L.A. TARGETS CANNABIS CLUBS

LOS ANGELES -- Daniel Halbert moved here from Phoenix this year to
invest his life savings in what he hoped was a golden opportunity:
the medical-marijuana business.

But on Tuesday, the Los Angeles City Council told him to shut down
his dispensary, part of a broad crackdown against a growing and
unregulated marijuana industry. More than 600 dispensaries have taken
advantage of a loophole in city regulations to open shop here in the
past two years.

The unchecked growth has alarmed some city leaders.

"They were like a rash," said City Councilman Ed Reyes, who is
leading the effort to shut down many of the dispensaries. He said a
colleague told him that at one dispensary near a high school, the
student crowds outside made the pot store look "like an ice cream
shop from the 1950s."

The planning committee has begun hearings to close the loophole used
by dispensaries to set up shop with scarcely any paperwork or permits.

At the committee's first hearings last week, it told 28 dispensaries
to close or face a fine. This week, it was Mr. Halbert's turn.

California legalized marijuana consumption for medicinal use in 1996.

In 2003, the state established legal protections for
medical-marijuana users who were issued a doctor's prescription. The
law also created more solid legal footing for the cooperatives that
distribute marijuana for medical purposes.

Dispensaries, which had numbered just a handful until 2003, began to
grow statewide. By 2007, Los Angeles had 183 dispensaries.

That same year, the city attorney's office issued a moratorium
intended to block new establishments until the City Council created
regulations, such as a ban on operating near schools.

But the City Council never got around to setting any rules on the
dispensaries. Meantime, word begin to spread that dispensary owners
could open new outlets, despite the moratorium, by filing paperwork
claiming a so-called hardship exemption.

Some applications cited the raids by federal authorities targeting
marijuana dispensaries as hardships. In other hardship applications,
owners simply claimed they weren't aware they needed permits.

The hardship applications went unchallenged by the City Council, and
the number of dispensaries soared to its current level of about 800.
San Francisco, by comparison, has about 30 dispensaries.

Mr. Halbert joined the rush in March. He was running a dating service
in Phoenix when a friend pointed out an ad on Craigslist from Marc
Kent, a former attorney, offering to help people apply for the
hardship exemption for a $3,500 fee. He said he has helped people
open up more than 100 dispensaries.

"It was pretty much a turn-key operation," said Mr. Kent.

Mr. Halbert made three trips to Los Angeles and toured several
facilities that had opened under the hardship clause. "I did my due
diligence," he said.

He settled on a storefront on Venice Boulevard in West Los Angeles.

He registered the business as Best Buds, but later changed the
outlet's name to Rainforest Collective. He placed a clapboard sign
out front and advertised his services with a flashing neon sign in the window.

He decorated his shop with rainforest-themed murals. Clients could
select from an assortment of marijuana strains for smoking, as well
as "edibles" -- pretzels and cookies with the marijuana baked inside.
Total investment: close to $100,000, he said.

Mr. Halbert encourages customers to consume their marijuana on the
premises and lures them with such offers as movie nights. "We don't
want them to just come here and get their medicine," he said. "We
want them to come here and maybe make some friends, have some fellowship."

He said he now has about 1,000 customers, but declined to discuss how
much the shop makes. Mr. Halbert said he might try to fight the city
order to close and planned to stay open as long as possible. In his
hearing before the planning committee Tuesday, Mr. Halbert produced
letters of support from residents and local businesses.

Other neighborhood activists, however, have campaigned to shut down
the dispensaries.

Cindy Cleghorn, a member of a neighborhood council in a another part
of the city, complained her area is overrun.

"It's out of control," she said. Ms. Cleghorn said the new
dispensaries violate neighborhood-improvement guidelines and operate
in storefronts that are zoned for other uses. "It's not about the
marijuana, it's about the land-use issues," says Ms. Cleghorn, who
brought her complaints to the City Council.

But because so many dispensaries had opened up without resistance
from the city, Mr. Halbert said, "Any business person would assume
that the city's fine" with them.