Truesee's Daily Wonder

San Jose says pot clubs popping up like weeds, starts crackdown

John Woolfolk
Mercury News

Posted: 01/16/2010 04:06:07 PM PST

Updated: 01/16/2010 09:54:26 PM PST

San Jose is yanking the welcome mat for medical marijuana dispensaries that have proliferated across the city in recent months — from just a handful last fall to as many as 30, according to one online directory.

With San Jose, which had no known dispensaries a year ago, now home to perhaps as many as San Francisco — and more than four times as many as Santa Cruz — code enforcement officials have begun telling owners their operations are illegal under city law.

"We've started to receive some complaints, and we're currently doing investigations on a number of these," said Mike Hannon, the city's code enforcement official. "If it looks as though they're operating as dispensaries, we're going to advise the owners to shut the dispensaries."

Pot clubs have proliferated in San Jose since City Councilman Pierluigi Oliverio, alarmed by their rapid spread in other places, last fall suggested legalizing and taxing a limited number of them.

Some fledgling clubs have filed business-tax paperwork with the city that makes no mention of marijuana — describing the operations vaguely as counseling, retail or health services.

Hannon is sending letters to the dispensaries he and his staff have confirmed are operating, notifying them they must close within 30 days. The dispensaries' landlords could face fines up to $2,500 a day if the outlets remain open after that deadline.

Andy Schwaderer, who operates the Pharmers 

Health Center dispensary off De Anza Boulevard, says he's optimistic the nonprofit cooperative can work things out with the city and avoid litigation.

Though Hannon told him during a recent inspection that the dispensary is illegal, Schwaderer believes state law is on his side.

"We're eager to work with the city and establish a good relationship," said Schwaderer, who opened his doors last month. "We will wait and respond accordingly to whatever the city has to say."

Voters in 1996 made California the first state in the nation to legalize medicinal use of marijuana for those with a doctor's recommendation, but the move has been mired in legal uncertainty ever since.

Superseding federal law continues to outlaw the drug as a dangerous narcotic, although the U.S. attorney general last year stated that federal drug agents won't bust those who comply with state medical marijuana laws.

Dispensaries have proliferated in California since then. That in turn has sparked a backlash among local officials seeking to limit their number or ban them outright.

Three dozen cities, including Santa Clara, have joined in support of Anaheim's court battle in a closely watched case over the right to ban medical marijuana dispensaries. A patients' group had challenged the Anaheim ban as a violation of state law, and an appellate court is expected to rule sometime in the spring.

Gilroy, Los Gatos, Saratoga and Los Altos also have recently passed dispensary moratoriums.

Oliverio in October proposed an ordinance that would allow a limited number of dispensaries in industrial areas with restrictions, and an additional tax to ease the city's chronic money shortages. A combination of winter holidays, open-government noticing rules and the need to analyze some legal issues has delayed efforts to get the proposal before the council.

The city's Rules and Open Government Committee, which sets agendas for the full council, is scheduled to consider the measure again Jan. 27.

Oliverio said the city's dithering is inviting chaos as medical marijuana providers rush to stake a claim on the local market.

"We've gone from a couple of places that have opened to several," Oliverio said. "The council needs to have a discussion."

Already there are signs of a budding backlash as more residents and businesses find themselves neighbors to new dispensaries.

Lisa Roberts, whose law firm on the Alameda is near a proposed new dispensary, told the rules committee this week that the city should enact a moratorium.

"I'm not personally against the concept" of medical marijuana, Roberts said. "It's just the location. Just the fact that a proposal has been made is viewed as a welcome mat."

San Jose approved zoning for medical marijuana providers in 1998, but the city dropped the provision while updating its zoning laws in 2001. City Attorney Rick Doyle said that makes any dispensaries operating in San Jose today illegal.

Even so, the city has collected the $150 business license tax from a third of the dispensaries said to be operating here. In some cases, those dispensaries were quite clear about their intentions: San Jose Dispensary on West Hedding Street described itself on its business tax forms as a "medical marijuana delivery srvc."

Others were less explicit on the city documents, though quite clear in their advertisements. Plant Providers Plus described its operation on the tax paperwork only as "plant materials." But online, it advertises as "San Jose Area Medical Marijuana Delivery," with products described as "green crack" and "big bang brownie."

The South Bay Cannabis Buyers Collective on Monroe Street listed its operation on city tax paperwork under "SJCBC Inc." as "retail/internet." But its Web site offers a "free joint for new members."

Deputy Finance Director Julia Cooper, whose department handles the business license taxes, noted that acceptance of payment doesn't mean the city confers any legal status to a business — a matter left to code enforcement.

"It means they've paid a tax," Cooper said. "It doesn't mean they've complied with all regulations."