Vancouver changed the landscape of Canada’s cannabis culture Wednesday, becoming the first city in Canada to regulate illegal marijuana dispensaries.

The action, which will see a two-tiered licensing system aimed at weeding out for-profit dispensaries in favour of non-profit compassion clubs, comes as the federal government continues to reject calls to loosen its drug policies.

From Wednesday, dispensary owners have 60 days to apply for a licence and will have to qualify under tight criteria, including criminal records checks and limits on where their shops can be located. Prominent on the map of no-go places are the Downtown Eastside, Chinatown and Granville entertainment district, as well as anywhere near schools, community centres and other public gathering places.

An astonishing proliferation of pot shops sprung up in a legal vacuum created by an ongoing court challenge to the new federal government rules on medical marijuana. But in trying to wrestle down the issue, the city appears to have won few friends.

Almost immediately after council passed a bylaw that would close as many as two-thirds of the estimated 100 now in operation, it was assailed by both federal Health Minister Rona Ambrose and pot shop owners who say they will fight the new regulations.

Even the operators of some of the city’s oldest compassion clubs were unhappy because some are caught inside a 300-metre proximity rule that prevents their shops near schools, community centres and other public places.

In a tip of the hat to the work compassion club do, however, city council lowered its proposed $30,000 annual licence fee to $1,000 for non-profits that also offer “wraparound services” such as nutritional counselling, acupuncture and massage therapy. The city did not relent on its ban on the sale of edible products, saying it doesn’t want children to be lured into buying cookies and candies laced with marijuana. And yet, it said sealed oils and tinctures can be sold to people who should make their own edible products at home.

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Under the rules, clubs will likely qualify for licenses more easily than so-called “profit shops” that don’t provide such services, as long as they are registered societies.

“A compassion club has to provide wraparound services, it has to have a membership, annual general meetings, as well as be a non-profit,” said Coun. Kerry Jang, who sponsored the motion calling for regulation. “Most profit shops don’t do anything; they just are a storefront.”

The new bylaw governs where dispensaries can operate. Applicants also must be owners, not corporations, and are not allowed to apply for or operate more than five dispensaries. They will be subject to police criminal records checks and shops must meet all the city’s other bylaws, such as fire, health, building safety and parking.

Jang said existing dispensaries that do not meet the city rules, including those already within proximity to schools, will have to close.

Dispensaries also can’t be located within 300 metres of each other. The city will use a “demerit points” system to weed out existing overlapping dispensaries. For example, for-profit shops that offer no additional patient-based services will be given 10 demerit points. If the place has had complaints from more than one person in the last 12 months, that’s another two demerit points. If the shop has done work without a permit, that’s three points. And if it has a history of poor business practices, they get tacked with another four points. The dispensary with the lowest demerit point wins, as long as it still complies with other city rules and bylaws.

The city says it will take a robust approach to closing down shops that violate the new ordinance or operate without a licence. It said it will apply the same bylaw enforcement procedures it uses for other businesses, but is prepared to also issue fines of up to $10,000 daily for those that refuse to comply. Ultimately, the city is prepared to take scofflaws all the way to the Supreme Court of B.C.

That is separate from any enforcement action the police have said they will take if they find a shop selling to children or is involved in organized crime.

“The police chief will make it on the terms of criminality or organized crime or selling to kids, but in regards to the bylaw just passed, we will enforce them,” said Jang. “We’ve always had a number of ways to do it, from business license fines, for example, all the way through to injunctions and court hearings.

“That’s what’s key here. We are treating these shops with the same rules and regulations pretty much as any other shop in our city. We are putting in structure where no structure exists.”

Mayor Gregor Robertson defended the council’s historic decision, saying the city was forced into regulating the shops with its business licence bylaw because the Stephen Harper government in Ottawa has stridently refused to amend its drug policies.

“We are faced with a tough situation, a complicated situation, because the federal government has failed to act on regulating medical marijuana appropriately,” he told reporters. “We will be looking forward to some more sane policy out of Ottawa to deal with the gaps that currently exist.”

Ambrose used most of a prepared statement to launch an election-style attack on federal Liberal leader Justin Trudeau, who had nothing to do with Vancouver’s plan to regulate pot shops.

She said at the outset that as health minister, “I am deeply disappointed by the City of Vancouver’s decision to ‘regulate’ illegal marijuana storefronts across the city.” She also reiterated the federal government’s position that the shops are illegal, adding: “We expect the police to enforce the law.”

That’s not likely to happen in a city where the police have already said they will act on cases of organized crime and the sale of pot to children, but consider low-complaint dispensaries to be low on their list of enforcement priorities.

The Vision Vancouver-led council squarely blamed Ambrose’s government for putting the city into a position where it has to regulate a plethora of pot shops that have sprung up faster than weeds.

“I have a message for Health Minister Rona Ambrose. Wake up! You are completely out of touch with realities on the ground,” said Coun. Geoff Meggs, adding the federal government policies on pot are “backwards and destructive.”

“If Minister Ambrose wants a viable policy, she’ll have to craft it.”

Marijuana activist and entrepreneur Don Briere applauded the city, saying all eyes in the world are watching Vancouver’s decision.

“I think they are the most forward-thinking city in the world on this. The whole world, not just B.C. or Canada or the U.S., is now looking at what Vancouver has done. They just defied the federal government,” Briere said.

But Briere also believes the new bylaw is deeply flawed and expects many dispensaries to challenge the proximity rules and ban on the sale of edible products. Of the 10 shops he owns in Vancouver, at least five would have to close. He owns six more elsewhere.

Briere said it makes no sense for the city to ban edible marijuana goods when the Supreme Court of Canada has already ruled such products are legal. And he predicted the city will find itself in a constant legal battle with bakers and dispensaries that intend to challenge the no-food rules and the high licensing fees.

“I have already been phoned by so many different dispensaries and bakers who are all going to file lawsuits. It’s going to be that taxpayers are going to end up paying for it,” he said.

That scenario is exactly what Non-Partisan Association Coun. George Affleck warned council about before he and his two NPA colleagues voted against the regulation.

“I don’t think it is actually going to solve the problem. We are going to head into a myriad of litigious problems,” he said. “Everyone from the federal government to pot shops that now have to close because of proximity rules will take on the city. Is this the battle we want to have? Do we want to potentially have to spend millions of dollars of taxpayers’ money on legal fees?”

Jamie Shaw of B.C. Compassion Club Society, Vancouver’s oldest dispensary, which would now be forced to move, called the new regulations a “historic move.”

“It’s actually great that they’re encouraging some dispensaries to be a little bit more patient-focused and patient-centred while still not actually outlawing more recreational-minded ones,” she said.

Shaw said she is hopeful that the chief licensing inspector will refer her dispensary to council so she can make a case to keep it in the same location, near an elementary school.

However, Jang said such approval would be tough to give. The city doesn’t want to give any leeway to any shop within a 300-metre proximity of schools and community centres, arguing there are plenty of other suitable locations.

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