In February 2022, an inspector with the City of Vancouver arrived at a business to find a sign outside reading “mushroom dispensary, psychedelics, coca leaf, kratom, peyote, LSD, DMT.”

Inside the Medicinal Mushroom Dispensary at 651 East Hastings Street, the inspector saw a counter with a sign that said “Coca Leaf Café,” with more signage advertising drinks and a warning that coca use can result in a positive drug test. Another sign read, “No minors.”

The inspector estimated that 90 to 95 per cent of the business was related to the “mushroom side.”

He also obtained a “membership application for the medicinal mushroom dispensary” and ultimately concluded that the business was “operating an illegal mushroom dispensary where substances containing psilocybin were being sold.”

A sign advertising the dispensary’s wares is seen on Tuesday, Aug. 27, 2024. (Ben Nelms/CBC)

These details are laid out in a recent B.C. provincial court decision which found the director of the business guilty of a bylaw offence.

However, Judicial Justice Aamna Afsar also found the City of Vancouver had failed to establish that the business sold or offered to sell products containing psilocybin — the psychoactive compound found in magic mushrooms.

“I think it’s fantastic and we were really hoping for this kind of victory,” said Medicinal Mushrooms Dispensary owner and spokesperson Dana Larsen.

Lawyers involved in the case say it highlights Vancouver’s “murky” fight to shut down suspected mushroom dispensaries, coming on the heels of police raiding that same business and two others last year only to see them reopen. 

“There’s an argument to say that what they’re doing is regulating criminal law, which the municipal government is obviously not entitled constitutionally to do,” lawyer Jack Lloyd, who specializes in drug cases, told CBC News.

The city did not respond to a request for comment by publication.

A judicial justice found ‘insufficient evidence’ proving the business was selling psilocybin. (Ben Nelms/CBC)

‘Cease operating as a mushroom dispensary’

The Medicinal Mushrooms Dispensary was raided by the Vancouver Police Department in November 2023, along with two other businesses, with police saying at the time they seized a “variety of controlled substances.” Owner Dana Larsen was later released with no charges and no conditions. The business is still in operation.

Now, Cindy Heemeryck, director of the Strathcona Tea Society, which runs the shop, has been found guilty of the unauthorized use of premises. She’s scheduled for a sentencing hearing in November.

Afsar found she breached a March 8, 2022, order requiring it to “cease operating as a mushroom dispensary and to remove all materials related to the dispensary within 14 days.”

The business was operating under a Limited Service Food Establishment (LFSE) licence at the time.

The order referenced the federal Controlled Drugs and Substances Act’s prohibition of products containing psilocybin, that the sale of psilocybin products is not permitted in the City of Vancouver, and that a mushroom dispensary is not an approved use in the city.

A sidewalk sign outside 651 East Hastings Street in Vancouver advertises a medicinal mushroom dispensary with the words, expand your mind. (Ryan McLeod/CBC)

The inspector came back to the business at the end of the month to find it “continued to operate in the same fashion” as it did in February, the judicial justice said.

The inspector then came back in February 2023 to also find that changes were not made, according to the court decision.

‘No evidence to support a contravention’

Heemeryck’s lawyer and a lawyer for a numbered company that owns the building that houses the shop argued that the business was at all times operating within the parameters of the LFSE license, saying “there is no evidence to support a contravention of the terms of the licence.”

They argued that because the business operated with a licence and valid permit, the inspector’s March order was “invalid,” according to the judgment.

But Afsar said “a reasonable and lawful course of action is not to simply ignore the orders and continue operations because you disagree with the orders.”

The judicial justice equated it to someone getting a driving prohibition, disagreeing with it and continuing to drive without challenging the prohibition through proper channels.

The City of Vancouver argued it didn’t have to prove that whatever was being sold or held was a controlled substance. It said the inspector’s observations while being at the store were enough. (Peter Scobie/CBC)

City’s argument ‘deeply problematic’: lawyer

However, Afsar found “insufficient evidence” proving the business was selling psilocybin.

There was no evidence to show that the city inspector “purchased, tried or seized any of the products and had them tested to confirm their contents,” Afsar said.

“He acknowledged he could not identify whether a mushroom contained psilocybin.”

Afsar also found no evidence that the inspector had any discussions with customers or employees about whether illegal substances were being sold.

A sign outside Dana Larsen’s mushroom dispensary store tells customers police raided the store on Nov. 1, 2023. (Ben Nelms/CBC)

The city argued it didn’t have to prove that whatever was being sold or held was a controlled substance. It said the inspector’s observations while being at the store were enough.

“It is possible that the mushrooms being sold included illicit substances like psilocybin or psilocin; it is even likely. However, a possibility or a probability does not meet the standard of proof,” said Afsar.

Kirk Tousaw, who represented the numbered company in this case, called the city’s argument “deeply problematic,” noting that the city doesn’t have jurisdiction to enforce the Controlled Drugs and Substances Act.

“At the end of the day, it’s a criminal matter, and you have to prove things beyond a reasonable doubt. The city failed to do that,” he said.

Heemeryck’s lawyer agrees, saying Afsar’s decision will serve as a “blueprint” if allegations or charges around selling psilocybin arise in the future.

“It outlined a very sensible and, in my view, legally correct evidentiary burden of proof position,” Lloyd said.