Article content continued

In other words, the government has put a complete firewall between production and sales, explained Kirk Tousaw, a B.C. lawyer specializing in the cannabis industry.

The move has precedence within the alcohol industry where “you don’t have the Anheuser-Busch store, unless it’s at the Anheuser-Busch brewery,” said Tousaw. “But it struck me as a little bit strange … LPs appear to be able to own retail stores, but they cant sell their own product.”

The announcement has thrown a curveball at licensed producers with retail aspirations.

“We could open stores, but we couldn’t dispense product that is created by our company,” said Alan Gertner, chief executive of Hiku Brands Company Ltd., which was recently formed by the merger of Kelowna-based grower DOJA Cannabis Company Ltd. and Tokyo Smoke, a retail-focused cannabis brand.

There are still opportunities for Tokyo Smoke coffee shops in B.C., Gertner said. But his company will be in the odd position of having to sell only competitors’ product.

The rules won’t only affect retail-focused companies like Hiku. Large LPs like Canopy Growth Corp. have been looking to expand their retail presence with Tweed Main Street stores. Aurora Cannabis Inc. just spent $103.5 million to acquire a 20-per-cent share in Liquor Stores N.A. Ltd., with the plan of transforming stores into dispensaries. Liquor Stores operates mostly in the Alberta market, but also has stores in B.C.

Keeping these big players out of the B.C. retail market seems to be the rationale behind the retail-producer firewall. According to the government application guide, “This restriction ensures that the market remains diverse and larger participants do not consolidate and control the market.”