Legal cannabis has a lot to learn from black market, says longtime dealer

A man who broke the law for three decades growing and selling weed thinks the biggest thing missing from the legal cannabis industry is people like him.

Mike Smith grew his first cannabis plant when he was 14 years old. For the next 30 years, it turned into a hobby he was willing to risk a lot for — he knew what he was doing was illegal but figured laws would eventually change.

He grew up to 30 plants at a time and said he sold the weed to friends and family. After covering his costs, he didn't profit much, he said. He kept his full time job as a painter.

He was arrested numerous times. Several convictions for cultivating and trafficking culminated in 2006 with a two-year prison term. He said he stopped growing and selling altogether after that. He had a family and decided the risk wasn't worth it anymore.

Now in his 50s, he has turned toward activism and recently opened a smoking accessories store in Alberta.

Mike Smith isn't his real name. CBC granted him anonymity because even though he said he's doing everything by the book these days, he fears his background could put his business in jeopardy.

On legalization day, he said, 300 people showed up at his store looking for cannabis, but he no longer sells any.

He's glad weed is legal and wants to be part of the industry, but the industry won't have him.

Looking in from the outside, he's not surprised supply issues are plaguing the entire country less than a month after cannabis became legal. He's also disappointed in the product licensed producers are selling.

He said if the legal market had better consulted with those who have extensive black-market experience, legalization wouldn't have been off to such a rocky start.

"At the moment, it's just almost a laughing stock," Smith said.

"They dropped the ball, that's for sure. They made the black market stronger, really, by what they've done."

Possession convictions to be pardoned

In Alberta, no one who has been involved in drug trafficking or has links to organized crime can get a licence to open a retail cannabis store.

That includes anyone like Smith, whose cannabis-related convictions predate legalization.

However, charges or convictions of simple possession of cannabis wouldn't disqualify a person from applying for a retail licence, or working in a retail store.

"We've heard that some of those folks might even make for excellent retail sales staff," said Dave Berry, vice-president of regulatory services with the Alberta Gaming, Liquor and Cannabis Commission, which sells cannabis wholesale to retailers and online consumers.

Berry said people don't need to have been formally charged or convicted with a crime related to the black market. If they can be connected to illegal drug trafficking, that's enough to deny a retail licence in Alberta.

He said he does not see those rules changing.

Public Safety Minister Ralph Goodale has confirmed the federal government will facilitate pardons for people with convictions for possession of cannabis, and his office has said more details about that process will be available in the coming weeks.

More than 500,000 Canadians have criminal records for possession of 30 grams or less of cannabis, according to a 2014 study.

There are currently no plans to pardon or expunge prior convictions for cultivation or trafficking of cannabis, which remain illegal for those without licences.

Some licensed producers say they welcome those previously involved in the black market.

Aurora Cannabis spokeswoman Heather MacGregor said the company employs people who have previously worked in the black market. She could not immediately say whether Aurora employs anyone who has previously been charged or convicted for cultivating or trafficking cannabis, or whether the company would be willing to hire people with these specific convictions.

Aurora has donated to the Campaign for Cannabis Amnesty, an organization that advocates to expunge criminal records for those convicted of simple possession.

"We don't do those types of checks that exclude those people from that culture," MacGregor said of the company's hiring practices.

"It's pretty obvious that these people have a lot of information and knowledge and experience to share that companies who are smart want to tap into."

Health Canada requires executives or leaders at licensed producers, including a CEO, COO or master grower, to have security clearance, which includes a criminal record check.

'The black market quality is exceptional'

Smith said people like him have decades of knowledge in growing and selling that would be invaluable to developing the legal market.

"There's a lot to know, it's a lot of personal tricks to the trade that you just can't learn overnight," Smith said.

"No university education growing tomatoes is going to teach you what you need to know."

In Alberta, retail licences continue to be issued to new stores, but those stores can't stock their shelves because the AGLC is so low on product. Its website is remains sold out of most dried cannabis. Shortages have been reported across the country.

Cannabis stores that opened on Oct. 17 are now mostly out of product, and some have had to temporarily close their doors.

There is no firm timeline for when product is expected to be back in stock in Alberta.

Smith said the legal market will have to improve quality and pricing to compete with the black market.

He thinks licensed producers have been rushing the curing process and cannabis has been sitting in warehouses for too long, leaving it dry and underweight in the package.

Smith said curing takes four to five weeks. During that time, cannabis is dried and the chlorophyll breaks down, giving it a different colour and flavour. He said the process is easier to do in small batches, and he thinks licensed producers may be rushing the process to meet market demand.

The legal market has more variety, Smith said. But the prices are "over the top too high," and that has led to a drop in prices on the black market.

Prices in stores can be up to $15 a gram, but the average price for a gram of black-market cannabis is around $5, Smith said.

The black market began improving quality, packaging and safety standards a couple of years ago to prepare for legalization, Smith said. Dealers and producers streamlined the supply chain and moved sales online.

"There's more weed around today than there ever has been in my lifetime, and it's cheaper than it's ever been in my lifetime, too," he said. "The black market quality is exceptional."

The legal market is missing the mark when it comes to cannabis culture, Smith said. People like to smell, touch and feel a connection to the product, he said, and growers have historically been competitive about quality.

Smith said the legal industry is focusing on profits at the expense of quality, and the demand can't be met because there are so many regulations preventing more growers from starting up, he said.

Without loosening rules and regulations to welcome those with extensive backgrounds in the business, Smith said the legal market will struggle to compete with a stronger black market.

"The only solution that I can see is to open the door, forget about the past, and let people like me and the people I know in on the growing end of it, the supply end of it," Smith said.

"If they let the people in the game who know what they're doing, everything will change. The quality will go up, the supply will go up.

"Until they do that, it's just going to be a big battle, like it was in the beginning of prohibition of alcohol."