RECESSION THREATENS TO BURN OUT POT CLUBS

SAN FRANCISCO - One might guess that tough economic times would only
fuel the desire for mind-altering substances. For San Francisco's
cannabis clubs, however, nothing could be further from the truth.

The deepening economic crisis has hit the dispensaries hard, forcing
the nonprofit collectives to cut staff, business hours and donations
to charities.

Charlie Alazraie, manager of Bay Area Safe Alternatives, said
business has dropped about 60 percent since summer, as the economy
forces patients to buy smaller quantities. Alazraie had to let go of
one full-time employee and two part-time workers at the small
Western Addition collective.

Also halted were donations to soup kitchens and low-cost health
clinics that serve many of BASA's patients. The previously
profitable collective was hit with a penalty last quarter after
paying their sales tax late for the first time.

"This year we're going to be so much in the red, I don't want to
find out. I know it's going to be ugly," Alazraie said. "We're in
arrears with our vendors, with architects, with everything."

The collective has always had a commitment to provide free medical
marijuana for those in impossible situations - people who are
critically ill and living in poverty were subsidized with money set
aside from sales. In the past, the number of people who qualified
hovered around 36. Today, there are 60.

The recession hit right after many San Francisco pot clubs had spent
tens of thousands of dollars to comply with legislation passed in
2005 requiring them to meet city permit regulations.

Kevin Reed, founder of the Green Cross, which delivers medical
marijuana to patients in San Francisco, said his sales are down 25
percent in the past 40 days, and dropped 45 percent in the past two weeks.

To survive, the collective cut its hours and cut its 12 employees'
pay by $2 an hour.

"It's amazing to me," Reed said. "It's an industry I never thought
could be affected."

Reed said he thought marijuana would be a recession-proof product,
much like alcohol.

"I always heard that if the economy went bad, people would be
depressed," he said. "The whole theory got blown out the window for me."

The cost of the pot hasn't risen, but the $300-an-ounce price tag
has become a heavy burden for people who have lost their jobs and
cut back on expenses. Insurance does not cover medicinal marijuana.

"The only busy day we've had in the past 40 days is when we offered
a one-third off discount for veterans," Reed said. "It seemed like
half the veterans in the state signed up."

Green sector

The recession is weighing on medical pot sales in The City.

30 Known medical marijuana dispensaries (clubs and delivery
services) in San Francisco

2 Known medical marijuana dispensaries (clubs and delivery services)
in San Mateo

$103 Cost of state medical marijuana card

$300 Approximate cost of an ounce of medical marijuana

Sources: San Francisco Health Department, The Green Cross,
sanfranciscocannabisclubs.com