The small eastern Ontario town of Smiths Falls is home to one of the world's largest legal marijuana companies. But when pot becomes legal across Canada this summer, the provincial government won't allow Canopy Growth Corp. to open a retail pot outlet at its plant.

The company and the town are lobbying to change that.

"It's the most logical place in Canada to have a store," president Mark Zekulin said in an interview.

The company, licensed by the federal government to produce medical marijuana, operates out of the town's old Hershey chocolate factory. It is eager to sell its products on site, as craft breweries can sell their beer to visiting customers.

Under Ontario's approach to selling marijuana, it won't be allowed. But the attorney general's department told CBC News it intends to keep an "open dialogue" with stakeholders, including Canopy.

How marijuana will be controlled, distributed and sold is up to each province and territory. Ontario is opting initially for 40 government-run retail stores and online ordering, with no privately run businesses.

Some municipalities are opposed to hosting a store or have expressed concerns. Richmond Hill Mayor Dave Barrow, for example, said the province is rushing its rollout and municipalities deserve the right to abstain until the plan becomes clearer.

But the Smiths Falls town council is fully behind Canopy Growth's proposal.

Ontario Attorney General Yasir Naqvi, left, and Finance Minister Charles Sousa announce the province's plan for recreational marijuana sales on Sept. 8, 2017. Smiths Falls is lobbying the ministers on behalf of Canopy Growth Corp. (Christopher Katsarov/Canadian Press)

The council is lobbying Ontario politicians. It has written to Finance Minister Charles Sousa and Attorney General Yasir Naqvi requesting meetings to discuss the proposal and has sent a letter to Premier Kathleen Wynne.

"My understanding is they are certainly willing to listen," Mayor Shawn Pankow told CBC News.

Government is 'cautious'

In an email response to questions from CBC News, a spokesperson for Naqvi's department said, "The Ontario Cannabis Retail Corp. will be the only retailer authorized to sell cannabis in Ontario."

The government says it is taking a "cautious" approach to sales, based on the advice it received during consultations, and that means "more control and adjusts over time."

Bruce Linton is the founder and CEO of Canopy Growth, based in Smiths Falls, Ont. Canopy is the parent company of licensed cannabis grower Tweed Inc., as well as several other related companies. Linton was photographed at his Smiths Falls facility on Jan. 26, 2018. (Evan Mitsui/CBCNews)

The town, though is trying to make an economic sales pitch, saying that Canopy Growth has helped revive the local economy, which had been devastated when Hershey and other major employers left in recent years, and a retail store would drive even more economic activity.

Busloads of tourists used to visit the Hershey factory and then sample the chocolate in a visitor's centre. Canopy envisions a similar tourism opportunity, with people learning all about cannabis at the 450,000-square-foot production facility and then stopping at the retail store.

"Obviously it would be a different experience, but what we are doing here is just as interesting," said Zekulin.

Hosting a government store?

The visitors centre could easily be renovated, he said. Operating its own store is Canopy's preference, but it's not opposed to hosting a government-run store.

It would still be a boon for the town and would further Canopy's interest in educating people about cannabis, said Zekulin.

This marijuana leaf was grown in the former Hershey chocolate factory that has become one of the world's largest producers of marijuana. (Allan Ziolkowski) "There is a great news story that is happening across Canada, which is major economic development, major leadership in cannabis, and the capital of that is right here in Smiths Falls," he said.

Canopy Growth's government relations point person, Jeff Ryan, is leading the company's lobbying efforts. The company has raised the issue with representatives from the offices of Wynne, Sousa and Naqvi, and it's hopeful that language written into the legislation gives them a window of opportunity.

The law, which passed in December, says the new provincial pot retailer can enter into agreements with people or entities who can sell cannabis "as an agent" of the government agency, and sell it on behalf of the government corporation.

The mayor of Smiths Falls says the government should consider the idea because he anticipates demand for recreational marijuana will outstrip supply at the initial stores. Putting one in Smiths Falls right away would serve consumers in the region, who would otherwise have to travel to Ottawa or Kingston if they didn't want to buy online.

"From the province's standpoint I would hope they would see this is just an opportunity for them to meet demand, provide consumers with a reliable, consistent, known product and the advice that goes along with that," said Pankow.

When Ontario announced its plan for government-run stores, critics denounced it and said marijuana dispensaries that currently operate illegally should be allowed to stay open.

Brewery model 'makes sense'

They argue dispensary staff are knowledgeable and passionate about cannabis. But the province says the dispensaries will be closed in the coming months.

Canopy Growth says the province shouldn't have any qualms about allowing it to operate a store outside the government-run system, while prohibiting other private stores.

Cannabis for medical use grows at the Canopy Growth Corp. plant. (Canopy Growth Corp.) "I think it's a completely different scenario," said Zekulin.

He pointed to the craft brewery model, saying when companies have invested in the community to create jobs, it "makes sense" to allow them to have a retail store associated with a production facility.

In other provinces that are taking a private sales approach, Zekulin said it's fair for businesses to compete. The Manitoba government is taking applications from companies interested in operating stores, and Canopy is among them.

In Newfoundland and Labrador, Canopy signed a deal with the government to be the province's pot supplier. It will operate four retail stores.