A bag of marijuana is held up at a medical marijuana dispensary in Vancouver on Friday May 1, 2015. The City of Vancouver has become the first in Canada to regulate illegal marijuana dispensaries, despite strong warnings from the federal government.

Image Credit: THE CANADIAN PRESS/Darryl Dyck

VANCOUVER - The City of Vancouver has become the first in Canada to regulate illegal marijuana dispensaries, with the mayor saying it's a common-sense approach after the federal government's failure to provide proper policies.

"We're faced with a tough situation, a complicated situation," Gregor Robertson said Wednesday after councillors voted 8-3 to impose new regulations.

"We have this proliferation of dispensaries that must be dealt with," Robertson said.

The new rules mean dispensaries must now pay a $30,000 licensing fee, be located 300 metres from schools, community centres and each other, and some shops will be banned from certain areas.

But in an unexpected move, the city voted to create a two-tiered licensing system, allowing non-profit compassion clubs to pay a fee of just $1,000.

Coun. Kerry Jang said the clubs provide other services such as nutritional and psychological counselling and help people transition from marijuana to other medicine if possible.

He suggested the clubs could funnel the money saved from paying a lower fee towards the creation of addiction programs.

Jang said he was disappointed that some councillors opposed the regulations without putting forward amendments, saying they had "stuck their heads in the sand."

Coun. Geoff Meggs had strong words in council for federal Health Minister Rona Ambrose, who has urged the city to uphold Canada's laws that make retail marijuana sales illegal.

"Wake up. You are completely out of touch with the realities on the ground," he said.

The city has blamed Ottawa's restrictive medical marijuana laws for the rise of pot dispensaries in Vancouver — to 94 from fewer than 20 just three years ago.

Ambrose said in an emailed statement that she was "deeply disappointed" with the decision.

"Marijuana is neither an approved drug nor medicine in Canada and Health Canada does not endorse its use," she said.

"Storefronts selling marijuana are illegal and under this Conservative government will remain illegal. We expect the police to enforce the law."

Jamie Shaw of B.C. Compassion Club Society, Vancouver's oldest dispensary, which would now be forced to move, called the new regulations a "historic move."

"It's actually great that they're encouraging some dispensaries to be a little bit more patient focused and patient centred while still not actually outlawing more recreational-minded ones," she said.

Shaw said she is hopeful that the chief licensing inspector will refer her dispensary to council so she can make a case to keep it in the same location, near an elementary school.

Council's decision comes after four days of public hearings that drew more than 180 registered speakers, many of whom complained about a proposed ban on edible products such as brownies and cookies.

But the city held firm on this part of the plan, arguing that the treats appeal to children, it is difficult to control their contents and patients can buy marijuana oil to make their own edibles.

Dispensaries now have 60 days to apply for a licence.

If several stores are located in a cluster, they must face a review that would give them demerit points based on factors including the number of complaints and police incidents. Stores that are not compassion clubs will receive 10 points.

Where two nearby shops have the same points ranking, a lottery would decide which one gets to stay.

Many dispensaries will be forced to move, including those located in the Downtown Eastside, Granville Street entertainment district and on Pender Street.

News from © The Canadian Press, 2015