For-profit pot shops look to skirt rules
Some consider converting to compassion clubs to avoid $30,000 business licence fee
Less than 24 hours after Vancouver enacted a two-tier licensing system to rein in an explosion of marijuana dispensaries, some for-profit shops are considering converting to not-for-profit compassion clubs to avoid paying a $30,000 business licence fee.
But the city’s requirements for those clubs, which would reduce the fee to $1,000, are onerous enough that at least one city councillor says it may be cheaper for them to just pay the city’s higher fee.
As dispensary owners, the city and the federal government begin to absorb the implications of the new law, there are many questions being raised about whether it will work.
It maybe cheaper for these for-profit shops to simply pay the city’s $30,000licencefee than have to go through the hoops.
KERRY JANG
CITY COUNCILLOR
From simple questions about why illegal dispensaries would obey a city ordinance when they already ignore federal drug laws, to how shop owners will try to skirt the rules by claiming compassion club status, the landscape around Canada’s first bylaw to regulate pot dispensaries is anything but tilled.
“I had two inquiries as of a few hours after the bylaw was passed from people wanting to know if they could convert to compassion clubs,” said Coun. Kerry Jang, who led the charge to regulate pot shops as businesses. “I told them they’ll have to meet all the conditions of a compassion club, and that’s not going to be easy.”
Those conditions go far beyond simply registering as a nonprofit society and creating a membership.
The city says the non-profits will have to be patient-centred and offer more than just a place to buy dope. At least half of the club area will have to be used to provide health care services and at least two licensed medical practitioners will have to be available, such as registered psychologists, dietitians, massage therapists, Chinese medicine practitioners or craniosacral therapists.
“Being a non-profit is a necessary, but not sufficient, condition. They have to meet all of the criteria to have a compassion club as outlined in the bylaw,” Jang said. “It may be cheaper for these for-profit shops to simply pay the city’s $30,000 licence fee than have to go through the hoops to become a compassion club.” But not everyone believes that. Coun. Melissa De Genova, one of three Non-Partisan Association councillors who opposed the regulation, noted city staff have said it could take up to a year to get illegal shops closed if the city has to go to court.
More importantly, the city is not insisting applicants file financial statements, meaning there is no way to know if a non-profit is actually operating as one. “I am sure we will see a rise in non-profit organizations. Now, as to whether they are really non-profit, we won’t be able to figure that out, will we? That’s because as far as city staff are concerned, we’re not asking for their financials.”
Donald Briere, the owner of one of the city’s largest chains of medical marijuana dispensaries, said he’s already looking at how his operation can qualify for the lower fee. He said his group operates as a compassion club but doesn’t offer the quasi-medical services the city insists such clubs must have. Briere said he set up a society, Canadian Weeds Cannabis Society, in 2013. It is managed by a business he owns, Weeds Glass and Gifts, which runs the society’s 10 stores. Briere said he draws a salary of $60,000, and some of the money is then donated to charities.
“The Canadian Weeds Cannabis Society has no assets, no money, nothing. Weeds Glass and Gifts Ltd. is running everything for the society and is donating to Children’s Hospital, the food bank, to kids going to camp. I have the receipts to prove it,” he said.
Briere said he’s already had people call him to offer consulting health care services to help him comply with the city regulations. But even if he were to apply as a compassion club, he says the city’s new bylaw is badly flawed and will be challenged by dispensaries and bakers of edible marijuana products.
“This is just the beginning of the beginning. The bottom line is these rules and regulations have to be refined to the point that we can keep people employed,” he said. “I have had phone call after phone call after phone call, and basically anybody who is going to get hurt by this is already talking to lawyers.”
Jang said it would be hard for groups like those run by Briere to qualify as compassion clubs.
“He says he is a compassion club but not by our definition,” said Jang, who appeared to grow testy at Briere’s decision to push for more than what the city has offered.
“You know, we’re putting structure where none exists. Is it Don Briere who is creating the rules around here or is it the City of Vancouver who is trying to manage these things?” he said. “The point is, a lot of these guys think they can just continue to open and it’s business as usual. Well, we told them all up front it ain’t going to be business as usual.”
Jang said he doesn’t believe pot shop owners will ignore the city’s order to shut down if they can’t get a business licence.
“It’s not going to be a problem, because money talks. When we start fining them $10,000 a day they’ll shut down pretty quick,” he insisted.
Meanwhile, the Vancouver Police Board will formally consider a complaint alleging its police department is failing to enforce the law against medical marijuana dispensaries.
The board sent a letter to Pamela McColl, the executive director of Smart Approaches to Marijuana Canada, confirming it will hear her complaint at a Sept. 17 meeting. McColl claims Vancouver police have failed to uphold Canada’s drug laws and allowed the illegal pot shops to flourish, profit from crime and threaten public safety.
Const. Brian Montague says police have the power to conduct investigations and make arrests, but can’t simply shut down illegal businesses without due process.
He says officers have executed nine search warrants at dispensaries in the past year and a half, but in all cases the stores reopened within a day or two.