The federal Health Minister is warning Vancouver's mayor not to regulate the city's illegal medical marijuana dispensaries, which she says would encourage drug use and increase addiction.

Health Minister Rona Ambrose made her remarks in a strongly worded letter to Mayor Gregor Robertson on Thursday, one day after the city announced details of a proposed licensing system for marijuana-related businesses.

The city says its proposal is a public-safety response to the rapid growth of such businesses, from 20 in 2012 to 80 today.

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Ms. Ambrose argued that regulating them would "normalize" the use of a drug that remains illegal in Canada – sending a dangerous message to youth.

"Legitimizing and normalizing the use and sale of marijuana can have only one effect: increasing marijuana use and addiction," she wrote.

The move appears to set the stage for a confrontation between the city and the federal government.

While Ms. Ambrose did not explicitly say her government plans to intervene, she emphasized that the dispensaries operate outside the law. "Storefronts and dispensaries do not operate within a 'grey zone' and the law is clear: they are illegal," she wrote.

Canadian courts have ordered the government to allow access to marijuana when it is prescribed by a physician. However, only Health Canada-licensed producers and patients are allowed to grow it legally.

Vancouver's dozens of dispensaries are not part of the legal medical marijuana system operated by the federal government. Local police have prioritized enforcement based on the risk to public safety, so dispensaries that operate without issue can typically do so with little interference.

Under the city's proposed licensing system, dispensaries would have to pay an annual fee of $30,000 and would be prohibited from operating within 300 metres of a school, community centre or another marijuana-related business. They would also have to stay out of the impoverished Downtown Eastside and away from the Granville Strip entertainment district.

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City Councillor Kerry Jang, who has taken the lead on the file, said the regulations were drafted precisely to keep marijuana away from children. He said the Health Minister has "clearly been misinformed as to the intent of Vancouver's bylaws."

Further, he said it is the federal government's new Marihuana for Medical Purposes Regulations program that has contributed to the spike in local dispensaries. Patients have argued that marijuana from licensed producers is too expensive. And those producers are prohibited from making or selling edible cannabis products.

"People lost access to their medical marijuana and they had to turn to other places, like dispensaries," said Dr. Jang, who is also a professor of psychiatry at the University of British Columbia.

Ms. Ambrose's letter appears to be driven by ideology rather than public-health policy, Dr. Jang added.

"What I find really offensive about all this is that they use Health Canada as part of a political machine," he said. "Health Canada is there for public health – for Canadians. It's misuse of a public department."

Mark Haden, an adjunct professor at UBC's School of Population and Public Health, applauded the city's willingness to have what he called an important discussion about regulation.

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"Before, we had unregulated gang involvement. The banner of drug prohibition produced widely available, unregulated cannabis," said Mr. Haden, who is also a former Vancouver Coastal Health Addiction Services supervisor. "Now that we're moving away from prohibition, it's turning into commercialization. It's the other end of the U-curve. What we need is something in the middle, that will reduce the harms that are produced by the two ends of the spectrum."

The matter goes to council for a public presentation on Tuesday. A public hearing is expected six to eight weeks after that.