“The extremely high size of the municipal business license fee for cannabis retailers acts as a significant barrier to entry for businesses seeking to join the legal market, which can incentivize them into operating illicitly, requiring additional enforcement and compliance costs, increasing the risk to public safety, and undermining the operations of the legal businesses who have paid the exorbitant licensing fee,” she says.
The City of Vancouver is currently voting to review the annual licensing fee for Cannabis retail businesses. Councillor Rebecca Bligh proposed lowering the annual $33,958 licensing fee to $5,000 a year, the same amount paid for licensing the business in Victoria.
Vancouver Cannabis retail business license is the highest in the country compared to any business license. In the city, the Pacific National Exhibition (PNE) license is the second highest and it costs $18,856 per year – less than half the amount paid to open a Cannabis retail store.
A Class-2 Casino license fee and the license fee for a Horse Racing Exhibition are both $13,464. The Compassion Club license fee costs $1,132 a year and Liquor Retail Store fees account for $429.
In the motion, Councillor Bligh stated that lowering the fee would enable more businesses to join the legal market.
Antonio Tiergarten, BC Sales Manager at World Wide Brands, says one of the biggest challenges of the legal industry still is the competition with the legacy industry, especially in BC.
“Reducing the disproportionate license fee can allow more store transitions from the legacy market, more small and local businesses to open, and current retailers to increase staff salary and training”, he said.
Lowering the licensing fee is the first step for changing the industry.
“A $34,000 licensing fee merely creates barriers for those traditionally targeted by prohibition (BIPOC) and perpetuates the stigma associated with cannabis”, said Green Team Solutions Director Stephanie Castro, who is also an advocate for minorities inclusion in the cannabis industry.
“It is absurd that liquor licensing is significantly cheaper when the risks associated with alcohol are much higher. Canada is the 2nd country to legalize recreational cannabis use yet there are no social equity programs, the least we can do is make licensing affordable”, she said in an e-mail.
Lowering the fee will also increase the wait time for a license to be approved. Since Legalization in October 2018 the Province of BC has shown to be in no rush to license new stores, with some retail businesses waiting up to 18 months to get clearance. With more businesses applying for a license the delays in processing can be even longer.
It will also have a direct impact on the supply of products.
For Isadora Dal Bem, Assistant Manager at City Cannabis, even with the market in its current state there is a shortage of good quality product available.
“If more dispensaries start opening, there will be no good products available. There are lots of License Producers focusing on craft growth, but there is a limited product supply. There are lots of products in the cannabis market that are produced on large scale, but they are not good products. When you produce on large scale, the focus goes to quantity, not quality. No store wants that. The Producers will not be able to supply this demand”, she said.
Although lowering the licensing fee can be a positive aspect to bring legacy retail stores to legality, this might not be the right strategy to suppress the gray market activities.
“This does not seem to be the best solution to make the situation better,” said Kauan Benthien, a cannabis journalist who has been working in the gray market for the past 5 years.
For Benthien, by increasing the number of legal stores you are not competing with the legacy market. This creates more competition, but you are not taking people away from illegal stores.
“What sustains the consumer on the illegal market is the price difference. It does make it easier to become legal. It seems as if they are giving people a chance to transition to legality, but there is more that must be done. If you do not lower prices you will never be able to compete with the legacy market”, he stated during a video call.
The motion proposed by Councillor Rebecca Bligh is a result of a newly established Cannabis industry that is still figuring out how to state its ground as a solid business. It is the first step towards a more reasonable approach to legal cannabis, but it opens room for an even deeper discussion on what is still to be done to make cannabis more accessible.