Ballem Speaks to City Council on Regulating Dispensaries

Also available at Cannabis in Canada.ca

Penny Ballem, Vancouver’s City Manager, addressed City Council on Tuesday, April 28th, 2015. She was there to present the Policy Report, dated April 21st, 2015, “Regulation of Retail Dealers – Medical Marijuana-Related Uses.” Her report may be found here.

For the most part, Ballem's regulatory framework was a long-time coming. Everybody knew something was going to happen with the dispensaries. A growth rate of 100% in two years doesn't go unnoticed. Ballem cited the federal regulatory change in 2012 as the reason for the spike in Vancouver's dispensaries. From one in 1997 to 85 in April 2015, absent any regulatory standard, the growth is exponential.

It was nice to see Ballem correlate the Marihuana for Medical Purposes Regulations (MMPR) as one of the reasons why Vancouver's dispensaries have become so plentiful. The utter failure of the federal government, and Health Canada specifically, to provide for medical cannabis users has led to this situation. The MMPR attempted to reduce the supply and put tens of thousands of patients at risk. The MMPR is riddled with “price constructs” and “delivery constructs,” as Ballem put it. She pointed out that even with a court-ordered injunction, the uncertainty in the market and the failure of the MMPR model has led to the Vancouver retail development.


 

In addition to the failure of the MMPR, Ballem cited recent ends to prohibition in Colorado and Washington. The states were featured prominently in the report and Ballem cited their assistance in coming up with Vancouver-specific regulations.

Ballem also cited Allard and how the entire medical cannabis system was “in a limbo.” This uncertainty, according to Ballem, resulted in the “critical mass” that dispensaries were creating in the city. She seemed worried about the economic growth of the city, as if it were happening too fast. There was no legal framework; it was chaos, in her opinion. But the city has it in its authority to regulate land-use. “Through that window,” Ballem explained, “we can bring some order.” What kind of order? Well, some dispensaries fall outside of traditional retail zoning areas. And in Ballem's presentation, a “Health Lifestyle” dispensary is used as an example of a business breaking aesthetic rules. In her defence, the dispensary did look like some tacky tourist trap for cannabis users. But unlike Ballem, I don't suggest we use the coercive arm of the state to mold private enterprise to match personal tastes.

Ballem concluded that the current uncertainty with the federal government and lack of enforcement from police and Crown Counsel meant that – given that these dispensaries exist – it is within Vancouver’s municipal authority to regulate land use and businesses. She cited examples such as locations, hours, noise, nuisance prevention, and design. To be clear, the city wouldn't regulate the product, just the business. This reassurance seemed to be forgotten when it came to the question of edibles. There, Ballem and her team took it under their authority to make a decision on something that is currently being decided by Supreme Court Judges. I imagine this won't be the end of the edibles question.

Ballem acknowledged the health benefits from cannabis. She even mentioned the harm reduction properties cannabis has for harder drug users; it's a safe substitute and provides relief from withdrawal symptoms. Where Ballem started to veer into prohibitionism was in regards to children; while we understand and fully support the responsible end of prohibition, we also preach the practice of educated rationale and informed parallels. For example: the regulations stipulate that dispensaries or compassion clubs must be 300 meters from a school. Putting aside the very important observation that in at least one case the dispensary pre-dates the school, there is the very simple observation that teenagers – if they really want cannabis – are going to walk more than 300 metres. Aside from the arbitrary value judgement that dispensaries shouldn't be seen alongside schools, libraries or community centres, I only ask, why stop there? Why not churches (of all religions), book stores, senior homes, fraternity lodges and university and college campuses? Why not cluster dispensaries, lounges and compassion clubs as a Green Light district?

But never mind. “Degraded character” and clusters of stores are seen as a nuisance. Why two stores existing across from each other should be disbanded I'll never know. Or at least, we can ask during the public hearing, along with why “edibles” falls under the municipal jurisdiction of land-use and by-law enforcement. Many other business and industries cluster in this manner, in fact it is the very concept of city commerce.

