31
May
2018
|
15:00
Europe/Amsterdam

Will placement of Edmonton cannabis dispensaries thwart the black market?

New research suggests “supply deserts” in the city could discourage legal consumption, while retail expert says access problems will be solved over time.

By GEOFF McMASTER

The distribution of legal cannabis dispensaries in Edmonton may not be wide enough to displace the black market, at least initially, according to a new study by a master’s student in urban planning.

Using a map of existing pharmacies in Edmonton as a proxy for dispensaries—since they sell controlled product and already have a high level of retail penetration in neighbourhoods across the city—Thomas Lippiatt superimposed a map of eligible land for dispensary placement, according to provincial and city regulations.

Cannabis dispensaries must be at least 100 metres from provincial health-care facilities, schools or parcels of land designated as school reserve, and 200 metres from each other.

What jumps out at first glance from Lippiatt’s map are huge swaths of land where there isn’t a potential dispensary for kilometres. Most are clustered in central areas like downtown and Whyte Avenue.

"There's not a lot of penetration at the neighbourhood level,” said Lippiatt, who conducted the research for a course in geographic information systems.

“There are large supply deserts in the southeast and southwest particularly, so that's in effect the entire south side of the city except for the Calgary Trail corridor. That means people have to get in a car or bus and get there somehow.”

Given the convenience of established black-market dealers, who don’t recognize boundaries and will often deliver directly to customers, the lack of easily accessible dispensaries could discourage some users from purchasing cannabis legally, said Lippiatt.

"The cannabis business is going to be competing with a very well-established, very nimble black market,” he said.

Allowing more mixed-use development—where commercial businesses and residential units share space—could solve the supply problem, he said. In fact, exploring ways to increase mixed-use space in general will be the focus of his master's research project.

“The landscape we see right now, which is effectively constraining dispensaries, is constraining a lot of other types of businesses,” he said. “We have a very simple Euclidian process, where one type of building goes on one type of land. We don't have many vertical mixes."

Challenges temporary

Retail expert Kyle Murray said Lippiatt’s map provides a useful snapshot of limited cannabis access in the short term, but he argues the city will likely adjust over time.

“The impact of legalization on the black market is multi-dimensional; it’s not just about convenience,” he said. “There's also brand, price and quality, and a bunch of other things.

“Even the regulations around location will evolve. It makes more sense for the city to be cautious initially and loose later.

“And remember, the government will also have an online site that will ship to your home. So even if you're in one of these areas where there isn't a store, at some point in the relatively near future, you'll be able to order from an app on your phone. It will be as easy as ordering a pizza is right now."

The Alberta Gaming and Liquor Commission has received between 80 and 100 applications for cannabis dispensaries in Edmonton, far more than necessary to supply current black-market demand, said Murray. After receiving hundreds of business permit applications, the city announced a lottery-based system earlier this month to determine who gets to sell marijuana once its recreational use becomes legal.

As for where dispensaries are most likely to pop up and survive, Lippiatt said that’s difficult to determine without assessing demand.

"Black-market dealers don't publish their market research online, so we don't know where the demand is,” he said. Besides, he added, knowing where black-market demand already exists won’t necessarily point to where new markets will emerge.

"Legal cannabis is potentially opening itself up to a whole new consumer base,” he said. “Take professionals—a teacher, for example. The career risk of purchasing black market is significantly higher than purchasing the legal stuff.”

Murray added that police will likely crack down on the black market aggressively once legalization takes effect, “so if you have your dealer dropping off at your house, you run the risk of being arrested, whereas if you order from the website, that risk doesn't exist.”

He said it’s also important to remember that cannabis legalization is a work in progress.

"In the short term it's going to be rough,” he said. Some retailers will fail, some will grow and others will consolidate. That means access will be less than convenient in some places.

“But that's all short term,” said Murray. “Ten years from now we won’t have this discussion anymore."