Municipalities in BC that reversed their ban on cannabis dispensaries have used industrial zones as a testing ground for their first store, and two owners offered differing opinions on the strategy.

Following the legalization of cannabis in 2018, the British Columbia and Ontario provincial governments allowed municipalities to opt out of permitting dispensaries. 

Two dispensary CEOs who opened the first stores in Tofino and Delta, BC, say industrial zones were the only place they could start their business. Non-commercial locations were selected to address city government concerns about cannabis storefronts being visible to minors on their way to school or going home, the owners said. 

Putting a municipality’s first store in an industrial area creates challenges for owners to reach customers, according to Vikram Sachdeva, CEO and founder of the Seed & Stone dispensary chain.

“This industrial area concept has to go away,” Sachdeva said.

Sachdeva opened Delta, BC’s first cannabis brick-and-mortar store, in November 2021 after working directly with the mayor and city staff to create a policy for dispensaries. 

Sachdeva explained that the industrial location was a compromise with municipal officials who were hesitant about not allowing a dispensary downtown. 

Since then, five more dispensaries have opened in Delta, including three in strip malls, BC’s Liquor and Cannabis Licensing data shows.

When Seed & Stone opened the first dispensary in Hope, BC, in September 2022, Sachdeva worked with local officials to ensure the location was in a strip mall. 

Pitt Meadows, BC, is currently working with Seed & Stone on opening the municipality’s first cannabis storefront after agreeing to hear applications for dispensaries in July 2023. 

A similar story with a different perspective played out on Vancouver Island.

The first Tofino, BC, cannabis store suggested to city officials that it should open in an industrial zone in January 2020, Michael Holekamp, CEO of Daylight Cannabis Company, said. 

Holekamp said his store in Tofino, next to breweries and automotive shops, is a trial by the city before potentially opening up in commercial areas.  “It makes sense up there,” Holekamp said. 

Daylight Cannabis is currently operating with a temporary permit because Tofino still doesn’t have permanent regulations on dispensaries, Holekamp explained. 

Small towns have limited commercial operation spaces in industrial areas, and Holekamp said he intentionally never requested municipal officials change the zoning of his store from industrial to commercial. 

“Technically right now, there is no legal zoning,” Holekamp said. 

A second dispensary has since opened in Tofino, this time in a commercial area, Holekamp confirmed.

Sachdeva argues that making a greater dent in the illicit grey market requires putting cannabis dispensaries where people already shop. 

Health Canada’s 2023 survey showed that 73% of cannabis users reported purchasing cannabis through the legal market.

“When there is no store in Surrey, BC, what are people going to do?” Sachdeva said.

“They’re going to go to other municipalities, or they’re going to call their guy that they’ve been calling for the last five to ten years.”

Holekamp agreed that grey market competition was a concern but said whether or not it’s more prevalent in municipalities without dispensaries was hard to tell. 

North Vancouver saw a slow growth of dispensaries after lifting its ban, according to Geoff Dear, owner of Muse Cannabis, the city’s first dispensary. 

But within 12 to 18 months, there was greater competition in the city, and Muse felt it in their bottom line. 

Dear said limits on the number of stores in cities and minimum distances between dispensaries can help fight market saturation. 

Government data shows there are now 60 dispensaries in the ten municipalities that have lifted their prohibition on cannabis storefronts.

Local media reports show that Surrey, North Vancouver, Tofino, Hope, Delta, and Pitt Meadows in BC initially opted out of allowing dispensaries before reversing course.

In Ontario, the municipalities of Mississauga, Tecumseh, LaSalle, and Milton took the same path of granting dispensary permits after initially refusing to. 

The number of dispensaries in each city that reversed its ban are Mississauga (24), North Vancouver (9), Milton (9), Delta (6), LaSalle (5), Hope (3), Tofino (2), Tecumseh (2), Surrey (0) and Pitt Meadows (0) according to BC’s Liquor and Cannabis Licensing and the Alcohol and Gaming Commission of Ontario.

Surrey, BC, announced on January 25 that it planned on allowing up to 12 dispensaries in the city after first exploring a lift on its ban in July 2023. 

~William Koblensky Varela is a reporter, editor, and journalist

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