MEDICAL MARIJUANA MERCHANT DEFIES OAKLAND ORDER TO CLOSE

Others Might Go Underground, As City's New Rule Gets Mixed Reaction From
Consumers, Business Owners

OAKLAND -- Medical marijuana patients who packed into the Dragonfly
Holistic Solutions dispensary on Telegraph Avenue on Tuesday seemed unaware
the business had been told by the city to shut down.

They said they were seeking the most potent medicine in town -- a strain of
marijuana called "Barney Purple" -- and didn't like hearing that new city
rules will limit them to four city-sanctioned establishments.

"If you enjoy feeling pain-free, this is the place to be," said Sullivan
Wallace of Oakland, who says he has a cannabis prescription to fight
chronic pain and anxiety.

Seven existing dispensaries and one proposed club had applied for the four
business permits available. After a series of hearings and several delays,
the clubs were notified Friday afternoon whether they made the cut.

Those that received licenses will have to pay a $20,000 annual fee. Those
that did not were supposed to close Tuesday.

Dragonfly did not make it, but owner Ken Estes said he will continue to
operate in defiance of city rules until he is arrested.

He planned a protest outside the dispensary Tuesday morning, but the only
signs of one emerged when the doors to the club opened 15 minutes late.

"There is some kind of discrimination going on behind the scenes," Estes
said. "Or else the city is out of touch with the patients, because we are
the preferred club. When we opened, we forced prices down and brought in
higher quality (than the other clubs)."

Other club owners, including some who were issued permits, criticized the
city's process as arbitrary and complained that three days wasn't enough
notice for them or the employees on their payrolls.

Still, no one except Estes continued business as usual. One dispensary
owner contended there are clubs that did not even apply for a city permit
and may try to operate under the radar.

"There are some who chose not to pay $300 and sign a confession," said
Richard Lee, owner of the Bulldog Cafe, who got a permit for his cafe on
Broadway but not for his small SR71 Cafe on 17th Street, according to the
city manager's office.

Even though Lee received a permit, he contended the process was arbitrary
and the four-club limit does not make sense. He plans to move to a larger
location to serve the additional customers the closures will bring.

"This thing is getting too big for them to say there can only be four
clubs. There are too many people who appreciate getting marijuana in a
civilized way," said Lee, one of the backers of an initiative now
collecting signatures for the November ballot that would all but
decriminalize adult use of marijuana in Oakland.

Sparky Rose, operator of Compassionate Access on Telegraph -- which also
was approved -- said he serves 7,000 patients and is expecting more. He
plans to soon move to a larger location nearby.

"It was difficult to gauge what was important to the city when we were
presenting ourselves. There wasn't a lot of transparency in the process,"
Rose said, adding that everyone was asked for the same information. "They
should have extended the deadline, because a lot of clubs have a lot of
employees and a holiday weekend isn't much notice."

The city inspected the clubs for code violations, checked for any
complaints against them, and asked for information ranging from number of
patients to products to prices.

In the end, according to a letter from the city's Administrative Hearing
Officer Larry Carroll to Estes, the city seemed to put more stock on who
had operated the longest. The three clubs issued permits in the "uptown"
area had operated between two and five years, though the fourth club on
West Grand is a relative newcomer.

The Lemon Drop Coffeeshop on Telegraph is one of the more established clubs
in the area, nicknamed "Oaksterdam," but it did not receive a permit. Owner
Mark Belote said the well-stocked coffee shop will continue to sell its
mochas and pastries, gelatos and cakes, but stop pot sales.

"I want to do everything legally. I've always been honest with them, so
we'll see what happens," he said. "I have an eight-year lease here, so the
cafe will stay open."

Karry Carr of The Green Door dispensary on Webster Street said he fully
expected to get a permit. The building met all code requirements and there
were no complaints against the club. It opened last October with the
blessing of the city, even stating it was a cannabis dispensary on its
business license. The city renewed its license in February.

The Green Door is now seeking an injunction to stay open until it can get a
court hearing. Its owners contend the application process was fraudulent.

Under the new rules, denial of permits cannot be appealed, Carroll said.
The final determination was made by City Administrator Deborah Edgerly, who
could not be reached for comment Tuesday.

As for those that continue to operate in violation, Carroll said, "the city
is considering its options."

Carroll said he will send final warning letters and may give them a short
grace period. However, he noted, "all of those operating without permits
are outside of the city's low policing priority with regards to medical
marijuana, so the police could take action."

The city will review the new rules in six months. Jeff Jones, director of
the Oakland Cannabis Buyers' Cooperative -- which issues identification
cards but does not dispense -- said he has been advising clubs to follow
the rules.

"The city is our friend, and we are in this together. They are doing what
they feel they need to do," Jones said. "I think the best practice is to
close down quietly, and we'll spend the next six months lobbying to
increase the limit."

E-mail Laura Counts at lcounts@angnewspapers.com