Medical Marijuana

POT CLUBS TURNING TO DELIVERY

With Feds Threatening Storefronts, Couriers Become Alternatives

Medithrive, a cannabis dispensary in San Francisco's Mission District
that was forced to close last month, has re-emerged as a
delivery-only service, part of a growing trend in California's
billion-dollar medical marijuana industry that's recently come under
attack by federal authorities.

Threats of property forfeiture,

fines, lawsuits and raids this winter have made brick-and-mortar
locations less enticing to pot entrepreneurs. Hundreds of storefronts
have closed amid the new federal crackdown. Delivery services remain,
offering a lower-profile, albeit more dangerous, alternative.

"It just makes sense. When you have a storefront, you're on the map.
You don't have those issues with a delivery service. No one's going
to know about it," said William Panze, an Oakland defense attorney
who represents Northstone Organics, a delivery service based in Ukiah
(Mendocino County).

California has struggled with cannabis distribution since voters in
1996 gave qualified patients a medical defense for breaking state
marijuana laws. Then in 2003, state Sen. Mark Leno's SB420 granted
patients the right to collectively cultivate and distribute marijuana.

Under those laws, San Francisco created a dispensary licensing
process in 2005 that led to an estimated 24 clubs and one
delivery-only service. There are thought to be several hundred
thousand Californians with a doctor's recommendation for marijuana.

Cities such as Los Angeles and San Diego chose the opposite path and
tried to ban shops with limited success. But the storefront
enforcement climate led to the proliferation of fly-by-night mobile services.

Indeed, the number of storefront dispensaries and mobile operators
are inversely correlated, Los Angeles Assistant City Attorney Asha
Greenberg said.

Federal action

On Oct. 7, four U.S. attorneys declared a crackdown on the medical
marijuana industry, alleging profiteering and exports to other
states. Hundreds of warning letters went out to dispensary landlords
across the state.

More than two-thirds of San Diego storefront dispensaries closed
within weeks, watchers said. Dozens closed in Sacramento County. At
least three San Francisco clubs have closed, and one in Oakland moved.

Jack Gillund, spokesman for the U.S. attorney for the Northern
District, said his office would not comment on storefront pot clubs
being replaced by delivery services.

Medithrive's return as a delivery service echoes the behavior of
operators in Southern California. San Diego has about 100 delivery
listings. Orange County has 50 and Los Angeles about 100, according
to data from leading dispensary locator WeedMaps.com.

"My sense is they're switching out of brick-and-mortars, or just
going to the black market," said Justin Hartfield, WeedMaps founder.

"It's like water," Greenberg said. "You close off one pathway, and it
morphs and goes in another direction."

Some patients prefer delivery. Medithrive declined to comment, but it is busy.

Calls to the service often go directly to voice mail because of high
volume. The company also has an online menu as well as smart-phone
apps that feature strains such as Dream Queen for $40 for an eighth
of an ounce - about a week's supply for an average patient.

Warning of delivery dangers

App photos also display Medithrive's shuttered Mission Street store -
a high-end affair with flat-screen TV menus.

The Department of Justice's crackdown amounts to a dangerous form of
theater, in that it does nothing to curtail supply or demand, said
Lisa Gygax, a California dispensary attorney. People feel less safe
buying cannabis from a random guy coming up to their house - but they
will if options become limited, she said.

"Delivery is dangerous, it's extremely difficult to regulate, but
they're extremely successful if there is no safe access," she said.
"What else are patients going to do - go to the park?"

San Francisco has one delivery-only licensee, the Green Cross. It is
delivery-only because it was pushed out of a storefront during the
2005 San Francisco licensing process, said General Manager Caren
Woodson. The Green Cross is seeking a city permit for a storefront
because it's the preferred business model, she said.

Risk of robbery

Safety concerns for drivers are huge, Woodson said, and the service
has been robbed once.

Unlicensed delivery services probably underreport robberies, Gygax said.

The conflict between California's medicinal marijuana supporters -
including advocates and lawmakers - and federal authorities is
expected to worsen. That is likely to bring an awkward social
compromise: more delivered dope.

"We sort of predicted this," said Dale Gieringer, head of
California's National Organization for the Reform of Marijuana Laws.
"I could see cars going around. I could see delivery trucks. It's
sort of what one expected. ... I've seen a decline in delivery
services in the last four or five years as dispensaries have
proliferated. I suppose that will go in the other direction now."