Cities Divided Over Pot Dispensaries

September 21, 2011

Bobby White, Wall Street Journal

A growing number of Bay Area cities including Danville and San Bruno recently banned their medical marijuana dispensaries, even as towns like Oakland and San Jose explore growing their marijuana business to boost city revenues, highlighting the murky terrain of marijuana policy for California municipalities.

Samples of medical marijuana are displayed at Harborside Health Center, a dispensary in Oakland.

Danville and San Bruno, which both banned dispensaries in the last two months, join at least 20 other towns in the region that have instituted such bans since 2004, according to data from marijuana advocacy group Americans for Safe Access. Citing incidences of crime and the difficulties of regulating operations, the cities opted for bans rather than implementing regulations that would restrict locations of dispensary operations and quantities of pot sold.

"We didn't see a compelling need [for the dispensaries] within our community," says Connie Jackson, San Bruno's city manager, of the town's August ban. "We studied the issue and felt there was sufficient availability and opportunity to acquire marijuana in neighboring cities."

The bans come as San Jose last week said it would allow 10 dispensaries to operate in the city and as Oakland moves to increase its dispensaries from four to eight.

In San Jose, all of the city's more than 100 pot dispensaries operated illegally, officials say, before the city began taking steps last week to close them down. San Jose Mayor Chuck Reed says the city intervened to provide oversight to marijuana operations and to ensure tax obligations were being met. Currently, 70 of the dispensaries pay taxes totaling about $300,000 a month. After initially curtailing the number of dispensaries, the city expects to gradually allow more to open.

Sue Piper, a spokeswoman for Oakland mayor Jean Quan, declined to comment on the city's medical marijuana dispensaries. In July, Oakland voted to increase the number of dispensaries in what it said was an effort to generate more tax revenue. The city also bumped up the cost of a dispensary permit from $30,000 to $60,000; the permits are now available.

The divergent approaches showcase the confusing nature of marijuana policy in California. Many Bay Area cities that have instituted dispensary bans are following federal law, under which marijuana is illegal, instead of state law, where the voter-approved Proposition 215 in 1996 allowed medicinal use of the drug.

In recent years, state lawmakers have built off Proposition 215 by passing more laws that established marijuana dispensaries, among other things. The Justice Department has signaled that it generally won't prosecute people who are in compliance with state marijuana laws. At the same time, federal authorities have pressured local leaders to back off plans to expand marijuana production.

Last year, for instance, Oakland's City Council attempted to launch large indoor pot farms capable of delivering as much as 20 times the amount of marijuana currently cultivated for dispensaries in the city that are in compliance with state law. But U.S. Attorney Melinda Haag for the Northern District of California warned that the farms violated federal law and said city council members could be subject to criminal prosecution if they proceeded with the expansion. The city soon dropped its plans.

In Isleton, a rural town 40 miles south of Sacramento, officials also had hoped to institute large pot farms last fall. But U.S. Attorney Benjamin Wagner in May warned the effort could result in prosecution of Isleton city council members. The city abandoned the effort.

"It seems like the legislature purposefully left many of the state's marijuana laws vague, leaving it to the courts to interpret," says Joe Elford, an attorney with Americans for Safe Access, which is based in Oakland.

Several cases wending their way through Southern California courts could rewrite some of the policies instituted by Bay Area cities to prohibit marijuana dispensaries, says Mr. Elford. In Anaheim, city leaders are fighting a lawsuit from marijuana advocates challenging their 2007 dispensary ban. Last August, an appeals court sent the case back to Orange County Superior Court, ruling the lower court couldn't dismiss the case on the grounds that federal law trumps local laws governing marijuana.

Some medical marijuana dispensaries say they won't comply with the bans. In East Palo Alto, the city enacted a ban on dispensaries last month. But Willie Beasley, founder of marijuana dispensary Peninsula Caregivers Collective there, says he plans to stay in business.

Mr. Beasley says he opened his medical marijuana dispensary in June after purchasing a land use permit and receiving reassurance from some city leaders that the business was welcomed. Now, he says, "we got a raw deal."

Valerie Armento, interim city attorney for East Palo Alto, says the city never granted permission for the dispensary to open and adds that Mr. Beasley's operation is illegal.

"We want it to close immediately," she says.

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