Vancouver Dispensary Regulations Destroy Local Economy

Vancouver‘s licensing of cannabis dispensaries is a scam; it protects producers at the expense of consumers. A license itself is essentially government permission to work. It is incompatible with a free society.

Regulators in general, and this definitely applies to Vancouver‘s regulators, are more concerned with punishing competition rather than incompetence. Regulatory rules limit what entrepreneurs can do with their own property. Regulation discourages innovation and drives up costs for both producers and consumers.

Vancouver’s regulatory framework will cause unemployment, not just for dispensary employees and entrepreneurs, but for suppliers as well. And not just cannabis farmers and extraction crews, but the third-party capital suppliers that all-in-all contribute $300 million to the local economy.

The only argument for regulation is that is protects consumers and the community. But the proliferation of Vancouver’s dispensaries is because of prohibition, resulting in a concentration of dispensaries in the Vancouver market where the Vancouver Police Department take a hands off approach compared to the RCMP in neighbouring municipalities.

Then there is regulatory capture: special interests organize better than the general public, resulting in manipulation of the law and a capturing of the regulatory agency for personal gain. There is no guarantee that Vancouver’s regulations will prevent this. In fact, they promote it by creating this legal apparatus where the remaining 16 dispensaries can be coerced to, say, sell Licensed Producer cannabis.

Vancouver’s regulations don’t even take supply into account. The regulators are more concerned about the dispensaries being near to schools and to each other. The supply question is being left to police, so the question then becomes: will Vancouver’s regulators approve of gang-related dispensaries that meet their criteria while shutting down non-profit compassion clubs that are across from schools but are clearly sourcing their medicine from non-violent, non-gang related suppliers? It seems that in a regulatory model, supply should be the first question, but Vancouver councillor Jang said the city “is staying silent” on the issue.

Vancouver’s regulatory model is clearly punishing competition, not incompetence or suppliers that may be related to gangs. They see an issue with profitable small-businesses that aren’t conforming to the arbitrary zoning requirements of the city planners. They would rather create unemployment and shut down a significant portion of the local economy to meet their “best practices.”

The “best practice” promoted by the city will limit entry, homogenize price and quality to the lowest common denominator by insulating certain dispensaries from competition that would otherwise benefit patients and consumers.

There is nothing about licensing dispensaries that improve price, quality or public health and safety. To the contrary, regulations protecting a cartel of dispensaries from free market competition only hurts consumer welfare.

The solution is not to regulate, but to cease regulating other businesses that complained about the lack of red-tape for cannabis dispensaries. It’s a fair concern, why should a barbershop pay protection money to the state and go about getting a costly license when the dispensary next door have none of those requirements?

The solution is to rely on market mechanisms for regulation. Government is inept and inefficient, it has no competition and unilaterally decides what you and I are forced to pay. Especially at a municipal level where the very idea of a property tax ensures that, even if you’ve paid off your mortgage or are a landlord, your private property will never truly be yours. A expropriating property protector is a contradiction in terms, and its regulatory apparatus should be rejected lock, stock and barrel.

Even if the regulations “work” as proposed, it should not be the role of the state to decide how entrepreneurs run their businesses. There is a place in society for regulatory oversight that ensures health, safety and consumer protection. But government action is always arbitrary. They have no market mechanism to check if their actions are beneficial for society. A voluntary licensure and certification process is the better option — private bar associations, for example. Or up until the city wrote them into law, the Canadian Association of Medical Cannabis Dispensaries.

Regulation itself is a business that can provided by entrepreneurs, and consumers will decide which regulation business has the most credibility based on their voluntary actions.

All the city has done is create a new bureaucracy while forcibly destroying a large portion of the local economy and with the audacity to call it “best practice.”

In a free society, people shouldn’t have to get the government’s permission to go into business.