VENDOR'S REEFER SADNESS

San Francisco -- Kevin Reed launched his medical marijuana business
two years ago, armed with big dreams and an Excel spreadsheet.

Happy customers at his Green Cross cannabis club were greeted by "bud
tenders" and glass jars brimming with high-quality weed at red-tag
prices. They hailed the slender, gentle Southerner as a ganja good
Samaritan. Though Reed set out to run it like a Walgreens, his tiny
storefront shop ended up buzzing with jazzy joie de vivre. Turnover
was Starbucks-style: On a good day, $30,000 in business would walk
through the black, steel-gated front door.

Today, the 32-year-old cannabis capitalist is looking for a job, his
business undone by its own success and unexpected opposition in one
of America's most proudly tolerant places. Critics in nearby
Victorian homes called Reed a neighborhood nuisance. Although four of
five San Francisco voters support medical marijuana, the realities of
dispensing the contentious medicine have proved far more controversial.

It has been 10 years since California approved Proposition 215 -- the
Compassionate Use Act -- becoming the first state to define marijuana
as a medicine. The 389-word act aimed to ensure seriously ill
Californians the right to use marijuana. But it said nothing about
how they might get the drug -- and left ample regulatory ambiguity.

Today, about 200,000 Californians have a doctor's permission to use
cannabis, which they can obtain through more than 250 dispensaries,
delivery services and patient collectives -- 120 of them in Los
Angeles County alone. Medical marijuana, activists say, has become a
$1-billion business.

There's been plenty of blowback. Local governments have been
grappling with how to regulate storefront sales, still prohibited
under federal law despite California's tolerance.

Though two dozen cities and seven counties -- including Los Angeles,
Riverside and Santa Barbara -- have approved regulations allowing
dispensaries, more than 90 others have passed moratoriums on new
suppliers or banned them outright. Earlier this month, a Superior
Court judge rejected a challenge to the medical marijuana law by
Merced, San Bernardino and San Diego counties.

FEW in the medical marijuana business have seen as steep a commercial
rise and fall as Reed.

He got into the marijuana business by accident -- literally.

Reared outside Mobile, Ala., he was a skinny country boy who never
got past ninth grade, the gay kid in a family of rednecks. An auto
wreck at 18 left him gimpy and in enough chronic pain, he says, to
try cannabis for relief.

Reed eventually took to smoking a dozen joints most days. He moved to
the Bay Area in the mid-1990s, along with the official arrival of
medical marijuana.

Dennis Peron, the author of Proposition 215, ran a hip, high-profile
cannabis buyers' club that was part speak-easy, part Haight-Ashbury
hangover. Support for medical marijuana was de rigueur for
politicians and residents.

Scraping by on an office manager job, Reed tried cultivating his own
cannabis under grow lights in his cramped apartment. He never managed
much of a crop, but he did attract attention -- he thinks from the
off-duty cops who frequented a restaurant nearby. Police busted his
operation and tore out 33 plants. Only a friendly pro bono attorney
kept Reed out of jail.

Reed says he launched Green Cross to make his medicine affordable. In
the South, he had sold mobile homes and run an electric-appliance
repair business and a truck stop cafe. Marketing medical marijuana,
he figured, wouldn't be much different.

Flanked by a hairstylist and an Irish bar, the 300-square-foot club
opened in July 2004 in a neighborhood called Fair Oaks. Located
between the Mission District and Noe Valley, it is a place where
blue-collar families mix with urban professionals pushing strollers.
The main street closes to traffic on Halloween for trick-or-treaters.

Reed thought Green Cross would fit in because it would be easygoing,
natty, safety-conscious and hip, just like him.

The outside was marked by a neon-green cross. At the door, security
checked each patient for medicinal bona fides: a doctor's written
permission or the city's formal medical cannabis ID card. The
blush-red interior rocked with music videos on a plasma TV. Reed's
prices -- $40 for one-eighth of an ounce -- were two-thirds what
other clubs charged.

He offered 55 varieties of raw weed, purchased on consignment from
patients who grew more than they needed. Shark Shock, Ogre, Queen
Kong, Hindu Kush -- an information sheet listed taste, ailments
assuaged, type of high (including "muscle relaxer," "great mind
drift" and "couch lock"). A pastry chef concocted marijuana-laced
peanut brittle, cannabis cookies with Ghirardelli chocolate chips,
pot peanut butter.

Reed dutifully kept his records on QuickBooks, paid employee health
insurance and nearly $200,000 a year in taxes. He lived in an
apartment and drove an aging Miata.

He wasn't getting rich, Reed insists -- just medicated.

"I would rather just go buy it at a regular drugstore," he says. But
for now, "places like mine have to exist, or you're literally forcing
people to go to crack dealers on the street."

Reed developed a devoted following, including AIDS patients and folks
with chronic aches.

Robert Mars, balding and middle-aged, made the drive from Foster City
to buy cannabis for his persistent back spasms. He liked the
knowledgeable staff, but more than anything felt "safe in going
there," Mars said. "And I can't say that about every dispensary in the city."

FAIR Oaks locals, most of them believers in medical marijuana, at
first were laid back about the little pot shop. But feelings hardened
as customers flocked in.

Reed says his big mistake was revving up business with a newsweekly
ad offering a half-off special. Pot patients arrived from across the
Bay Area, many bereft after a dispensary crackdown in Oakland's
downtown "Oaksterdam."

