THREE CITIES, THREE APPROACHES TO SELLING POT

From No-Go to Heavy Regulation, Options for Monitoring Pot Dispensaries

Santa Rosa, Vallejo and Oakland each take a different tack on medical
marijuana dispensaries.

Napa is considering whether to allow and how to regulate dispensaries,
and has declared a six-to nine-month moratorium on such operations as
it prepares to draft its own ordinance. Many cities and counties
across the state have gone before it, introducing ordinances that lay
out rules for dispensaries.

Vallejo does not allow dispensaries, since the city's municipal code
doesn't provide for such a use, said a city official. In Santa Rosa,
two dispensaries operate under tight controls, with limits on patients
and products.

Oakland requires potential marijuana entrepreneurs to undergo a
rigorous process before securing one of the city's four permits. Each
approach offers food for thought as Napa approaches the subject.

Vallejo

Vallejo's philosophy on medical marijuana is summed up in a
three-sentence bulletin the city issued on Jan. 21. It acknowledges
that collectives or cooperatives may be authorized elsewhere under
certain circumstances, but the city of Vallejo doesn't allow them.

Michelle Hightower, the city's acting planning manager, declined to
explain the city's position further. "My comment is exactly what this
document states," she said. "The dispensaries are not allowed or
permitted in the city because this type of use isn't allowed."

The policy hasn't stopped dispensaries from cropping up. Linda
Jimenez, secretary and treasurer of the Solano Patients Group, the
local chapter of the medical marijuana activist group Compassionate
Coalition, knows of two operating in Vallejo -- the only ones she knows
of in the entire county.

They operate without drawing attention to their locations and
advertise only in inner circles.

You really don't want to advertise, because you put a target on
yourself," said Jimenez, who is also chairwoman of the Compassionate
Coalition.

The one that Jimenez visited operates like a high-security pharmacy or
doctor's office. Security officers screen patients at the door to make
sure they have medical marijuana cards.

They wait in a room until they are called into another area of the
building, where someone fills their prescription only after checking
with their doctor.

"They're doing it by the book," she said.

As one of the sole operators in a city that Jimenez says doesn't
support them, she worries the dispensary will be raided.

Jimenez has filed suit against the county, arguing that the ban was
put in place improperly without public notice. She said she is
fighting for patients' rights.

"We're going to keep fighting," she said.

Santa Rosa

Santa Rosa's ordinance is a 16-page document that covers everything
from operating hours to patient limits and dispensary locations.

The city was mum on the issue until two dispensaries opened under the
moniker of "wellness centers" and became a focal point for problems,
said Noah Housh, city planner. In part because of their locations,
they seemed to draw break-ins and other crimes.

City officials took notice and drafted a law regulating
dispensaries.

The ordinance limits the number of dispensaries in the city to two,
limits the number of patients each can serve to 500, provides that no
operator should have a criminal record, details location restrictions
and spells out security measures each should take.

At Sonoma Patient Group, for example, security cameras blanketing the
premises record video and audio, said Dave McCullick, one of owners of
the dispensary.

Anyone who enters must be buzzed in. The marijuana is kept in a
500-pound safe within a "safe room."

"The ordinance gives us a lot of teeth as far as revocation their
approvals" should they not comply, Housh said.

Dispensaries have been careful because the permits are precious, he
said.

Housh believes the previous problems have stopped.

As for Santa Rosa residents, "Most of the citizens are supportive of
the use, but the specific locations can sometimes get a little
contentious."

The city established the two-permit limit with the idea that more
dispensaries might be approved someday. However, the second dispensary
never reached its 500-patient capacity and has closed, Housh said.

The city is processing another applications.

McCullick supports the idea of regulating the clubs, but feels Santa
Rosa has gone too far.

"Santa Rosa is probably one of the most restrictive ordinances I've
seen in the state," he said.

The rules limit the products dispensaries can sell to cannabis only.
Books, classes, massage, acupuncture and other services are off
limits, McCullick said.

He also takes issue with the 500-patient limit.

"We turn a lot of people away every month that we could be helping," he
said.

