Pot shop owner wants City of Toronto to crack down on illegal dispensary next door

A licensed cannabis dispenser wants the city to do more to weed out illegal pot shops like the one that's operating openly just two doors down from his place.

'I'm losing money every day,' says Levon Kostanyan, owner of Lagoo

Levon Kostanyan, the owner of Lagoo, a licensed cannabis shop on Harbord Street in Toronto, wants the city to do more to crack down on illegal operations. (Mike Smee/CBC)

A licensed cannabis dispenser wants the city to do more to weed out illegal pot shops like the one that's operating openly just two doors down from his place.

"The City of Toronto needs to take some action," said a frustrated Levon Kostanyan Thursday while standing in front of Lagoo, his newly-minted cannabis store on Harbord Street west of the city's downtown core.

"There is a legal store that has all the licences that has all the products that are meeting Health Canada regulations. And there is a store next door that doesn't have any licence .. .and it's operating fully. It's affecting my daily sales."

But Carleton Grant, executive director of the city's municipal licensing and standards division, insists city hall is doing everything it can to crack down on the controversial CAFE chain of pot shops, one of which neighbours Lagoo.

"We're aware of CAFE and their operations," Grant said. "We've been working to close them down for the last number of years."

CAFE, which stands for Cannabis and Fine Edibles, is facing several charges under the province's Cannabis Control Act. The city won't discuss the charges while the issue is still before the courts. (Mike Smee/CBC)

City staff told CBC Toronto CAFE, which stands for Cannabis and Fine Edibles, is facing multiple charges under the Ontario Cannabis Control Act laid by bylaw enforcement officers in 2018, 2019 and 2020. All of the charges (the city wouldn't say exactly how many have been laid) are still before the courts.

"We're waiting for that court process to take place to deal with them accordingly," Grant said.

Kostanyan says it took a year and tens of thousands of dollars to get his shop renovated and the operation licensed by the Alcohol and Gaming Commission of Ontario. He finally opened about three weeks ago.

But he said he's "frustrated" watching potential customers walk by his shop and buy weed from the neighbouring, illegally operated CAFE outlet.

The head of the city's municipal licensing and standards division, Carelton Grant, disputes the idea that the city hasn't done anything to rein in illegal pot shops. (Greg Bruce/CBC)

And he wonders why the city could so quickly shut  down the Adamson Barbecue restaurant in Etobicoke last year for defying COVID-19 protocols, but seems powerless to control CAFE.

Grant said the two situations aren't comparable, because restaurants need to be licensed by the city, but pot shops are not. They operate under licences issued by the Alcohol and Gaming Commission of Ontario.

Although police technically can shut down an operation, Kostanyan said he was told by the city that the decision has been made to enforce the Cannabis Control Act by using the city's bylaw enforcement officers — not police.

Licensed pot retailers must buy their product from a Crown corporation called the Ontario Cannabis Store (OCS). Unlicensed operations do not, and often get their product from illegal suppliers, Kostanyan said.

Consequently, Kostanyan said CAFE can offer different varieties than are offered by the OCS.

CAFE has a controversial pedigree. It was opened by a pair of Windsor-area men — Jon Galvano and Wesley Weber —  in Toronto in 2016, and it soon grew to four outlets, mostly in the west downtown area — outlets that are still in operation.

The company has faced more than a dozen attempts by police and bylaw enforcement officers to shut down its stores. Officers would raid them and then weld the doors shut.

But not even huge cement blocks piled outside to block entry deterred the illegal locations 

"They were removed by the store owner in the middle of the night with their own equipment," Grant said.

The CAFE location at 104 Harbord St. was sealed off with concrete blocks by police and bylaw enforcement officers in a 2019 raid. Within hours, the company had removed them, city staff say. (Chris Glover/CBC)

Kendra Stanyon, a lawyer who has often defended pot shop owners over the last five years or so, said it could be some time before CAFE's charges are dealt with by the courts.

"Like any criminal case, that could take several months to well over a year, especially if they're not particularly motivated on their end to move things forward faster," she said of CAFE. 

But Stanyon also said the city could do more to crack down on CAFE.

"There are some mechanisms that allow it, especially if there are public safety concerns ... to go ahead and shut down the location," she said.

"And ... if the landlords haven't been charged, that could be a way to put some pressure on the organization." 

Landlords who permit their premises to be used by unlicensed cannabis retailers face "stiff fines," she said.

The unregistered pot shop CAFE, on the left, is just a couple of storefronts down from the legally operated Lagoo dispensary, on the right. (Mike Smee/CBC)

Grant said the city has been trying for years to stop CAFE's operations and now it's up to the justice system to do its job.

"We've gotten to a point where we need to rely on the court process to to deal with this."

Grant pointed out that convictions under the Cannabis Control Act carry fines of up to $250,000 for individuals and up to $1 million for corporations.

And he said the city has already managed to shutter more than 90 illegal operations in the past few years; about 10 remain, he said.

CBC Toronto offered CAFE an opportunity to speak about the controversy. It has not yet responded to our request.

With files from Zach Dubinsky


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