CITY WITHHOLDS PERMITS FROM CANNABIS CLUBS

Ordinance Dooms Thriving Businesses In Oaksterdam Area

Oaksterdam is on its deathbed.

Oakland's once-bustling downtown enclave of medical marijuana clubs is
about to disappear -- less than a year after it earned its nickname --
after city officials refused last week to issue permits to several popular
establishments.

"All that you see around us will be gone," Jeff Jones, executive director
of Oakland Cannabis Buyers Cooperative, said Monday. "They're shutting
almost everyone down, and I don't think that's good for the patients. I'm
glad the city is involved in regulation, but it's also driving away
businesses that could be paying revenue" to the city.

Most of about a dozen cannabis enterprises in the city, including four in
the 1700 block of Telegraph Avenue, are being forced to close or stay open
as cafes -- without selling marijuana -- or risk the wrath of Oakland
police. The closures began June 1 when a new ordinance took effect.

In February, the Oakland City Council adopted an ordinance allowing the
city to regulate marijuana clubs and limited their number to four. The
ordinance requires that no marijuana dispensary be located within 1,000
feet of another.

Club operators, customers and advocates of medical cannabis had hoped the
city would allow more of Oaksterdam's clubs to remain open.

"It's been very confusing," said Richard Lee, who owned two cannabis clubs
in downtown Oakland -- the SR71 Cafe on 17th Street and the Bulldog Coffee
Shop at 1739 Broadway.

Lee said city officials told him on May 29 that he would receive a permit
to keep selling marijuana at the Bulldog but not at SR71. Then last week,
he found out he could only sell medical marijuana at the smaller cafe, SR71.

"I've operated the Bulldog for five years, and I think we've provided a
good service for people," Lee said.

Oaksterdam was born, medical marijuana advocates say, as a result of
government's mixed response to voter approval of Proposition 215 in 1996.
While local governments have supported medical marijuana in concept, the
advocates say, they have done little to regulate how patients get their
medication -- which is still illegal under federal law.

After the measure was passed, Jones opened the cooperative in the 1700
block of Broadway to provide patients with medicinal marijuana. A federal
injunction forced him to shut in 1998. Since then, his group has aided
patients by issuing city-sanctioned ID cards and making referrals to pot
clubs that filled the void.

By last fall, 10 to 12 clubs were operating in a stretch of downtown from
14th Street to Grand Avenue.

City officials grew concerned that the northern edge of downtown, which is
a redevelopment area where major projects are planned, was becoming
dominated by marijuana clubs. The council also agreed the city needed to
regulate the medicinal sale of marijuana.

Some clubs, such as the Bulldog and Lemon Drop cafes, are visible from the
street and cater to marijuana users and non-patients. Others, like the
Compassionate Healing Center, are low-profile and unknown to anyone but
their clients.

The three surviving clubs will have to pay the city about $20,000 in fees
and permit costs to remain open. They are:

- -- Compassionate Healing Center at 578 West Grand Ave.

- -- SR71 Cafe on 17th Street near Franklin Street.

- -- California Access Relief Exchange (CARE) at 1900 Telegraph Ave.

The city is authorized to issue four permits, although city officials were
not available Monday to discuss whether they would issue the final permit.

"I'm looking to revisit this," said Councilwoman Nancy Nadel, a supporter
of the ordinance whose district includes Oaksterdam. "I'd like to see if we
can issue permits to allow more clubs to stay open."

Medical marijuana advocates said that by forcing Oaksterdam to split up,
the city is destroying a unique culture that brought visitors and money to
benefit Oakland's often derided downtown.

"There are a half dozen clubs within a short walk of the 19th Street BART
(Station), and that's great for patients," said Dale Gieringer, California
coordinator for the National Organization for the Reform of Marijuana Laws.
"The city has a great thing and doesn't appreciate it. They are forcing
thriving businesses to close."