Supreme Court Ruling Spurs San Jose Pot Club Ordinance

Enforcement may soon get a lot stricter for San Jose cannabis retailers. Emboldened by the California Supreme Court’s recent ruling on City of Riverside v. Inland Empire Patients Health and Wellness Center, that reinforced municipal rights to ban medical marijuana collectives, city officials are looking at ways to crack down on local storefronts and delivery services.

“In light of this ruling the administration can be prepared to bring forward for (City) Council consideration appropriate medical marijuana zoning and regulatory ordinances in the fall,” writes Angelique Gaeta, assistant city manager, in a memo sent out Wednesday.

Since legislation hasn’t caught up with the industry, medical cannabis regulation has been relegated to austere federal enforcement and unprepared municipalities left scrambling to figure out how to police something that yielfds revenue but also presents risk.

In San Jose, there has been talk of upping the city’s 7 percent marijuana tax to 10 percent. And cities all over the state, including San Jose, have been checking businesses for land use violations, seeing if some collectives are closer than the minimum 600 feet away from schools. Finding a store out of compliance with distances rules is a quick, easy way to evict someone—one strategy local authorities have used in an attempt to weed out (pun!) some stores.

As a result, the number of marijuana retailers in San Jose dropped from 106 in the fall to 96 as of the latest count. Last year, the city found 18 businesses out of compliance with local rules and state laws, which ban smoking on the premises and take a pretty strict stance on a slew of zoning and code enforcement requirements.

Finding a business breaking a land-use rule has become the fallback enforcement plan for a lot of local authorities, notes downtown Councilman Sam Liccardo.

Of the 21 complaints the city received against pot clubs this year, only three met criteria for investigation of public nuisance, according to city officials. In one location, on North First Street, code enforcement officers allegedly found people illegally smoking on site, as well as unpermitted and building modifications. The city informed the landlord that the violations were valid enough reasons to evict the tenant.

At a second spot, on The Alameda, the city claimed to have found several code violations and met with the property owner to make sure they get corrected. The third location, on Lincoln Avenue, faces closure after someone reported a fairly large growing operation on site.

Ultimately, even if collectives are up to code locally, every one of those businesses remain in violation of federal law, Liccardo adds, despite state legislation that allows people to sell cannabis for medicinal use. As HuffPo reported last week, U.S. Attorney Melinda Haag seems bent on taking down some pretty big players in the California medical cannabis scene, particularly in Berkeley, Oakland and, recently, San Jose.

The article says seven pot shops in San Jose received letters threatening property seizures and prison time unless they shut down. The U.S. Drug Enforcement Administration is investigating some dispensaries in San Francisco.

Tom Angell, head of pot advocacy group Marijuana Majority, told HuffPo that he believes the recent spate of letters is part of an effort by federal War on Drug enforcers to “intimidate the legal marijuana industry out of existence.”

“Whoever is coordinating these attacks in the federal law enforcement apparatus is clearly terrified about what the increasing acceptance of a legal and regulated marijuana trade means for the drug war bureaucracy that employs them,” he told the online news site.

A recent poll showed that a majority of Americans supported pot legalization. And many consider California to be on track to allowing recreation adult use of the plant.

Despite the legal limbo, cities will continue to rake in whatever tax proceeds they can pull out of pot clubs. San Jose counted $2 million in proceeds in 2012, even though 18 businesses refused to pay—some on the grounds that it’s not fair to pay taxes if the city won’t come up with a land-use policy protective of these marijuana-selling members of the taxpaying public.

Businesses a month late in paying the local marijuana tax have to cough up 25 percent interest.

The city expects up to $3.7 million in marijuana tax revenue by the end of the 2012-13 fiscal year, according to a bi-monthly finance report issued in April.

Since California voters passed Prop. 215 in 1996, the state has collected more than $100 million in yearly tax revenue.

The cost of the War on Drugs, however: approximately $1 trillion. That doesn’t count the human toll, in terms of people incarcerated and jobs lost.

Jennifer Wadsworth is a staff writer for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

4 Comments

  1. I think the city clowns are already smoking to much, time for them to go and grow.

    San Jose counted $2 million in proceeds in 2012, even though 18 businesses refused to pay—some on the grounds that it’s not fair to pay taxes if the city won’t come up with a land-use policy protective of these marijuana-selling members of the taxpaying public.

    This is how the city accounts for everything!  650 million pension funds, lets throw it against the wall an see if it sticks.

    God help us all in SJ

  2. Go ahead and try to regulate the poop out out this . it will only encourage people to grow their own . It seems as if Reed and the rest of his regime have forgotten all the fires that were started because of illegal grow houses , you can expect that number to climb . I for one do not use , but it is crazy to treat marijuana with stricter regulations than alcohol . People in need will continue to use

  3. Marijuana taxation makes just as much, likely more, than revenue expected to be generated by the A’s move.

    While I’m not a proponent of legalizing marijuana or even allowing these clubs in San Jose, I do recognize that the City did not have to gift a billionaire land or promise millions of dollars to a massive corporation in in order to entice their business- marijuana tax money was a grass (pun!) roots occurrence.

    Mr. Reed is clearly in bed with developers and construction outfits if he thinks spending hundreds of millions in order to generate 3 per year is good for San Jose.  The City already owes billions based on his votes and decision making over the last decade.

  4. DSW you are correct about costs of regulation/enforcement exceeding revenue.  The problem is you don’t “think” the way that those currently “ruling” San Jose think.

    (A) The ruling elite sees pot clubs/dispensaries/collectives (or what ever they want to call themselves) as a huge cash cow. Every penny the City collects is “one more penny that would never be collected” if the City had opted to be closed minded and deny the chronicly ill amoung us the cure-all wonder drug. 

    and (B) The City currently doesn’t have the personnel to regulate, investigate or enforce anything. While the City has grand plans to hire people to these things every day that goes by without hiring anyone equates to a net savings!

    They get some money (not all they are owed) but they do get something and as long as hiring regulators can be delayed there is no expense to regulate. A win-win!