STIRRING THE POT

Purple Cross Rx vacates downtown dispensary location, opens new
facility across from Hollister Airport

Calling it another "strategic move" in his effort to gain approval to
operate his medical marijuana dispensary in Hollister, Scott McPhail
recently moved Purple Cross Rx from its downtown location and now
rents a 4,000-square-foot building across the street from the
Hollister Airport.

The city had sued McPhail and his landlord in an effort to get the
dispensary to move from its 335 San Benito St. location - and figured
the tactic worked when McPhail closed the shop one week before the
matter was set to go to court last week.

Unbeknownst to City Attorney Stephanie Atigh, who dismissed the
lawsuit when Purple Cross pulled up stakes, McPhail recently moved the
dispensary's offices and his music label - Felony1 Records - to 1785
San Felipe Road, the former location of the Dance Factory.

"It was a strategic move to step away from that building and it
worked," said McPhail, who recently opened up another medical
marijuana dispensary in Los Banos and has plans for five more
locations, including spots in San Jose, Colorado and Michigan, to open
within the next month or two.

McPhail is renting the Hollister and Los Banos buildings from former
San Benito County Supervisor Richard Scagliotti, who said Tuesday that
the lease agreement for the Hollister location only allows the record
company, not Purple Cross, to operate there.

"He did move his music business there; that's the only use,"
Scagliotti said. "He said he's not going to mess around with the
Purple Cross there."

Scagliotti added that McPhail and the city have to "settle their
issues" before Scagliotti would consider letting Purple Cross dispense
medical marijuana from the San Felipe Road site. If an agreement was
reached, "he has to come back to me and we'd have to look at it," the
landlord said.

Asked about the Los Banos location, Scagliotti said that if McPhail is
challenged by that city as he was in Hollister, "he's going to have to
close down."

McPhail said he plans to ask the Hollister City Council to reconsider
its ordinance banning medical marijuana dispensaries before
considering his next move.

By switching landlords and changing his company from an unincorporated
nonprofit to an incorporated one, McPhail said he believes the city
would have to file another lawsuit against this new entity and
Scagliotti, tying the matter up in court once again.

"It locks it up in court and my attorneys are able to keep us open,"
he said. "It's not like we have to close down. I operated for eight
months before my first court date. It's a slow process because I'm
operating within my rights."

McPhail said that while patient walk-ins are not yet allowed at his
new facility as they were at the downtown location, Purple Cross does
continue to offer delivery to its more than 400 patients in Hollister.

"I am there now but I am not accepting patients there," he said. "I'm
going to give the City Council another chance to give me an ordinance
(rescinding the ban on dispensaries). If they don't do that, we'll
just start over again."

McPhail is using the same tactic with his Los Banos location, located
at 225 North Mercy Springs Road.

"They got hit out of left field," he said of Los Banos city officials.
"They give me tickets every day but they are just administrative
tickets. My nonprofit will absorb them. I'm waiting for them to sue me
so it can get locked up in court."

The plan, McPhail said, is to operate his dispensaries while awaiting
a state appeals court ruling that he and his legal team expect will
ultimately allow marijuana cooperatives to dispense pot for medicinal
reasons. A decision in that case is expected to be announced Aug. 18.

"I'm still in the city," he said. "I could have moved to the county,
but I kind of like messing with the city. I really want to stir the
pot here."

To emphasize his point, McPhail recently threw his hat into the ring
to run for City Council.

"I should be on the ballot, I should win and I should stir the pot on
the city council," he said. "I like my chances. I took my chances
(opening the downtown dispensary) and I made it happen. Now I have a
lot more support behind me. The City Council is so whacked and so old,
I want to light fires under their (expletives) and make things happen.
I'm going to do one term and see what I can do and then I'm out."

Atigh said that the council will decide what the city's next move will
be, which could include re-filing the same complaint against Purple
Cross. She said the city's anti-dispensary ordinance pertains to any
type of marijuana distribution - from either a fixed or a mobile location.

"If council decided they want to bring an action to stop the use, it
would be the same complaint," she said. "There would be different
defendants and a different location, but everything else (in the
lawsuit) would be the same."

The city all along has preferred to avoid taking the matter to court,
Atigh said, and that hasn't changed with McPhail's latest move.

If the city decides to re-file its lawsuit, Atigh said it would seek a
case management conference to schedule a hearing in a shorter time
frame than the original suit.

"We'd try to advance the case in light of the fact that it's the same
circumstances and legal issues," just at another location, she said.
McPhail's efforts to tie up the matter in court, Atigh added, could
backfire.

"No court in any state in America wants to be used to harass another
party," she said.