Residents compared the revolving door of 300 daily patrons to a
beehive on a sunny afternoon. They grumbled about customers
double-parking, blocking driveways, flipping off homeowners. Aromatic
smoke wafted. When Green Cross hired security guards to referee
parking conflicts, problems simply moved up the block.

Neighbors watched some youthful customers emerge and share their
wares with friends, high-fiving all around. A few reportedly harassed
some eighth-grade schoolgirls. One patient was robbed at gunpoint.
Crime worries grew.

"I saw people coming up on bikes and skateboards, with backpacks,
healthy-looking young men," said Dr. Charles Moser, a physician who,
like many in Fair Oaks, voted for Proposition 215.

Neighborhood critics said they were all for cannabis compassion, but
not this free-for-all. Proposition 215 encouraged government planning
for safe and affordable distribution, but it didn't mention pot clubs.

"No reasonable person would have gathered that they were voting on
setting up marijuana stores back in 1996," said Mark A.R. Kleiman, a
professor of public policy at UCLA.

The courts and state lawmakers, however, have come to tacitly support
the role of the dispensaries. A 2003 legislative measure added a bit
of clarity to the Compassionate Use Act, underscoring that a
patient's primary caregiver could be paid to supply pot. In 2005, a
state appeals court decreed that a dispensary could use the expanded
rules in a criminal defense.

Activists have interpreted the ruling to mean a dispensary can serve
as a de facto primary caregiver. "You simply can't expect a patient
who is undergoing chemotherapy to go find a seed and grow their own
medicine," said Steph Sherer of Americans for Safe Access.

As for complaints about the robust appearance of some customers,
activists say looks can be deceiving. Often, they say, healthy
caregivers are picking up cannabis for the very sick. And even
seriously ill people can appear outwardly healthy. Bruce Mirken of
the Marijuana Policy Project cited TV host Montel Williams, who uses
cannabis to control his multiple sclerosis: "Turn on the TV. Does he
look sick?"

Before Green Cross celebrated its first anniversary, the neighborhood
hubbub began attracting attention at City Hall. San Francisco
regulators suspended the dispensary's permit, ruling it a
neighborhood nuisance, but let Green Cross remain open while Reed appealed.

The fight played out in September 2005 at a marathon evening hearing
before the city's Board of Appeals.

A parade of moms, a nun and several schoolteachers voiced support for
medical marijuana, but not a dispensary in their neighborhood.
Residents griped about traffic, noise and crime. "It is an
unfortunate fact," said a mother of three, "that a percentage of
Green Cross patrons are criminals" intent on resales.

Green Cross activists packed the hearing too, offering testimonials
about the dispensary's fair prices, professional staff, safe
atmosphere and medicinal value. "It's not like we can go to Walgreens
and say, 'Hey, we want generic,' " said Melody Gannon, a Montessori
teacher and mom.

The board gave Green Cross six months to find a new home.

MEANWHILE, complaints piled up at City Hall about the ballooning
number of clubs. An ex-con had opened one. Another sprouted in a
welfare hotel full of recovering addicts.

Under growing pressure, supervisors approved new regulations.
Operators would undergo background checks. Dispensaries would be
prohibited within 1,000 feet of schools and parks. They drew up a map
outlining a patchwork of "green zones" for dispensaries, with 90% of
the city off limits. Reed's Green Cross -- the first to run the
gantlet of new rules -- became "the acid test," Supervisor Ross Mirkarimi said.

The search for a new home proved daunting. A real estate agent
produced no leads, so Reed hit the streets with 15 volunteers,
looking block by block.

This past March, the hunt looked hopeless. Then, only a day before he
was to shut down in Fair Oaks, Reed got a call from a patient about a
willing landlord. The catch: The location was a couple of blocks from
Fisherman's Wharf.

By summer he'd spruced up what had been an old cafe, installing
neon-lighted display cases and high-tech security cameras.

Neighborhood opposition was swift and nearly unanimous.

At get-acquainted meetings, residents and business owners shared
coffee with Reed but politely explained they couldn't support a
marijuana shop. Newspapers and TV stations, meanwhile, played up the
whimsy of pot being dished up alongside the sourdough and chowder of
Fisherman's Wharf.

"I voted for [Proposition] 215, like many people," said Christopher
Martin, president of the Cannery Properties Inc. "But this has been
forced into the community. We responded the same as we would have if
it was a Jack in the Box."

Reed's final stand came in late October, before the same Board of
Appeals he had addressed a year earlier.

In a suit and tie, he huddled at the edge of a packed audience as
Green Cross attorney Joe Elford pleaded his case. Reed had slaved to
meet all of the requirements, the attorney declared. The outcome for
Green Cross, he said, would set the tone for the future of
dispensaries in San Francisco.

Once again, residents and business people talked of trampled
community character, threats to schoolkids and proximity to
government housing. Many wore red tags that read "Families First."

After a break, the board expressed its condolences to Reed before
burying his career as a dispensary entrepreneur.

Commissioner Michael Garcia concluded that if progressive San
Francisco couldn't figure out a way to distribute medical marijuana
without opposition, "this might not happen anywhere." Then he voted
against Green Cross.

Outside the hearing room, cannabis partisans lamented.

"Well, disappointed yet again," Reed said. "This is going to cause
havoc. There's no place for us to go."

But it seems City Hall can't keep a medical marijuana entrepreneur
down. A few weeks ago, Reed wrote Mayor Gavin Newsom, asking for the
return of $10,000 in permit fees paid during the course of his long fight.

It would, he said, be seed money for his next venture. This time,
Reed is skipping the storefront. He wants to go whole hog into the
medical marijuana delivery business.