Nanaimo is looking at regulating its dispensaries as more cannabis shops begin to open in the city.

The city is working on a report for council, with administrators looking at options for regulation based on other regions in BC.

Nanaimo dispensaries have been growing in number, currently operating in a legal grey area. Nanaimo has the ability to ticket businesses operating without a license but, as the sale of cannabis products is illegal federally, the city hasn’t issued them, and hasn’t ticketed dispensaries for operating without them either.

Now that surrounding communities like Vancouver and Victoria have taken the first step with regulation, Nanaimo has followed suit.

Nanaimo mayor Bill McKay said the federal government’s lack of support on cannabis issues has put cities in the position to deal with dispensary issues themselves.

“My biggest fear is not the sale, but it’s the product that’s going out the door,” McKay said. “If these places are going to be regulated, I want to ensure we’re not in any way endorsing the activities of a product that people are going to consume of which come from unknown origin and has unknown content.”

Trees Dispensary Nanaimo assistant manager Anita Roy said she looks forward to the creation of regulations around the cannabis industry in the city.

“It would legitimize our business and then they can collect revenue and ask us to make sure that we are safe for our staff and our clients,” Roy said.

Last week, delegates at the Union of B.C. Municipalities convention voted that cities in the province have the power to regulate cannabis dispensaries, despite federal opposition.

Under court order, the federal government created a licensing system for growers to produce medical cannabis. These licensed producers are not registered to sell from dispensary storefronts, only through internet courier services.

Licensed cannabis producer Tilray’s chief executive officer Greg Engel said the city needs to work with the court system and police against Nanaimo dispensaries.

“They are selling illegally and they are creating a lot of misconceptions to legitimate patients who could access a legal source through licensed producers like ourselves,” Engel said.

RCMP Supt. Mark Fisher said police have been monitoring Nanaimo dispensaries and recommended cannabis users get their product from licensed producers like Tilray.

“There’s controls over the production of that marijuana, and quality controls and testing that meets certain standards that all falls under the federal government program,” Fisher said. “Dispensaries we don’t know where they’re getting their marijuana from, what testing is done on that marijuana, anything of that nature.”

Since Tilray opened production in Nanaimo in 2014, McKay said it had contributed millions to the city’s economy.

“It’s been a real boon to Nanaimo,” McKay said, in March. “Here is a new industry we wouldn’t have dreamt of 10 years ago.”

McKay said he expected the operation to generate $85 million into the economy.