San Jose Council Considers New Medical Marijuana Department

San Jose could create a dedicated oversight office for local medical marijuana collectives, much like the Division of Gaming Control that monitors the city's two casinos.

A Division of Marijuana Control would offer administrative oversight of San Jose's pot clubs, Council members Raul Peralez, Ash Kalra and Chappie Jones write in a joint memo. The office would establish a streamlined authority over the ever-complicated regulation of collectives, according to the proposal up for review at Tuesday's City Council meeting.

For nearly two decades—going back to 1996, when California approved the Prop. 215 Compassionate Use Act—San Jose has struggled to provide a local regulatory framework for the industry, which remains legal statewide but outlawed on the federal level.

In 1998, San Jose approved its first-ever zoning regulations for pot clubs and tasked police with oversight and enforcement. But federal drugs agents raided collectives, forcing the industry back underground. The city failed to include cannabis club land-use regulations in its Zoning Ordinance update a few years later in 2001.

Senate Bill 420, signed into law by Gov. Gray Davis in 2003, gave caregivers and patients a legal framework to establish collectives to cultivate and distribute medical marijuana. Four years later, the California Board of Equalization enacted a sales tax on pot clubs. Still, all those years since the feds quashed the industry in the late '90s, there were no pot clubs in San Jose.

Then, in 2008, the state Attorney General's Office handed down guidelines for running a collective in California. A year later, the U.S. Attorney General issued a memorandum to federal prosecutors directing them to focus on big-time drug traffickers rather than medical marijuana collectives abiding by state and local laws.

Those documents together spurred a green rush in San Jose, which was beset by financial cutbacks at the time because of the widespread economic recession. The city went from having zero collectives in 2008 to 57 by late 2010. The city imposed a voter-approved sales tax that fall, just as state Proposition 19, which would have legalized marijuana in California, failed at the ballot.

A year later, the council imposed strict zoning regulations and a citywide cap of 10 pot clubs. But collectives repealed the ordinance by referendum. By the end of 2010, San Jose was home to more than 100 collectives.

For a few years, the city's pot clubs existed in the absence of local regulation until the council voted in a new regulatory framework last summer, which established strict distance and operational requirements. Now, the council is considering extending the deadline from July to September to bring pot clubs into compliance.

By April this year, 29 collectives won zoning approval from the city, though they still need to undergo an operational review to make sure all employees complete criminal background checks, among other requirements. Several clubs were denied permitting because they refuse to pay the city's business tax, arguing that it would be an admission of making a sale of a controlled substance—illegal under federal law. One club has been disqualified for refusing to pay the tax and four for failing to provide records to police. Twenty-four remain under review.

Santa Clara County has banned pot clubs from setting up shop in unincorporated areas. The county has also directed its Department of Environmental Health to regulate collectives that plan to manufacture edibles.

On the state level, five competing initiatives have been filed for the 2016 ballot. One of them, The Marijuana Control, Legalization and Revenue Act of 2016, was submitted by San Jose dispensary owner Dave Hodges and pot lobbyist John Lee.

The proposal, filed on 4/20, bills itself as the first open-source initiative because of the way it crowd-sourced authorship.

More from the San Jose City Council agenda for May 19, 2015:

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260

Jennifer Wadsworth is the news editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected]. Follow her on Twitter at @jennwadsworth.

26 Comments

  1. Santa Clara County has banned pot clubs from setting up shop in unincorporated areas, though it may relax that restriction after coming up with comprehensive guidelines. The county has also directed its Department of Environmental Health to regulate collectives that plan to manufacture edibles.

    I heard a rumor that the county is gearing up to allow grows in unincorporated areas. Geared mostly towards properties in the hills which are unsuitable for any other type of farming (sans grapes)

    The city’s Salary Setting Commission recommended upping the mayor’s yearly pay …they should hold off on those pay increases until they end wage and benefit negotiations with the city’s bargaining units…

    It’s probably a good idea not to be hasty with pay raises. How about we wait until we have a moratorium on commercial to residential rezoning? The apartments going up on the old IBM site instill me with fear that our already past capacity roads and highways will be on the highway to the danger zone.

  2. A Division of Marijuana Control would offer administrative oversight of San Jose’s pot clubs… The office would establish a streamlined authority over the ever-complicated regulation of collectives…”

    Is this a joke? So all the rules and regulations that San Jose has adopted and implemented now need an “office” to oversee and regulate?

    • Doesn’t the DEA or FDA already regulate “medicines” and “marijuana”?

      I’ve always heard that the Federal Government is the gold standard of wise, efficient, smart, and effective regulation.

      Why not just let them do it and let the City Council and County get back to filling potholes and finding foster homes for illegal alien minor children kidnapped in central America and pushed across our southern border.

      • SJO This is one we’ll disagree on. Collectively those pot clubs bring in as much tax revenue for San Jose as Google does for mountain view. Although I’d rather have 1 google than 30 pot clubs.

        • In theory the collectives should be forking over enough tax revenue to put The City well into the black. In reality most don’t pay anything because there is no consequence for not paying.

