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New licensing bylaw shouldn’t affect pot prices in Vancouver’s retail outlets

Prices at Vancouver’s pot dispensaries are in line with the products offered through the federally regulated medical marijuana system.

Gosia Wozniacka/AP Photo

The price of pot at Vancouver's retail shops will likely stay relatively the same over the next year even if their numbers are drastically reduced in light of the city's new licensing system.

The city announced Monday that only 11 of the 176 applicants had been approved to move on to the next stage of the licensing process, but that number could double once the city breaks up 10 clusters of shops located closer than 300 metres from each other.

A higher price for marijuana could potentially hurt many low-income patients who have been turning to the stores for cannabis, the main operators are arguing.

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Vancouver became the first city in Canada to regulate the illegal storefront sales of marijuana dispensaries in June after public pressure mounted to control the exponential growth of the sector.

Vancouver has no hard number on how many business licences it will ultimately hand out, but experts predict upwards of 50 could eventually be operating legally within a year or so. More than 100 have popped up recently.

Rielle Capler, a PhD student at the University of British Columbia analyzing how patients access medical marijuana, said there was no appreciable drop in pot prices when a "big spike" in dispensaries began increasing the supply in 2013. Though that phenomenon is recent, customers still pay roughly the same premium – an average of about $8 to $10 per gram of dried cannabis – now, as they did then, and she estimates that will continue even if the vast majority of Vancouver's stores close.

"A lot of the dispensaries are already trying to give the lowest prices they can in respect of the fact that these are patients that are using it for medical purposes," Ms. Capler said.

Under its new bylaw, the city has tried to give preference to non-profit compassion clubs by only charging a $1,000 business licence fee versus the $30,000 retail pot shops must pay.

But both the dispensaries and the compassion clubs, which must offer alternative therapies such as massage, "know that the price has to be as low as possible," she said.

Prices at Vancouver's pot dispensaries are in line with the products offered through the federally regulated medical marijuana system, which permits about two dozen industrial-scale growers to mail dried flowers and bottles of cannabis oil directly to patients.

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But even if the number of pot shops is cut in half, many patients in Metro Vancouver would still seek to buy cannabis in person over getting legal medical marijuana mailed to them, according to Ms. Capler, who conducted a national survey into how patients access the federal system.

"It's the face-to-face interaction and convenience of being able to go and get it the day they need it," she said.

She added that few customers would resort to buying off street dealers if access to dispensaries is limited because "legality is a very big issue for a lot of patients."

If the number of storefronts drops significantly it will hurt the many low-income clients who will have to spend more money travelling further to get their marijuana, she said.

David Malmo-Levine, a long-time cannabis activist whose Stressed and Depressed compassion club has cleared the city's first licensing hurdle, said he does not plan to "take advantage of the possible gouging" that could happen when the city begins forcing the dozens of failed applicants to shut down after the deadline to reapply from another location ends in six months.

"Because we have this decimation of dispensaries, that allows that possibility to exist," said Mr. Malmo-Levine, who lost a Charter challenge more than a decade ago fighting for his right to run a basement smoking and vapour lounge in East Vancouver.

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"Whereas, if they treated it like coffee beans, there would be no way to price gouge, people would have to compete in quality and price, so the quality would go up and price would go down."

Dana Larsen, who runs two of Vancouver's oldest dispensaries that may have to move to get a licence, said if the city starts shutting down their shops potpreneurs will start looking at the surrounding suburbs for profits. Local RCMP detachments were openly hostile to dispensaries in the region, but communities such as Maple Ridge now have an operating dispensary and Mounties are more likely to ignore storefront pot sales with legalization promised by prime-minister-designate Justin Trudeau on the horizon.

"I'm hoping that even though Vancouver might end up only having 50 licensed ones and then trying to shut down the other 70 unlicensed ones … in a year from now there's 500 dispensaries in the Lower Mainland," Mr. Larsen said.

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