After waning considerably in the first few years of legalization, unlicensed cannabis stores are making a comeback in parts of Canada.

Canada’s approach to legalization in the first six years has primarily been to encourage those operating outside of the rules to find ways to transition to the legal side. Provinces, which are responsible for enforcing their own approaches to retail cannabis, have seen many who were previously operating in Canada’s illicit cannabis market pre-legalization choosing to close down rather than face enforcement. 

Provincial approaches vary

In provinces like British Columbia, this was encouraged through a multi-year education campaign and encouraging compliance rather than shutting down stores on the first day of legalization. BC’s approach has been relatively successful, with many formerly “grey market” or otherwise illegal store owners now operating licensed stores. While an increasing number of stores operating on First Nations reserve lands in BC eschew provincial licensing, it’s very unlikely to come across an unlicensed store within BC’s cities. 

Ontario, another province with a fair number of illegal shops in the run-up to legalization, took a heavy-handed law enforcement approach (see Project Claudia), but a somewhat more measured one after October 17, 2018. Bylaw officers are now often left to handle illegal stores in cities like Toronto, an approach that seems to have encouraged some more gutsy entrepreneurs to operate in the open again with seemingly little concern for or expectation of any kind of enforcement. 

New Brunswick has also reported a number of closures of unlicensed cannabis stores in the past few years, usually operating in and around its more urban areas. After the province passed new enforcement powers for bylaw officers earlier this year, several unlicensed stores were quickly closed down in recent months. 

The complicated issue of enforcement

Other provinces have taken a more hardline approach to enforcing their retail regulations, with provinces from Alberta to Quebec to the Maritimes carrying on the historic lack of permissiveness around these types of stores before and after legalization. 

Like other aspects of our evolving cannabis industry, StratCann has covered this issue extensively and from multiple angles. From in-depth interviews and exposés like our recent look at the robust online Mail Order Marijuana scene or our upcoming look at the return of illegal and unlicensed brick-and-mortar shops popping up in many major cities east of the Prairies to our documenting of law enforcement actions, we’re helping to draw a bigger picture of this complex and nuanced aspect of the overall cannabis industry. 

The heart of this complicated issue is enforcement, or the lack thereof. Law enforcement officials in places like Toronto and Ottawa appear to be paying no heed to clearly unlawful businesses operating in the open, but the reasons why get murky when you scratch under the surface. 

Some in law enforcement will describe how they don’t often pursue cannabis-related cases because courts usually don’t give them much attention. This means that with limited time and resources, police leadership will simply prioritize many of the other myriad issues that impact public safety. 

Complexity of cross-jurisdictional support

Another issue is the complexity of enforcement and cross-jurisdictional support. Shutting down an illicit store is usually a game of whack-a-mole. Without targeting the owners and suppliers, the store will likely be open again, sometimes as soon as the same day. But taking the time to build a case that can connect all these dots in a way the courts will uphold is much more complex than just seizing products and possibly arresting employees present that day. 

Personally, I was surprised to see how many illegal stores were operating in Ottawa on a recent visit. Operating on major streets, sometimes just a few minutes walk away from a provincially licensed store, one can see how many casual passersby would have little reason to think these are not legal shops. Unless you’re deeply invested in understanding the nuances of legal cannabis, a weed store looks like a weed store, especially when it’s operating on a major street in a major Canadian city, rather than out of a small shack on a rural road with hand-painted signs.

The OCS currently has a campaign to draw attention to this issue, although the method has drawn the ire of many in the industry who say what is really needed is enforcement. 

Political football

But that brings us back to the political football, which is enforcement. Without the courts being able to distinguish between someone operating as part of a sophisticated, organized illicit supply chain and someone standing up for, say, the rights of medical users, law enforcement in a lot of cities and provinces seem like they will continue to let this new wave of illegal stores continue, unabated. 

Sure, we might see the periodic superficial raid, but not the in-depth efforts needed to tackle cross-jurisdictional supply chains with deep pockets of not only money but also political connections.

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