          The owners or their lobbiests really sold the public and the CITY an empty bill of goods when they were making all the noise about being legitimate members of the business community and agreeing to pay higher than the normal tax rate to get that business licence to operate….

          did you see Kntv’s report last week about how one club dies business? I bet that is the industry standard. Shut them all down. …

          • I think San Jose’s idea of taxes on medicinal pot is a joke.

            Ten percent or whatever?!!

            GIMME AN EFFING BREAK!!!!

            It should be five THOUSAND percent. Or, ten THOUSAND percent.

            The social and civic costs of marijuana are very high. The profits are gigantic.

            Make the bastards pay for the social costs of all the bums and skid rows they are creating.

  3. Their raises should be tied to the COLA that the city unions receive. Which ever union gets the lowest COLA is what Council and Mayor can get. So, if POA gets 5% and MEF gets 2%, council should only get 2%. Very interesting that they are already saying that employees are getting a 3% increase this year when not one union has finished negotiations. Typical city…no negotiations…just whatever the council dictates. Hopefully they won’t vote for this increase. They shouldn’t get any more than any other city employee. $81,000 is more than the employee median salary.

  4. There have been ZERO raises since 2009 ! Anyone who claims that the broken up give back of 10% was a raise is an absolute idiot! Meanwhile medical, employee retirement contributions have gone up along with an extra 1/2% of the GASB that the city straight up screwed SJPD on ! Im afraid at the rate were seeing resignation letters to other cities we will see a sharp increase in a trend of de-policing in San Jose. I think the average citizen truly does not understand what this could lead to……

  5. Raises or bonuses should be strictly performance based. Public safety is highly compromised in SJ, and SJ roads are positively Third World, and the Salary Setting Commission recommends raises?! Giving politicians raises based on COLAS or union negotiated raises makes no more sense than paying Carly Fiorina big bucks while she nearly destroyed HP. Over the last few decades the unions, private and public alike, have managed to convince the general population that a worker is entitled to a raise in pay merely because time has passed, or because the cost of living has risen. Performance has become irrelevant in the union environment, and performance based pay is fought tooth and nail by public employee unions, particularly the teachers’ unions. In a union environment, particularly in the public sector, the slacker gets the same pay as the go-getter—a very communist notion. And now it is suggested that concept should be extended to a very underperforming mayor and council by giving them all raises. I think not.

  6. A new bureaucracy with little or no new money to pay for it. How about the council eliminates The Office of Cultural Affairs and uses that money to pay for the pot police?

    • There is a lot of money JMO. One of my childhood friends owns a club. I’ve done work for him from time to time, and he always seeks my sage advice. I helped him get his operations into compliance.

      I’m not going to give exact figures, maybe I can say it like a bank would, “Mid 5” is what they’re paying in taxes every month. The shutdowns had a great effect, it weeded out the ones that weren’t paying tax, and drove business to the ones that are paying tax and working with the city. By shutting the bad clubs down, they effectively increased tax revenue and gave the city less work to do.

      I’d say a club like his, could pay the salaries of 2 officers. For the 25 or so clubs we have left, I’d think we’d only need 4 full time enforcement officers, and maybe 4 or so administrative? That would still leave the city with enough money for 92 employees (or whatever else they decide to use the money for)

          • Why do I gotta go there? Oh, I dunno, Cousin Cortese. Perhaps because if I were your boss I’d want to get a full days work out of you for a full days pay. You blog a lot on company time. Try to think of it as theft, since that’s what it is; like taking home company pens, copy paper, stuff like that for your personal use. Bottom line: if you hafta ask, you obviously don’t get it. Your boss doesn’t pay you to blog on SJI. The fact that you hafta ask says a lot about who you are, and about what weight I should give to your opinions.

    • Your grand jury should have investigated the many ways that the City of San Jose hides it’s money in plain sight while claiming to be broke.

      • Weedboy: The Civil Grand Jury would consider your request for such an investigation. Put together a request for the GJ’s consideration. Just go to the SCC superior court website and fill out a form to request such an investigation.

  7. Great in theory, but haven’t the mayor and council already budgeted that money for other things? R U telling me they have just been banking the MJ tax dollars and have dedicated it to administration and enforcement? If so, show me the link that proves it.

    • JMO I’m not trying to argue where the money will go, just making a statement of fact that the money is there. Even if the council has decided to allocated the money elsewhere, there’s nothing really stopping them from raising the tax another 1% to cover the costs of a department.

      • RMC: And my point is that I am not sure the money is still there, rather than having been spent on something else. Can you point out to me the location of that MJ money, which is what I asked you, but you failed to respond.

  8. Maybe our Mayor and City Council are on (to) something with this new “Department of Marijuana” idea. I would imagine that the more “stoned” one would get, the more sense their policies and decisions would make.

  9. So smoking pot is good but smoking cigarettes is bad. Only a politician could come up with that logic. Sometimes the star-filled marijuana induced high that local politicians subscribe to is simply amazing. Politicians ” show me the tax money!” mantra is truly bulls**t.

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