A big part of the proposal for regulations was the concern from other businesses, or as Ballem called it: “inequality for other businesses.” Other business owners, such as restaurants and other retail outlets, were annoyed that they were subject to bureaucratic paperwork and regulations when the dispensaries were not. The 19th century French economist Bastiat called government, “that great fiction by which everyone tries to live at the expense of everyone else,” and this is kind of what he meant. Since all business owners have to abide by the various by-laws, fees and regulations in the city of Vancouver, they feel threatened when someone walks along and doesn't abide by those fees. It's not fair, according to them. And they are right. It's not fair. But the solution isn't to tax and regulate those other businesses. Look at the economic growth of dispensaries and compassion clubs; it's not solely because they sell cannabis openly in a storefront. It's also because they are unhampered by the bureaucratic regulatory framework in which the rest of the business community is subject to. The larger and more bureaucratic the legal framework, the more costly it becomes to do business. Vancouver City Council should look at cutting red tape for existing businesses, not creating more of it for new businesses.

The solution isn't to excessively regulate the dispensaries. The solution is to stop regulating other businesses as much. Ballem pointed out how outreach with the dispensaries resulted in positive feedback. Many were welcome to getting a legitimate business licence, to meeting regulations and having a positive impact on the community. Ballem's regulations are, however, excessive and perhaps that was the goal. We need to think in terms of: Problem, reaction, solution. Make regulations excessive and encourage debate with dispensary owners and informed experts in order to refine them to best serve the community as a whole.

Ballem took examples from Colorado and Washington, particularly Seattle, Denver, and Boulder. The list of regulations Ballem brought into her report were regarded as “Best Practice.”, despite only a year to evaluate the results and limited opportunities for comparison with other legal regimes. This included regulating where dispensaries go and how far they are from each other and other “sensitive” zones. No multi-purpose dispensaries (i.e. a movie theatre that offers medicated popcorn) and no mall outlets allowed. Criminal record checks would be required, as would liability insurance and security features. The city also looked at limiting operating hours, disallowing sampling, banning minors, capping the number of dispensaries, and limiting the number of licences per person.

Ballem was also concerned about the local economy. Clusters of dispensaries are supposed to be bad. As well, businesses in industrial zones are costing “job-producing sites.” But that reasoning would also indicate that zoning regulations themselves are costing potential job-producing activities from taking place. What is inherent about zones that equal wealth? Houston has no zoning laws, for example, and is one of North America’s thriving metropolises. And why isn't a dispensary considered job producing? It's the freest market in the city. Or at least it was and still is until some kind of regulation takes effect.

How did these regulations get written? Who wrote them? Who works for Ballem? Who does Ballem work for? What makes their knowledge of zoning and “best practice” superior to the actual business owners? Why is Ballem “not prepared to let people establish” dispensaries in the entertainment section of Robson?

 

In her presentation, Ballem showed us a model that took into account the existing dispensaries and their geographical proximity to schools, community centres, childcare centres, library and each other. Again, why competing dispensaries close to each other should be discouraged by the state was not addressed. What was addressed were the different distances and variations of the “land-use conflict.” Modelling all these variables together,

Ballem and her staff came up with a “recommended option,” a sort of market-clearing policy where the cost is the exact number of dispensaries that will have to move or stay, and where the market is the arbitrary decision of the bureaucracy. On the surface it appears that Ballem and her team have come up with some sort of optimal “supply and demand” model for the number of dispensaries. In reality this is simply another example of a good idea (end of prohibition) being corrupted by over-regulation and bureaucracy, which as we’ve seen through the Harper regime’s policies does nothing but confuse the populace and delay progress while civil servants expense “research” trips to more enlightened locales.

When it came time for the Councillors to speak to Ballem, Councillor Jang was up first. He had a host of questions but Mayor Robertson had already clarified that the public hearing would keep the debate alive. This Q and A session was solely for the purpose of discussing the public hearing. Despite that clarification, the meeting broke down to questions about the regulations and at several times the volume of the gallery murmurs rose in response to what Ballem was saying.

