Should There be Store Separation Regulations?

By: Randy Shore

To call Toronto’s Kensington Market a cannabis-friendly neighbourhood would be an understatement. No less than seven retail cannabis stores are clustered in a two-block radius in the heart of TO’s funky weirdsville.

The Kensary and Hot Buds are jammed together with five others almost to the exclusion of any other business type. The House of Cannabis and Fire & Flower are a couple of blocks away, while a brisk walk to the south or the west reveals nine more storefronts. More are on the way, including two on the same block of Kensington Ave.

“If you walk in the area of Kensington Market … you will be shocked at how many stores have already opened,” says Mary Massoudinia, owner of Hot Buds. “We are close enough to wave and say hello.”

“We hardly ever break even and with so many stores right next to each other.”

Mary Massoudinia and her daughter Roya. Courtesy of Hot Buds

“Business is bad,” laments Massoudinia. “We hardly ever break even and with so many stores right next to each other we are splitting the market. Survival is going to be about who has the best financial backing.”

The sheer diversity in retail distancing rules among provinces has turned Canada into a real-life laboratory for cannabis retail regulation.

Ontario has lurched from eyeing a government-only retail model, to private stores and license lotteries, to a virtual free for all, with minimal regulation on store locations. The current legislation forbids municipalities from creating any licensing system or bylaw that distinguishes cannabis retail from any other business.

“How could anyone be upset or expect anything different when the province failed to limit and prevent clustering?” asks Jeff Levy, president of The Kensary in Kensington Market.

“Retailers and communities would benefit from a regulation to prevent clustering.”

Preventing Clustering

Retailers and communities would benefit from a regulation to prevent clustering, he notes. Fewer cannabis stores mean that vacant storefronts will fill in with a diversity of businesses, “and the existing retail cannabis stores will have a fighting chance to survive.”

Davenport MPP Marit Stiles has twice introduced legislation aimed at bringing sanity to Toronto’s “wild west.” Currently, municipalities in Ontario can opt out and lose cannabis retail altogether, or opt in and give up control over where stores are located.

Bill 29 would give cities the ability to exert control over the locations of cannabis retailers. If the bill receives a second reading before the next provincial election in June, 2022, it could be sent to committee to hammer out the details.

“We owe it to some of those small, independent retailers to give them half a shot,” she says. “I think that the other piece of this is that we give municipalities just a little bit more say about where stores go.”

Loosening Regulations

But rather than tightening the rules, many jurisdictions are loosening regulatory bonds.

Regina Council recently dropped its oddly prescriptive rule that cannabis retailers be located at least 182.8 metres apart, reducing the buffer to just 60 metres, which would limit density to about one store per block. The original buffer still applies to schools.

“I think we need to get past the stigma of cannabis,” Councillor Andrew Stevens told CBC, dismissing the old rule as “a remnant of an ill-conceived notion of Reefer Madness.”

Still, some existing retailers took issue with the plan. At the time, at least 30 retail licenses were either approved or under review, which is roughly one store for every 10,000 people.

Any additional permits could easily double the number of stores in the city, complained a submission from Farmer Jane Cannabis Co.

“Maintaining a positive neighbourhood image is difficult if there is a concentration of multiple cannabis storefronts crowded into one area,” they complained. “Additionally, oversaturation of cannabis retailers will pose challenges for many businesses as the market won’t be able to sustain competing dispensaries.”

Landyn Uhersky of Wiid Boutique was equally perplexed: “To be frank, I am unable to understand why Administration is recommending any changes at all.”

His submission notes the City’s own report states, “The general rule for a mature market is about one store for 10,000 people. This means Regina, with its population of 239,497, would need to host roughly 24 stores to ensure a healthy business environment to disrupt the black market.”

The previous regulation forced one of his stores into a less-than-desirable location—their preferred choice was two feet too close to a library—but new entrants will not be so shackled.

Tightening Restrictions

Winnipeg appears to be headed in the opposite direction, after city staff delivered a report to council in December urging new distance regulations after looser rules resulted in clusters and several stores operating within 50 metres of schools, playgrounds, or each other.

Alberta is also suffering from clustering where distancing regulations, like those in Edmonton, separate stores from schools and libraries by 200 metres, community centres and health care facilities by 100 metres, and from other cannabis stores by 200 metres.

Courtesy of Scott Treasure

“When you start adding lists of businesses or organizations or structures that a cannabis retail shop cannot be close to, I think that just naturally results in clustering in areas where those things aren’t,” says Scott Treasure, CEO of The Local Cannabist and Chair of the Alberta Cannabis Council.

“It creates a situation where there is no cannabis retail in parts of the city and the biggest benefactor of that is the illicit market,” he says. “If the goal of legalization is to eliminate the illicit market, we need to look at things like convenience.”

In Vancouver, licensed retailers face a blanket requirement that cannabis stores must be 300 metres from schools, community facilities, and each other.

“Nearly every store must go through a variance process, which can be time-consuming, uncertain, and expensive.”

Because the regulation effectively bars cannabis retail from about 99% of the city, nearly every store must go through a variance process, which can be time-consuming, uncertain, and expensive for applicants holding a lease on an unopened store, according to Jaclynn Pehota, Executive Director of the Association of Canadian Cannabis Retailers.

The regulation also failed to keep stores from operating near sensitive uses.

“It is very stringent and completely dysfunctional,” she says. “We have stores operating within 70 metres of a private school and two stores right across the street from each other.”

“The rationale for distancing requirements was all done with guesswork and I think that is proving true across the country,” notes Pehota. “Three years after legalization, it’s time to revisit these things.”

Change is also coming to British Columbia, albeit slowly. A new farm-gate retail program, coming this spring, will allow cannabis growers to operate a retail outlet at their production site, which would open the door to dozens—if not hundreds—more retail locations, especially in rural communities.