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Blair, Ottawa's point person on legalization, attacked illegal storefront operations that have multiplied in Vancouver and Toronto.

Dave Chan/The Globe and Mail

The marijuana dispensaries spreading rapidly across Canada's largest cities are illegal, reckless and often exist to make a "fast buck," Bill Blair, the federal government's point person on the legalization of marijuana, said Tuesday.

In his strongest signal yet about whom the government will allow to compete in a legal marijuana market, Mr. Blair praised the "exhaustive and exacting" procedures of the 28 companies currently licensed by Ottawa to grow and sell medical marijuana, while attacking the storefront operations that have proliferated in Vancouver and Toronto in recent months.

While the federal government wrestles with how to legalize marijuana by its stated target of next year, numerous entrepreneurs have tried to claim a foothold in the emerging industry by opening dispensaries that purportedly sell the drug for medical purposes. None of these storefront businesses are licensed under the federal government's current regime, a system that only allows patients to purchase directly from licensed producers through mail order.

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"Participating in this business activity means that you must be willing to adhere to a strict set of regulations," Mr. Blair told a conference of investors, Bay Street lawyers and several executives from the licensed firms. "The current licensed producers are competing with people who don't care about the law, who don't care about regulations, don't care about kids, they don't care about communities, don't care about health of Canadians. They're pretty reckless about it. And so they're selling anything to make a fast buck before we get the regulations put in place."

The spread of the dispensaries has been so swift that municipal licensing departments in Vancouver and Toronto have been forced to crack down on businesses that would normally be the domain of the police. Last week, Toronto inspectors sent letters to the landlords of some of the city's estimated 100 dispensaries, threatening fines of up to $50,000 for violating city bylaws. Faced with its own explosion of dispensaries, the city of Vancouver instituted a licensing regime, threatening non-compliant stores with fines of hundreds of dollars a day.

Toronto's dispensary owners have responded by forming their own coalition, the Cannabis Friendly Business Association. A spokeswoman for the group, Abi Roach, said Mr. Blair's comments do not reflect the desires of most consumers of marijuana.

"The government is listening to people in suits instead of people on the ground. Stop and listen to what the consumers want. The consumer is educated now and understands good-quality curing and good-quality bud," said Ms. Roach, also an owner of the Hot Box Cafe in Toronto's Kensington Market.

"It's easier for a politician to talk about children than speak the truth," she said.

During his talk, Mr. Blair, the former chief of Toronto police, delved into his own experiences with illegal marijuana grow operations and the damage wrought by the criminal organizations that are largely responsible for running them.

Despite his own firmly held belief that "marijuana is not a benign substance," he said the current model of prohibition is not working, repeatedly citing studies that show Canadians use more marijuana than any other country in the developed world.

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"We need to do a better job. I believe we can do a better job through strict regulation and public education."

Although many favour legalization because of the potential government revenues, Mr. Blair said that is not what is driving this change. In one of his conversations with Prime Minister Justin Trudeau about the revenue implications, he said the Prime Minister said, "roll that money back into prevention, research, treatment, education."

With a report from Craig Offman

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