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Dana Larsen, pictured in his Vancouver dispensary on Jan. 26, 2023, had his business licence reissued by Vancouver city councillors, in a tacit official approval for him to continue selling magic mushrooms and other illegal substances.Rafal Gerszak/The Globe and Mail

A long-time cannabis and psychedelics activist has had his business licence reissued by Vancouver city councillors, a tacit official approval for him to continue selling magic mushrooms and other illegal substances.

Activists who would like to see psychedelics legalized, in the same way cannabis was, heralded the move as an important step for similar retailers across the country.

The Vancouver hearing on whether to restore the licence was attended by three councillors. Two Green Party councillors voted to overturn the licence suspension. The decision was opposed by the lone councillor from the ABC party, which currently has a majority on council.

Dana Larsen’s reissued licence must clarify that the store offers “education and advocacy regarding entheogens and medicinal psychoactive substances such as psilocybin mushrooms, peyote, LSD and DMT.”

Green councillor Pete Fry said he saw no evidence of “gross misconduct” on the part of Mr. Larsen, whose store on Broadway had a licence to sell party supplies and other items before the suspension last year.

Mr. Fry said the city had received no complaints from the public about the store’s operation and said he and fellow Green councillor Adriane Carr reject the mayor and his ruling party’s assertion that public safety is put at risk by the storefront sale of the illicit psychedelics.

“The reality is mushrooms have exploded – I have personal friends who are not drinking anymore and microdosing instead,” he said Wednesday.

“We are seeing an average of 10 deaths per week of overdose in the city of Vancouver. I don’t want people who are trying to find safer alternatives through microdosing mushrooms – or what have you – turning to some black-market supplier on the internet or a guy at a bar.”

Mr. Larsen and other psilocybin entrepreneurs say they are employing the same tactics used by the owners of the illegal cannabis shops that began booming in Vancouver a decade ago. In response, Vancouver created a new class of licence for these businesses well before cannabis was legalized in 2018.

Mr. Fry said he and Ms. Carr would introduce a motion to council next week to have staff report back on a regulatory framework for psychedelics, similar to the research and analysis that informed the 2015 bylaw regulating cannabis shops.

Jack Lloyd, Toronto-based co-counsel for Mr. Larsen in his licensing fight, called the decision a “fluke” but one that is an important precedent for owners of dozens of similar mushroom dispensaries that have opened in other Canadian cities.

Vancouver now has a month to file a judicial review. Mr. Lloyd said he would welcome such an appeal because, if the city loses, the ruling could create a binding precedent to, in effect, license the two dozen other active mushroom dispensaries across Vancouver.

“It’s a pretty well-reasoned decision based on the evidence,” said Mr. Lloyd, who added he’s representing more than 30 clients facing prosecution from raids at mushroom dispensaries in Toronto, St. Catharines, Ont., Ottawa, Montreal, London and Windsor, Ont.

Mayor Ken Sim said in a statement that the Green councillors were engaging in “activism on matters beyond the jurisdiction of the City of Vancouver and not endorsed by council.”

“While we acknowledge the significance of this national conversation, we firmly believe that this discussion should take place at the federal level, rather than at a city business licence hearing,” his statement said.

Mike Farnworth, B.C.’s Solicitor-General and Minister of Public Safety, called the development “bizarre” at an unrelated press conference Wednesday.

“It makes absolutely no sense to me,” said Mr. Farnworth, who has previously called for the illicit shops to be denied business licences and shut down immediately. “The products they’re selling are illegal in this country. And they are leaving themselves open to be raided by police.”

The federal Liberal government has repeatedly said it is not interested in legalizing more drugs after cannabis.

Health Canada has stated that magic mushrooms do not usually lead to addiction, but users may experience anxiety, fear, nausea and muscle twitches when they take the drug. In the past two years, the department has also greenlit more than 20 clinical trials investigating psilocybin.

Vancouver police raided Mr. Larsen’s two mushroom dispensaries last November and said Wednesday their investigation would soon be complete, and they would be forwarding charges to Crown prosecutors for approval.

With a report from Andrea Woo

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