  In a previous work, a straightforward canonical approach to the source-free
quantum Chern-Simons dynamics was developed. It makes use of neither gauge
conditions nor functional integrals and needs only ideas known from QCD and
quantum gravity. It gives Witten's conformal edge states in a simple way when
the spatial slice is a disc. Here we extend the formalism by including sources
as well. The quantum states of a source with a fixed spatial location are shown
to be those of a conformal family, a result also discovered first by Witten.
The internal states of a source are not thus associated with just a single ray
of a Hilbert space. Vertex operators for both abelian and nonabelian sources
are constructed. The regularized abelian Wilson line is proved to be a vertex
operator. We also argue in favor of a similar nonabelian result. The
spin-statistics theorem is established for Chern-Simons dynamics even though
the sources are not described by relativistic quantum fields. The proof employs
geometrical methods which we find are strikingly transparent and pleasing. It
is based on the research of European physicists about ``fields localized on
cones.''
