TESTS FOR CALIFORNIA'S 'POT ECONOMY'

Medical Marijuana Booms In Cities Such As L.A., With Some Eyeing Its
Revenue Potential. But There's Pushback, Too.

LOS ANGELES - Sitting on a sofa in the gymnasium-sized Quonset hut of
the New Liberty Bell Temple, Daniel Reynolds puts his lips to a
plastic cone and breathes in marijuana vapor.

The vapor contains the active substance in cannabis that Mr. Reynolds,
a cancer patient, says "eases his pain."

The vast room also hosts a pool table, ping-pong table, video-game
monitor, and a stage for live music. In the back, a cubicle displays
Mason jars filled with green, leafy clumps. Customers pay between $25
and $55 per one-eighth of an ounce for different strains of marijuana,
marked "Humboldt Gold," "Black Africa," "Banana OG," and "NY Diesel."

Los Angeles's pot economy is booming. The number of medical-marijuana
dispensaries here has skyrocketed from 183 in 2007 to about 800 now.
In this period, pot shops have morphed from what Reynolds calls
"hidden, remote places with no signs or addresses" into listed and
public outlets. Many sport 10-foot signboards in the shape of a
marijuana leaf.

But as dispensaries have sprouted across this and other California
cities, they face pushback from local residents unhappy with their new
neighbors and officials concerned about inadequate oversight of a
novel business. Sacramento and Santa Cruz are considering moratoriums
on new dispensaries as they review regulation. In L.A., complaints
about robberies and drug abuse at the clinics prompted the city
council to shut down several hundred dispensaries over the past few
months.

Many of them had opened in spite of a moratorium on new dispensaries
because of a legal loophole that allowed them to operate pending an
application for exemption. On June 16, the city council enacted a
measure to eliminate this exemption.

"This is about the health and safety of those who need marijuana
dispensaries to treat conditions including HIV, glaucoma, and cancer,"
said Councilman Ed Reyes, who sponsored the measure. "This is also
about the health and safety of our communities to protect them from
nuisance operations."

Medical marijuana was legalized in California with a 1996 state ballot
initiative that made marijuana available by prescription to relieve
pain or nausea.

Federal law prohibits the use and sale of marijuana even for medical
purposes, and that seems unlikely to change soon. Nationwide, about
775,000 people were arrested for marijuana possession in 2007.
However, the Obama administration ended raids in states that have
legalized medical marijuana – one reason for the recent growth in
dispensaries in California.

In 2007, the Los Angeles Police Department (LAPD) expressed concern
about the rising number of medical pot sellers and called for a
moratorium pending new regulation. The absence of specific zoning
rules, officials pointed out, had resulted in a dozen dispensaries
opening within 1,000 feet of schools. One dispensary had slipped
fliers on the windshields of cars parked outside a high school, the
LAPD said.

The dispensaries are "targets for people who want to come in and rob,"
says Lt. Paul Torrence of the LAPD's Gang and Narcotics Division,
"because they know there is lots of cash around and security is
limited because they like to keep a low profile."

On their part, dispensaries including the Rastafarian New Liberty Bell
Temple counter that they are unnecessarily harassed on trumped-up complaints.

Some neighbors have also questioned whether some of the young and
apparently healthy people they see walking into the dispensaries or
lighting up outside them are really ill. Lieutenant Torrence echoes
this concern. "[T]his is a way for people to grow medical marijuana
and make serious money," he says.

Still, polls show American public attitudes toward marijuana have
changed over time. In 1979, just 27 percent of Americans favored
legalization of marijuana, according to a a CBS/New York Times poll.
In a July 13, 2009, CBS poll, that figure had gone up to 41 percent.

"Five years ago, my mom would have been openly hostile to my smoking
marijuana," says Reynolds, the customer at New Liberty Bell Temple and
a registered process server. But at a recent lunch, she asked him if
he had considered getting a marijuana prescription to help with his
cancer.

Despite "the huge public support, politicians are worried about their
political liability amongst both colleagues and voters," says Paul
Armentano, deputy director of the National Organization to Reform
Marijuana Laws. He notes that 13 states have medical marijuana laws
exempting patients from arrest and criminal prosecution, but only
three – Hawaii, Rhode Island, and Vermont – enacted the laws through
the legislature.

More states will legalize medical marijuana, say many observers.
Nudging the issue forward are budget-crunched states such as
California, which could take in as much as $1.2 billion annually from
taxing marijuana sales. An April Field Poll showed that 56 percent of
California residents favor taxing and regulating marijuana.

Oakland became the first city in the nation to tax marijuana last week
when voters voted "yes" to such a tax.

"[T]he culture is changing, and it's not considered the evil weed once
portrayed in movies like 'Reefer Madness,' " says Robert Pugsley, a
specialist in marijuana legislation at Southwestern School of Law in
L.A. "The state will want to tax it and regulate it as a product like
cigarettes and get revenue out of it. Maybe even cities would add
their own surcharges," he adds.