Well. think of it this way: Regina can still take out people’s hearts and crush them, etc., right? Which means that magic must exist. But maybe the only magic that will work in SB is magic that was enacted before the curse.
Or, maybe magic does exist in SB, and SB is like a world within a world (which it technically is). Maybe each character in SB actually has magic, but not the power to use it, because they don’t remember who they are, or the curse PREVENTS them from using magic, without really taking it away.
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