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Under new rules, for-profit medical marijuana dispensaries will be charged a $30,000 licensing fee.Rafal Gerszak/The Globe and Mail

Vancouver's pot shops may have a legal case if they challenge new city rules that charge them tens of thousands of dollars for a licence – far more than other businesses, including body rub parlours and escort agencies, experts say.

Joel Bakan, a law professor at the University of British Columbia, says a court could see the $30,000 fee charged to for-profit medical marijuana dispensaries as "as prohibitive, rather than merely regulatory."

"Is there justification … to charge a hundredfold more for a pot shop than for a pet shop? That is the question," Prof. Bakan said.

New rules prevent dispensaries from setting up within 300 metres of schools and other pot shops, and they also ban the sale of edible cannabis candies and baked goods over concerns they appeal to children.

The licensing fee was approved by city council last month, along with a $1,000 fee for non-profit compassion clubs.

The city said it had to respond to the growth of marijuana shops – as many as 100 now – which technically violate federal drug laws' prohibition on selling pot. The deadline to apply for the licences is the end of August. The city is refusing to say how many applications it has received.

The owner of Vancouver's largest chain of dispensaries says he and other operators are contemplating a lawsuit, but the city said no one has filed a legal challenge.

Prof. Bakan said council is right to limit where dispensaries can be located and what they can sell, but he argued the "completely disproportionate" dispensary fee could be seen as an attempt to stamp out the storefront sales of marijuana.

He said this could allow dispensaries to argue that shutting down illegal sales of marijuana is federal jurisdiction and not the city's job. The Conservative government has vehemently opposed the medical and recreational use of pot, but has not said whether it will respond to Vancouver's new rules.

"There isn't a ruling out there by a court that says pot shops are illegal, so it's obviously a grey area," Prof. Bakan said.

Patrick Smith, a political scientist at Simon Fraser University, said Vancouver's high dispensary fee is likely aimed at drastically reducing, not eliminating, the stores that now operate in almost every corner of the city.

"Maybe get it down to 10, so you can monitor and regulate them better," Prof. Smith said.

Prof. Bakan said a legal precedent exists for the courts stopping a city that overstepped its boundaries attempting to regulate criminal matters.

In 1983, the Supreme Court of Canada struck down Calgary's prostitution bylaw, which fined sex-trade workers at least $100 if they were caught on the street soliciting.

"The city attempted to justify it ... by saying, 'Look, we're just controlling the streets, this is like jaywalking or putting signs on the sidewalk. It's all the same,'" Prof. Bakan said. "The court said, 'No. ... We think you're trying to punish prostitution.'"

Councillor Kerry Jang of the governing Vision Vancouver party said the fees will help pay for implementing and enforcing the new rules, which staff estimated would cost $1.4-million the first year, about $700,000 the year after and $500,000 the next.

Staff estimate most of that money will used for administration, two police constables dealing with problem stores, building inspectors and bylaw enforcement officers. Staff also said compassion clubs will be charged less because the administration and enforcement costs are expected to be much less.

"It's all cost recovery, and that is the standard practice in the City of Vancouver, whether you have a hair dressing salon or a grocery store," Mr. Jang said. "Clearly, they get it cheaper because it doesn't cost as much to enforce."

Prof. Bakan said, if taken to court, the city would have to justify why it decided to charge non-profit compassion clubs much less than dispensaries to operate under what is essentially the same bylaw.

Business licensing fees in Vancouver

Business licence fees of $30,000 for marijuana dispensaries and $1,000 for compassion clubs are many times higher than similar costs for some other businesses in Vancouver. Here is a sample of what various businesses are charged:

Community association: $2

Barber shop: $245

Pet store: $248

Steam bath: $269

Adult entertainment store: $333

Private liquor store: $372

Escort service: $1,204

Body rub parlour: $10,187

Pacific National Exhibition (PNE): $16,331

Source: The City of Vancouver

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