B.C.’s medicinal marijuana business growing

Increasing number of entrepreneurs working in cannabis culture’s legal nether world
Yaletown Medical Dispensary executive director Arash Zaeri (right) with manager Cindy Martin: Zaeri started out in a 500-square-foot space and later moved to a much larger space on Howe Street, adding a retail component and a members’ lounge

Jordana Casey commutes from Chilliwack to East Vancouver each day for a job that could end at any moment and possibly land her and her staff in jail.

As the manager of the Medpotnow Dispensary on Fraser Street, Casey is one of a growing number of Vancouverites working in the medicinal marijuana industry, which has enjoyed a quiet boom in the wake of court rulings that have struck down government regulations restricting patients’ access to the drug.

However, dispensaries remain technically illegal, and with more than a dozen now operating in Vancouver, they exist in a legal grey area under looming threats of a regulatory overhaul and a law enforcement crackdown.

But despite that uncertainty and the marijuana legalization debate, entrepreneurs and activists alike have begun cashing in on the controversial weed and its many spinoff products and services, and competition is undoubtedly about to ramp up.

A relatively new player in the game, Medpotnow has operated for about a year as a non-profit society. Using the skills she honed as a Telus Mobility manager, Casey said she oversees the dispensary’s inventory, staff and all its marketing and advertising.

With a few hundred “active” members, she said that, even with a 50% markup on the many strains of cannabis the dispensary offers, there’s little room for profit due to overhead and staffing costs.

And while she struggles with the idea of operating in a grey market, she also struggles with the ethics of it all and doesn’t make a move without consulting the dispensary’s lawyer.

“I only purchase product from people who grow under a Health Canada licence,” she said.

Running a cannabis dispensary is not easy nor is it easy money, according to Dana Larsen, owner of the Vancouver Seed Bank and operator of the Medical Cannabis Dispensary Society, which has two locations in the city.

“I talk to people almost every week who want to open new dispensaries,” he said in an interview with Business in Vancouver between puffs on a thumb-sized joint in the Cannabis Culture headquarters building on Hastings. “There’s certainly profit to be made in the marijuana industry or in the dispensary industry, but there’s a lot of head shops and bong shops out there; there’s dispensaries opening at an increasing rate, so it’s not like when we first started out.”

Dispensary operators complain of difficulties dealing with banks; their suppliers have also attracted attention from the Canada Revenue Agency. They struggle as grey market operators, and even though they attempt to operate above board as much as possible, they still have to be guarded about their numbers to avoid attracting unwanted attention from law enforcement, government agencies or more unsavoury characters.

The legal black hole has enabled dispensaries to operate and created a market for information dedicated to navigating around the government’s Medical Marijuana Access Regulations.

Don Schultz runs the Greenline Academy, which holds seminars dedicated to educating people about getting paid to grow pot. Although he’s just providing information, he’s run into problems that highlight the stigma attached to medical marijuana. Ten days before a seminar held in early June at the University of British Columbia, PayPal cut him off, claiming his company violated the online payment processor’s anti-narcotics policy.

In an interview with BIV during the seminar at UBC, Schultz said there are many opportunities in the medical marijuana industry.

More than 200 people paid $330 a head to take his seminar, which covers the industry’s legal issues and growing methods used by master cultivators. He said dispensaries “make a fortune selling medicine illegally” and his main concern is about educating people on how to become designated growers for patients in need.

Meanwhile, those in the industry are concerned that Health Canada has indicated that the MMAR program will likely be revamped by 2014.

Dispensary operators and patients worry that Health Canada’s plan to license commercial producers will strip them of their right to grow their own cannabis. They’re also afraid that the new regime won’t include distribution by community-based non-profits and they wouldn’t have access to the high-quality, low-cost marijuana offered at those dispensaries.

Hilary Black, founder of the B.C. Compassion Club Society (BCCCS), worries about the impacts an overhaul might have on the club’s more than 6,000 members. In operation for more than 15 years, the BCCCS, according to Black, is part of a civilly disobedient movement on the verge of turning into a legitimate industry. She said that while there are more than 12,000 Canadians licensed to consume medicinal marijuana, more than 30,000 people use dispensaries across Canada.

It’s remarkable, she said, that they’ve been allowed to operate for as long as they have, but the Vancouver Police Department, in contrast to the RCMP, have taken a somewhat tolerant approach to cannabis dispensaries.

“They know that we’re a solution to some of their problems,” she said. “They don’t want little old ladies from the west side going through breast cancer downtown looking for a gram of weed to deal with the side effects from their chemotherapy.”

Black said that, under prohibition, “patients will always be compromised.”

Lawyer Kirk Tousaw echoes Black’s concerns. He said that as demand for medical cannabis grows, the government has a difficult choice about who should take advantage of the emerging market. “Do we want it to be these well-run compassion centres operating on a non-profit basis and do their best to help patients or do we want it to be the black market? Because the demand is not going to go away.” •

Highs and lows: Legal marijuana business by the numbers

$6 billion: estimated annual value of B.C.’s cannabis industry

Between 500,000 and 1,000,000: estimated number of medical cannabis consumers in Canada

Between 15,000 and 20,000: the number of medical cannabis consumers Health Canada serves in Canada

Between $3,000 and $10,000: estimated monthly revenue for a husband and wife team licensed to grow marijuana for four patients

Less than $10,000: estimated medical marijuana dispensary startup costs

Between $4,000 and $5,000: estimated cost to starting a legal grow operation

Sources: Dana Larsen, Don Schultz and Kirk T

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