CHIEF: NO MARIJUANA DISPENSARY IN GILROY

Police Chief Denise Turner rejected an application Tuesday to open the
county's first medical marijuana dispensary in Gilroy, claiming the
business violates state law.

The dispensary would not meet state restrictions because it would not
be members-only and it could reap a sizable profit, Turner said in her
written rejection. However, the owners of the proposed business, Batzi
Kuburovich and Neil Forrest, said the letter amounted to a
misunderstanding of state law and seemed politically motivated.

"We're going to let the lawyers work it out," Forrest said Thursday
evening, referencing his team's Oakland-based marijuana lawyer James
Anthony. Forrest said the lawyer told him that Chief Turner either had
"prejudice" or "marching orders" from someone else given the fact that
medical marijuana is allowed - tacitly or overtly - at the state and
local level, but prohibited at the federal level and not addressed at
all on the county or local level.

In her letter, Turner said the state Attorney General has interpreted
California law as to allow only medical marijuana to be sold by
cooperatives or collectives that provide medicinal care - not
businesses that sell marijuana to prescribed residents, as dozens of
dispensaries throughout California already do.

"Like a cooperative, the collective should not purchase marijuana
from, or sell to, non-members; instead, it should only provide means
for facilitating or coordinating transactions between members," Turner
wrote. "Clearly, you could not be a primary caregiver for all of the
proposed members of the enterprise."

"I'm not even sure what she's referring to," Forrest said, adding that
he and Kuburovich have since signed a lease downtown at 7581 Monterey
St. near Fourth Street - next to Pinnacle Bank - instead of their
original location at 1207 First St. near Togo's and First Street Coffee.

"We feel at this point we're in compliance, and when we were designing
our application, we actually went back to change things based on
statements from the Attorney General."

Kuburovich and Forrest, who are Morgan Hill real estate professionals,
submitted their application in May.

Dispensary proponents, including many Gilroy residents, say the
business will decrease street-level sales and associated crime while
providing a service to people with debilitating ailments. They also
point to statistics from cities with medical marijuana businesses that
show crime trends have not seen any major increases since those
businesses opened. However, opponents argue crime will increase and
that residents will feign symptoms to obtain prescriptions so they can
sell the drug on the streets.

From small, agrarian-based cities like Tulare to metropolitan areas
such as Los Angeles - where more than 200 dispensaries operate in the
greater area - law officials, backed by federal statistics, said they
have not noticed an uptick in crime associated with the shops since
Californians approved medical marijuana in 1996.

California law allows the possession and cultivation of medical
marijuana for people with proper prescriptions, but federal law views
the drug as illegal no matter what. Neither Santa Clara County nor
Gilroy have any legislation on the books, but local council members
said they were disinclined to create a Gilroy ordinance in the absence
of any residential outcry. Staff also has the option to hinge any
approval on operating conditions similar to those liquor stores must
abide by.

Currently, residents who have legitimate prescriptions have to drive
to Redwood City, Millbrae, Oakland, San Francisco or Santa Cruz to
purchase medical marijuana, which dispensaries buy from private,
licensed growers who usually sell a pound for $3,500 to $4,000,
Kuburovich said. A store-bought ounce, in turn, goes for about $400 -
or about $6,400 per pound - excluding the extra $37 per ounce for
taxes. Any profit will pay off overhead, said Kuburovich. Legal
marijuana comes in all types, similar to tea, and are typically
bottled in orange plastic vials.