British Columbia's hybrid model for the recreational marijuana market could leave gray market dispensaries and craft growers out in the cold. 

Under the proposed plan, the province would oversee the retail market though the BC Liquor Distribution Branch, which would supply cannabis to both the government-owned outlets as well as private stores. That system is much the same as the model being used for liquor sales. But it isn't clear yet whether or not retailers will be allowed to sell marijuana alongside alcohol.

“We are still looking at the issue of co-location as to how cannabis in a public or private retail store will be sold,” B.C. Solicitor General Mike Farnworth said yesterday.

The government could ultimately decide to let current liquor retailers handle all marijuana sales — a move that would cut illegal cannabis dispensaries out of the market. And that's fine with a lot of stakeholders who don't think the illicit storefronts should get a chance to be part of the new regime.

“There is a distaste, I think, in giving these licences to people who are breaking the law,” Tony Wilson, a lawyer at Boughton Law Corp., told Business in Vancouver recently.

However, some municipalities disagree. Vancouver and Victoria, for example, broke rank with other Canadian cities by licensing and regulating gray market dispensaries instead of trying to shut them down for breaking the law. Right now, the only legal way to acquire medical marijuana is through a mail-order system overseen by Health Canada. But compassion clubs and other venues offering access to medicinal cannabis have been operating for decades, and some cities feel they should be allowed to continue doing business. Even Wilson concedes that reputable dispensaries that have done their best to comply with municipal regulations should be given a chance to enter the legal market.

We'll know more about their fate by early February, when the BC government of NDP Premier John Horgan is expected to finalize what the retail model will look like. Meanwhile, the fate of the province's craft cannabis industry rests with Prime Minister Justin Trudeau.

"The federal government has been very clear that they are responsible for the licensing of production,” Farnworth said, adding that he would personally like to see small-batch growers given the chance to become legitimate business, but that is up to the feds. "That is something that relates to B.C. and that is something we would like to see here in British Columbia....But British Columbia is not planning its own licensing of production systems because the feds have made it clear that they’re engaged in that.”

So B.C.'s draft regulations have really raised more questions than answers for the time being.