Jang wanted to hear pros and cons from the public before moving forward on this. He wanted clarification of the $30,000 licensing fee and better justification than what Ballem had provided. Keeping with the concern over fees, he wanted clarification on the non-profit situation and whether the $30,000 can be spread out over smaller payments. Jang wanted more clarification over all, particularly in the very real example where a compassion club pre-dates a school.

Ballem responded that these were all valid points that would be brought up at the public hearing. She stressed the complexity of change in the dispensary market, and that their approach has been “structural” and based on “best practice.” She emphasized that the more one discriminates (that is, dials in the criteria) the harder it becomes to make decisions. Instead of specifying certain issues in the regulations, the criteria are purposely broad as to make it more reasonable and easier to implement.

Councillor Carr also wanted more clarification. Among her many issues was the economic impact of dispensaries. Carr cited Ballem's report as mostly covering “character” and cultural impacts. Carr's constituency had complained that dispensaries increased rents of neighbouring properties, which some would argue is a positive notion. Ballem, according to Carr, lacked sufficient economic analysis for her concern on the “impact on local economy.”

Fair, acknowledged Ballem, but she stressed that this kind of information is “difficult to document and show causation.” Of course, I whispered to myself as I watched this unfold. The average Joe doesn't know the first thing about sound economic principles; the Causal-Realist tradition of Menger, Bohm-Bawerk, von Mises and Rothbard. When the average Joe doesn't know about it, I can't expect a high-ranking city bureaucrat to be proficient in it either. The Ron Swansons of the world are likely as fictional as the show.

Carr also wanted some hard data behind the modelling sources. Ballem's assistant agreed to provide that at the public hearing.

As mentioned, despite the reassurance that Ballem's team promotes regulating land-use and business practices within their reach – in other words, they have no interest in regulating the cannabis production or the supply – Ballem took some very large value judgements in regards to edibles. Although the regulations allow for extracts like oils, it claims to ban food products like edibles that could be potentially targeted at children. Ballem didn't provide any evidence that more children are consuming edibles now that Vancouver has 85 dispensaries. Literally zero evidence, whether in her report or her presentation. She just made a wisecrack about the potency of brownies drawing laughs from everyone who wasn't a patient or was about to have their entire livelihood threatened by the bureaucratic decisions of the state. In Ballem's view, no government control meant risk to public health and safety. It would seem that without these wise-overlords, we all would have gone extinct off bad food products centuries ago.

Councillor Meggs wanted to know what the Vancouver Police Department thought: Will organized crime be assisted or hurt by these regulations? Councillor De Genova wanted to know if they'd be regulating the suppliers (i.e. cannabis farmers) too. Thankfully not. De Genova was also concerned about the letter Rosa Ambrose sent the Mayor and wondered about the legality of all this. While Ballem attempted to answer, the Mayor had to remind everyone that these questions were better suited for the public hearing. The questions now were in regards to the public hearing. Still, De Genova asked what would happen if these dispensaries didn't shut down even after the city's attempt to regulate them.

Ballem gave the most direct and honest answer I've ever heard from a public servant. She said post-permit, with their on-going enforcement ability to ticket, to take it to council and even get a court order means that eventually unregulated dispensaries will be closed. But no, Ballem reminded everyone, there would be no guns blazing raids by the police. It's not a matter of Ballem calling the police and having the police show up to the dispensary. There's a process that must be undertaken. Which goes to show you: anyone can violate by-laws. Just do it. The process of enforcement is so slow and bureaucratic that there is power in numbers. If 85 restaurants decided to stop filing in certain paperwork, the city would be powerless to stop them. If 85 car mechanics said, “enough is enough,” and in solidarity cut their paperwork in half or openly violated unnecessary by-laws, the city would find itself increasingly powerless. If 85 dispensaries opened up without a business licence, it would – and it did – take the city two years before something was done.

Councillor Stevenson was practical. He wanted to know the budget. Would regulation require a new enforcement team? New staff? New equipment? Yes, Ballem replied, and that's where the $30,000 licensing fee comes in. Stevenson also wanted to know why ATMs weren't allowed. ATMs, according to Ballem, were another business and thus not allowed. Which, of course, they are not. They’re rented equipment.

