MEDICAL MARIJUANA: AN UNEXPECTED FIGHT

Those Hoping to Run Dispensaries Surprised by Landlords'
Resistance

Gayle Palms says she has a team of legal and medical experts, a
business plan and the $150,000 Arizona requires to open a
medical-marijuana dispensary.

She knew it would be a challenge to win one of about 125 certificates
for a facility that the state is expected to issue this year. But what
Palms didn't expect were challenges from her own community - and the
absence of a local landlord willing to rent to her.

The Ahwatukee Foothills resident wants to move a wellness center she
already owns in the community where she has lived for three years to a
nearby shopping center with zoning that would allow her to also run a
medical-marijuana dispensary.

She envisions a new center where patients with a variety of ailments
can be treated with herbs, acupuncture, massage and - for those with
the proper doctor's referral and state ID - marijuana in liquid or
aerosol forms.

But as Palms puts the final touches on her application for a
dispensary certificate, she finds her plans already being challenged
by a lack of community consensus on where medical marijuana should be
sold. On Thursday, the state starts taking applications from cancer
patients and others who want to use the drug to reduce pain, nausea
and conditions like muscle spasms.

Many potential dispensary owners are in the early stages of getting
their business plans and certificate applications together. But some
who are further along in the process have been surprised by the chilly
reception they are getting from neighborhoods and landlords.

"It's a challenge, frankly, to find a receptive landlord," said Joe
Yuhas, co-founder of the Arizona Medical Marijuana Association, a
trade group for the Arizona medical-marijuana industry. "It's a new
industry, and folks don't understand it."

Last month, golf-equipment manufacturer Ping threatened to leave a
north Phoenix community it has occupied for 45 years because of a
medical-marijuana dispensary that was approved nearby.

In Flagstaff, former art gallery owner David Grandon is part of a team
of local professionals that wants to open a dispensary called the
Grass Roots Wellness Center in a shopping center in the northern
Arizona city. But they are struggling to find a landlord and a bank
that will do business with them.

"Flagstaff is a small town, and we want this done right," Grandon
said. "We are not trying to get the foot in the door to legalize
marijuana. But what we are finding is landlords and banks have already
been approached multiple times by people who are speaking wellness
center but have Bob Marley playing in the background."

Other potential dispensary applicants in Phoenix suburbs acknowledged
they are also facing leasing and business challenges, but declined to
talk.

"Right now it's a very sensitive issue," one said.

An Ahwatukee resident, commercial real-estate broker and Ahwatukee
Foothills Village Planning Committee member Max Masel says he has have
no problem with a dispensary in a shopping center.

"I'd like to see a dispensary in Ahwatukee - we have 70,000 people
here," Masel said. "I think shopping centers are the logical place for
medical-marijuana dispensaries. Where else are they going to go?"

But other influential residents don't want medical marijuana anywhere
nearby.

Doug Cole, a political consultant and chairman of the village planning
committee, said medical marijuana belongs in industrial areas.

"I just don't want to see one at Elliot Road and 48th Street," he
said. "Medical marijuana is legal, but right now no one knows what the
outcome of all of this will be."

Palms, who worked as a loan officer at a bank before studying herbal
medicine and opening a wellness clinic in Seattle a decade ago, says
her conservative, business-oriented background should be evidence to
Ahwatukee that the medical-marijuana dispensary she wants to open
would be a health center, not a head shop.

"We want to educate people on the medical use of marijuana," Palms
said. "We don't want people to use it recreationally."

She has owned and run the Phoenix Holistic Health Center at 4747 E.
Elliot Road in Ahwatukee for two years, yet she can't get an
appointment with a leasing agent.

"Landlords just hang up the phone on me," Palms said.

Alan Zell, owner of Zell Commercial Real Estate Services, which
represents both tenants and landlords in a number of Ahwatukee
shopping centers, was not surprised by that.

He said he doesn't think the Phoenix village is the right place for
medical marijuana. "It's not the right image we want to present as a
company," he said.

Zell said potential dispensary owners should look for locations in
shopping centers that might have vacancies because they are somewhat
run down, in less than prime locations or that lack major anchor
tenants. "There just aren't that many of those in Ahwatukee," he said.

Phoenix City Councilman Sal DiCiccio, who represents Ahwatukee
Foothills, predicts the community will eventually have one dispensary
- - but stopped short of predicting where it will be. Ahwatukee only has
a handful of shopping centers that have the C-2 or higher level of
zoning that Phoenix requires for dispensaries. Most of those centers
are along Interstate 10 between Ray Road and Chandler Boulevard.

The Arizona Medical Marijuana Association is in the early stages of
pulling together a team of bankers, credit-card processors, security
companies and human-resources providers willing to work with
dispensary owners.

Yuhas and Vanessa Ryan, another member of Ahwatukee's village planning
committee, said if dispensaries can't get their businesses up and
running, neighborhoods might see residents growing their own marijuana
plants.

Arizona law allows people who need medical marijuana to grow it in a
secure area if there is not a dispensary within 25 mles of the
patient's home. It's a concern in 36-square-mile Ahwatukee which is
still a part of Phoenix but is surrounded on three sides by open Gila
River Indian Community land and the South Mountain Preserve.

Tribe officials will not allow a dispensary on the reservation for
various reasons and have asked neighboring municipalities not to allow
dispensaries within one mile of their border with the Gila River
Reservation.

Ryan said she supports an Ahwatukee dispensary because she doesn't
like the idea of marijuana growing outdoors, no matter how secure the
backyard facility might be.