a court of law?" she said. "I don't think so, not with legalization on the horizon."

B.C.-based lawyer Kirk Tousaw, who was also at the news conference, said the city's actions will result in massive legal bills for taxpayers. Any criminal charges faced by pot dispensaries would face a tough fight under the Charter of Rights and Freedoms, he said, as would any charges laid for violating the city's zoning bylaws. Mr. Tousaw warned that Toronto could find itself paying lawyers to fight myriad constitutional cases as a result of Thursday's raids.

Courts have repeatedly ruled that the country's legal mail-order medical marijuana program is unconstitutional because it unfairly restricts access to the drug.

In February, a B.C. Federal Court judge ruled that medical marijuana users should be allowed to grow their own pot, giving Ottawa six months to come up with a new set of rules.

Mr. Tousaw, who was taking calls from pot-dispensary clients as the raids continued Thursday afternoon, said he would be leading similar constitutional cases on behalf of pot dispensaries in Toronto, Vancouver and Victoria. He said cities are free to regulate pot dispensaries, as Vancouver has done, and he argued that "regulate does not mean prohibit."

Canada's legal market for medical marijuana has seen underwhelming growth since it was overhauled by the Conservative government three years ago. Now, two dozen licensed commercial growers mail dried buds and cannabis oils to more than 50,000 patients.

The illegal dispensary sector, meanwhile, has exploded over the same period as tens of thousands of people seek out face-to-face sales and fewer hurdles to accessing the drug. Before the recent enforcement actions in Toronto and Vancouver, industry insiders estimated Canada supported between 200 and 300 total pot shops, with most operating in those two main cities and Victoria.

John Fowler, the CEO of Ontario-based Supreme Pharmaceuticals Inc., is a licensed producer who says he'd like to see pot sold legally out of storefronts as soon as possible.

"They … train people to pay more for variety," he said. "They have a relationship with the consumer. Economically, I think there's much more to gain from regulating the industry rather than closing them and forcing the businesses farther into the black market."

Don Briere, a dispensary owner, said at least some of his six pot stores in Toronto were raided, even though they closed earlier this week after various landlords complained about being threatened by the city with $25,000 daily fines if they continued to rent to the illegal shops.

"We couldn't ask them to swallow something like that, so we voluntarily closed until we could find out what was going on," Mr. Briere said Thursday morning from his headquarters in Vancouver. "We're suggesting the landlords talk to the city council, the mayor."

The total number of charges will be announced by police at a news conference on Friday.

With reports from Patrick White, Selena Ross and Jeff Gray