JOBS, REVENUE LOST IN POT DISPENSARY CRACKDOWN

The federal Department of Justice's crackdown on medical marijuana
dispensaries in California has meant the loss of thousands of jobs
and millions of dollars in tax revenue, according to cannabis
advocates and government statistics.

An estimated 2,500 people statewide have lost their jobs since late
September, when California's four U.S. attorneys sent letters that
threatened jail sentences for dispensary owners and the possible
seizure of buildings that house the pot clubs, said Dan Rush,
director of the United Food and Commercial Workers' national medical
cannabis division. The union began organizing medical marijuana
workers in May 2010.

Of those jobs, which union officials say include people who are
directly employed by marijuana dispensaries as well as those with
indirect ties to the industry, about 50 have been lost in San
Francisco and dozens more around the Bay Area.

Three city dispensaries have closed since receiving warning letters
from Melinda Haag, the U.S. attorney for Northern California.

Before closing Nov. 12, Medithrive in San Francisco's Mission
District employed 17 people at its storefront near 16th Street and
another five at its warehouse, said P.J. Johnston, a spokesman for
the dispensary. Another 15 jobs were lost when Divinity Tree in the
Tenderloin neighborhood closed Nov. 11, said Charles Pappas, chairman
for the collective.

Representatives for Mr. Nice Guy, the third to close, did not reply
to requests for comment, but industry experts say the Valencia Street
dispensary employed at least a dozen people.

Wages and benefits

The average wage at Medithrive was $17.80 an hour, Johnston said,
while a job at Divinity Tree started at $20 an hour, according to
Pappas. Both included full health care benefits.

"These are all good, single-earner, breadwinner jobs," Rush said.
"How many places can take a hit like this to their economy? It's insane."

The state Board of Equalization collected an estimated $100 million
in sales taxes from medical marijuana dispensaries in 2010, agency
spokeswoman Anita Gore said.

Only Divinity Tree officials would discuss their tax bill: The
dispensary, which with 7,000 registered members had less than a third
of Medithrive's 26,000 patients, "never paid less than $200,000" a
year in taxes since opening in 2007, Pappas said.

Subsidized services

In the Bay Area, where some dispensaries must also pay a local tax,
the medical marijuana industry helps subsidize government services.
That's in addition to spending thousands of dollars on advertising
and hiring professional services such as lawyers and accountants.

Some of this economic activity is disappearing even as the
dispensaries remain open. Medithrive, for example, spent $209,000
this year on advertising, $64,000 in payroll taxes, and $4,000 in
local permit fees, Johnston said.

Since the crackdown, San Francisco's 23 remaining dispensaries have
canceled much of their advertising, according to Stephanie Tucker, a
spokeswoman for the city's Medical Cannabis Task Force.

Ad revenue

Medical marijuana advertising constitutes about 10 percent of the ad
revenue at alternative weeklies like the San Francisco Bay Guardian,
Executive Editor Tim Redmond said. "It's a significant source of ad
revenue for us. It not only hurts us, it hurts any newspaper trying
to sell ads."

Chronicle President Mark Adkins, however, said the federal crackdown
generally has not affected the newspaper's ad revenue and paid
business listings. "Our policy has not changed, and we will continue
to accept legitimate medicinal marijuana dispensary advertising," he said.

Were San Francisco's medical marijuana industry to be extinguished,
thousands of jobs would be lost, Tucker said. When ancillary jobs
ranging from construction workers to architects to planners to
lawyers and accountants are factored in, San Francisco's medical
marijuana industry employs "1,500 people, conservatively," she said.
In Oakland, medical marijuana employs 400 people, Rush said.

In an e-mail, Haag did not comment on the issue of jobs, but said
that her office had received "many phone calls, letters and e-mails
from people who are deeply troubled by the tremendous growth of the
marijuana industry and its influence on their communities." She
signaled that more warning letters - and more closures - could be on the way.

More complaints

"Since my office sent the letters," she wrote, "we have received even
more complaints relating to schools, and now from cities that have
banned dispensaries yet still have them opening and refusing to abide
by local law."

California state law allows dispensaries to operate within 600 feet
of a school or park; stricter San Francisco law requires a 1,000-foot boundary.

Thus far, San Francisco's elected officials have been silent on the
issue, with the notable exceptions of state Sen. Mark Leno and
Assemblyman Tom Ammiano. Both Democrats have sponsored
cannabis-friendly legislation in Sacramento, and both appeared at a
rally denouncing the raids.

But so far they've been unsuccessful in either scheduling a meeting
with Haag or eliciting action or a statement from other state
officials, such as Gov. Jerry Brown, who as attorney general wrote
the guidelines for California's legal marijuana providers.

Restraining order sought

Legal action pursued by the dispensaries has also been unsuccessful.
Dispensaries in all four federal court districts in California sued
the Justice Department this month, seeking a temporary restraining
order against federal prosecutors' actions. The case has not yet been
scheduled for a hearing, said San Francisco attorney Matt Kumin, who
is representing the dispensaries in court.

Meanwhile, "monetary costs are certainly in the hundreds of thousands
monthly," Kumin said. "Lost jobs, unemployment benefits, lost taxes,
loss of secondary economic impacts. Who is served? DEA jobs and budgets."