Vancouver has issued its first business licence to an illegal marijuana dispensary, as the city presses ahead with a landmark set of municipal bylaws in Canada aimed at regulating the sector.

The Wealth Shop was granted a licence this week to operate in a shopping complex on West 10th Avenue in the tony Point Grey neighbourhood, near the University of British Columbia.

Malik Sayadi, who has been in charge of hiring for the store, said the group of young local entrepreneurs behind the dispensary likely benefited by not joining in on the green rush of the past several years.

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Instead, they quietly gained support from their prospective neighbours and jumped through all the bureaucratic hurdles to get the licence, he said.

"Instead of trying to become the first ones there, we just went through all the proper procedures and worked closely with everybody that wanted us to work with them," Mr. Sayadi said.

The Wealth Shop is also one of a number of B.C.-based dispensaries expanding eastward, with a store opening soon in Toronto's Forest Hill neighbourhood.

As a for-profit dispensary, the store must pay an annual licensing fee of $30,000 to the City of Vancouver. Pot shops can pay $1,000 for a licence if they are run as compassion clubs, which must be owned by non-profit organizations and offer other health services on site such as acupuncture or nutritional advice.

Though several B.C. communities have issued one-off business licences to dispensaries over the past year, Vancouver is the first city in Canada to create a set of bylaws regulating the sector.

Councillor Kerry Jang, ruling Vision Vancouver party's lead on cannabis issues, says the historic bylaw has rolled out pretty smoothly so far and will ensure that medical-marijuana patients continue to have proper access to enough dispensaries, despite plans to close all but a third of the pot shops in the city.

"We are finding a space for medical marijuana but at the same time making sure our neighbourhoods are balanced," Mr. Jang said Wednesday on the way to Toronto for a speaking engagement.

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All dispensaries and compassion clubs across Canada still operate outside the federal government's medical marijuana program, which permits about two dozen industrial-scale growers to sell dried flowers and bottles of cannabis oil directly to patients through the mail. Public pressure mounted on the city to regulate these shops after their numbers rose exponentially from just 14 in 2012 to more around 100 when city council began public hearings into crafting a dispensary bylaw last spring.

Provincial politicians have been pushing for pot to be sold through liquor stores or pharmacies – not dispensaries – once recreational use is legalized next spring. Regardless of where recreational cannabis is eventually distributed, the City of Vancouver has said any face-to-face sales of the drug must follow these rules.

Vancouver is expected to issue several other business licences in the coming weeks, with two shops awaiting the final stamp of approval and 12 applicants making it to the second of three licensing stages. Meanwhile, 30 other shops have closed since bylaw officers began issuing violation tickets at the end of last month and another 61 remain subject to enforcement, a city spokesperson said. So far, 139 shops have been issued $250 tickets, with only seven paid by offending pot shops.

Mr. Sayadi wouldn't say where the Wealth Shop gets its cannabis products. Any cannabis sold in these stores is technically illegal even if it is bought from home growers approved under the old federal medical marijuana system, many of whom are still producing under an ongoing federal court injunction. That's because these production licences are tied to individual patients – not businesses.

As Vancouver's pot-shop sector begins to drastically contract under the city's new bylaws, Toronto has witnessed its own explosion of dispensaries since the federal Liberals won last fall's election.

Toronto Mayor John Tory recently vowed to crack down on the more than 100 stores now operating in his city and instructed city staff to quickly come up with recommendations for regulating the sector. This week numerous Toronto pot shops stated that bylaw officers had been by to warn them that violation tickets would be issued soon.

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Mr. Jang said Toronto's bylaw department quizzed their Vancouver counterparts last week on ongoing enforcement action in the West Coast city.