Sonoma Patient Group reaps about $1.6 million annually in gross
revenue. Half of that goes toward purchasing the product from patients
who grow marijuana. The rest covers operating costs.

McCullick estimates he could double that figure sans the patient
limit.

Since dispensaries must be non-profit, he would lower the prices if
his revenue went up.

The city is open to further conversation, but hasn't seen a need to up
the patient levels, Housh said.

We'll see how it goes once the other one gets up and running," Housh
said.

Oakland

Prior to 2004, Oakland had no controls on dispensaries. At least a
dozen opened under ambiguous names with zoning clearances for things
such as "hydroponics," said Barbara Killey, Oakland's administrative
hearing officer.

They became magnets for robberies, violence, illegal drug sales and
other problems, she said.

"The city council decided that we wanted to support the goals of the
medical cannabis state law, but do it in a way that was more
controlled," Killey said.

It drafted an ordinance setting a limit of four dispensaries and took
applications from a number of interested parties. Two lost their
permits within a year due to building code violations.

"We were pretty surprised that our initial occupants lost their
permits," she said. "It seemed like a pretty valuable right."

After that, the city refined the application, making it more
rigorous.

All applicants must take a test on city and state law, submit a
business plan and adhere to other requirements. Dispensaries must
offer other services besides medical marijuana, such as classes,
programs for indigent patients, massage and yoga.

"They're medical facilities; it only makes sense," she said. "If this
is not a pretense and we really believe there's medical value, then
they need to function as medical facilities."

The regulations seemed to work, Killey said.

"All the problems went away," she said. "They are probably some of the
safest locations in the city."

Oakland Police Department spokesman Jeff Thomason vouched that his
department has not seen any issues arise from dispensaries.

Steve DeAngelo, the executive director of Harborside Health Center,
was one of 11 applicants in the second round.

While he noted obtaining the permit was a rigorous process, he doesn't
think it is too restrictive.

"We are asking our citizens for a great deal of trust, which is, we are
asking our citizens to handle a controlled substance," he said.

As an operator himself, he frowned on the shadowy results before the
ordinance.

"When you don't regulate the industry, you have people entering the
industry that are comfortable with those gray areas," he said.

DeAngelo has sought to make his center operate with more transparency,
he said. When a patient comes in, the center validates that the
prescribing doctor is licensed and in good standing with the state
medical board. It also verifies the prescription.

Then, the patient signs an agreement to join the center's
collective.

The center acts as a clearinghouse between patients who can grow and
those who can't. Those who can are paid for their time and expense.

Security at Harborside is also extensive.

Guards roam the parking lots, looking for signs of illegal drug
trading, loitering and even loud music from cars.

Twenty-two cameras sweep the area and the watch is on 24 hours a
day.

There is a metal detector at the entryway, and fingerprinting
technology in a doorway leading from the public to private dispensary
area. This door keeps records that DeAngelo can review for the past 30
days.

In three years, Harborside has had only minor problems, DeAngelo said.
One was an attempted purse snatching that security personnel
interrupted. The other was a domestic violence dispute.

The center collects $20 million in gross sales annually.

It uses money above its costs to provide a variety of extra services,
such as a free seven-day-a-week holistic care clinic.

It also holds free "Grow Your Own Medicine" seminars every
Sunday.

When the economic downturn hit Oakland, center officials approached
the city about increasing their gross receipts tax from $1.20 per
thousand to $18 per $1,000, DeAngelo said.

The new rate translates to $360,000 for the city from Harborside. It
will go into effect the first of next year.

"I think that in the course of the three years we've been open, we've
been successful in establishing (a) new model of excellence," he said.

History of Legal Marijuana Use

California voters passed Proposition 215 in 1996, allowing people to
use marijuana for medical purposes. The Legislature followed with a
revision to the Compassionate Use Act in 2003, requiring medical
marijuana identification cards and setting limits on how much
marijuana each patient can possess.

While the 2003 law doesn't state outright that businesses are allowed
to sell marijuana, it contains provisions regarding cooperatives and
collectives. The difference is essentially that coops or collectives
can't make a profit. President Barack Obama's administration eased
concerns about prosecution under federal law when it announced it
would no longer target dispensaries that follow state law.