Pot shops face dilemma in bid for legitimacy

Owners of illegal pot dispensariesin Ottawa are welcoming the shift in the province's approach to retail cannabis sales, but say they're facing a serious dilemma in their quest for legitimacy.

• Ontario to allow private retailers to sell cannabis, province will handle online sales
• Ontario's private sector retail cannabis plan draws pot industry approval

Under the planannounced Monday, the province will handle online sales of marijuana when it's made legal Oct. 17, but private retailers will be allowed to sell the drug directly to customers beginning next April.

"[Overall]it's positive news," said Benoit-Claude Briand-Turpin, a volunteer at Cannabliss, one of more than a dozen illegal pot shops operating in Ottawa.

In February,CBC News counted 17 of the dispensaries operating in the city, but it's believed some have closed or relocated since, while others have opened.

Currently, only licensed producers regulated by Health Canada are allowed to sell to authorized medical marijuana patients, and only by mail. Canabliss and stores like it arecurrently operatingoutside the law at least for now.

The illegal dispensarieshave been the subject of numerous police busts since 2016,and were expecting toface even harsher penalties once recreational pot becomes legal in October.

New direction

The new direction announced by the Ontario government this weekappears to offer the illegal shops a reprieve,but there's a catch.

They'dbe required to close their doors before applyingfor a license under the new rules.

"We won't want to do business with people running an illegal business," Ontario Finance Minister VicFedelisaid Monday.

Briand-Turpinwouldn't say whetherCannablisswill comply.

"It's possible, but I'd rather not comment further on that," he said.

Private pot shops cautiously optimistic of Ontario's new plan

6 years ago

Duration 0:27

CannaBliss volunteer Benoit-Claude Briand-Turpin says he doesn't see Ontario's new pot plan rolling out smoothly, even though it is positive news for shops.

Shops reluctant to close

Shawn MacAleese, a former pot shop worker who says he's authorized to speak on behalf of several Ottawa dispensaries,said stores will be reluctant to lose out on sales, sever ties with loyal customersand cancel leases, all with noguarantee of a licence come April.

"It becomes frustrating that they have to shut down in the interim," MacAleesesaid."The frustration is not knowing whether that's going to give you any advantage."

MacAleese said there's also a danger customers will turn to riskier methods of procuring their marijuana if their regular source shuts down.

Fierce competition

Competition for theretail licencesis expected to be fierce.

One of the largest businesses vying for a piece of the action, National Access Cannabis, hasalready appliedto open retail outlets in provinces that haveopened the door to private marijuana sellers.

The Ottawa-based company's CEO, Mark Goliger, said it also intends to apply for retail licences in Ontario municipalities including Ottawa and Toronto.

The company has alreadyput together an agreement with Second Cupthat could see some of the coffee chain's locations converted to pot shops.

Industry giants making moves

Meanwhile some established cannabis producers have put together deals with retail operators to compete for licences.

Industry giant Canopy Growth, basedin Smiths Falls, Ont., has acquired pot retailerHiku, which has already secured licences to operate inother provinces.

"If [Canopy Growth] chooses to be aggressive, they can own the whole market," Goliger said.

Goligersaid he'd like to see rules limiting ownership so smaller operators don't get squeezed out of the market.

Other provinces have already taken steps to avoid pot monopolies: the Alberta Gaming and Liquor Commission caps ownership at15 per cent of stores in the province, while B.C.'sLiquor and Cannabis Regulation Branch restricts owners to eight outlets.

"There's a fine balance that has to be struck here," Goliger said.