Councillor Deal wanted more facts, statistics on complaints, trends in certain neighbourhoods and information on whether these businesses were eligible for insurance. Ballem asserted the dynamics prevented a lot of this knowledge from being known and besides, it was public hearing stuff.

Councillor Ball told everyone the story of how Canadians used to buy alcohol. First by filling out a form and applying through a tiny window, then by actually getting to see the alcohol you wanted to buy before you bought it, then finally through a regular retail storefront. She wanted to know why the City hadn't stopped the growth of cannabis dispensaries in the last two years. Had the city applied for any kind of federal exemptions under the MMPR? Post-regulation, who would be responsible for adverse effects?

Ballem reminded Ball that the city was not regulating cannabis per se, but the land-use. She used hospitals as an example. The city didn't regulate what went on inside hospitals, including drug prescriptions and doctor qualifications. They merely regulated how the land was being used.

Councillor Affleck wanted to know about the supply. How much of it was legal versus illegal? Ballem replied that supply was not their jurisdiction, and that in her experience the supply was coming from legal MMAR growers. However, as Cannabis in Canada wants to reiterate, there is nothing in the MMAR that permits a grower to sell or share his or her cannabis and that federal prosecutors have failed to prove their accusation that MMAR growers have been selling to the illegal market.

Affleck said if a bar were obtaining its alcohol from an illegal source, would the city not intervene? Ballem responded that the police would respond because of the criminal code. Liquor regulation is also a provincial issue. So Affleck asked about the RCMP and the federal government. Couldn't they technically overrule the Vancouver Police? Ballem tried to answer the best she could, but in the end she chose not to speak to the issue. Affleck continued, however. He wanted statistics on Ballem's assertions of “community support” for medical cannabis. Ballem said she’d provide more clarification at the public hearings.

Councillor Carr was up again and she wanted a summary of the rationale behind the regulations. As if they weren't already evident. She also had an idea about the Vancouver Coastal Health Authority regulating edibles but Ballem shot her down.

Jang was up again asking Ballem to be prepared for “what if” scenarios at the public hearing. He wanted more information on the impact of leases and rents. Then Affleck asked (again) for data and statistics on public support for dispensaries, but he also had questions on the supply. This time, instead of Ballem answering, the police representative answered that all trade was illegal unless through the LPs. But there is a legal limbo thanks to Allard, so the supply question is up in the air despite it being “mostly illegal.” The Vancouver Police Department representative said that unless the dispensary is openly targeting minors, runs obvious public health and safety risks, or is connected to organized crime; it has a low priority for police enforcement.

Ballem was back up to respond to Affleck's ongoing questioning. Her staff have gone around to dispensaries, especially the ones within 300 metres of each other or of schools, and have told them not to invest and be expected to get shut down.

De Genova then asked (again) about the children. Everybody stop and give up their liberties for the children. Are the shops near schools being especially monitored right now? Ballem assured her that all dispensaries are being monitored. But what about the children!?

 

Councillor Ball wanted data on drug use, abuse and mental health and illness issues. Ballem didn't have it. She was just a City Manager. So Ball wanted to know, if the dispensary owners are openly violating a federal law, why would they abide by a municipal one? Ballem gave the best answer she could, but it didn't seem to satisfy Ball. When the issue of going to a public hearing went to a vote, Ball was the only one who voted in opposition. Of course, it might have meant that she didn't support regulating the dispensaries at all, let alone going to a public hearing about it.

Councillor Reimer stood up for the first time and asked about the legal status of cannabis. Given that the Supreme Court had ruled constitutional access, it seemed wrong to refer to certain supplies as “illegal” even if they flaunted federal law. The Constitution takes precedent over legislation. This distinction and request to call it “legal” drew applause from the gallery. Next Reimer asked about the private school that moved in near a dispensary. She would like to hear representatives from that school at the public hearing.

The public hearing has not been scheduled yet.