City Threatens to Shutter Pot Clubs

The city of San Jose issued a memo today threatening to shut down three pot clubs within the city limits if they refuse to stop selling medical cannabis for a fee.

In the memo, released this afternoon by Joseph Horwedel, director of the Department of Planning, Building and Code Enforcement, stated that the department has received complaints and is in the process of investigating Pharmers Health Center Cooperative, Inc., San Jose Cannabis Buyer’s Collective and Medileaf Collective.

The memo says: “If it is determined that these businesses are dispensing medical marijuana/cannabis for a fee, which is neither permitted or a conditional use under the City of San Jose’s Zoning Ordinance, Code Enforcement Division staff intends to issue compliance orders to both the property owner and business owner requiring that the unpermitted businesses cease operating within 30 days.”

According to Code Enforcement official Michael Hannon, who is in charge of the case, code enforcement officers will be visiting the pot club facilities today or Friday, to issue the compliance order. He says the memo was originally written on Jan. 5, and that he has received complaints about a total of seven medical cannabis dispensaries in San Jose.

Hannon says that if the clubs do not cease operating in 30 days, the department will precede to administrative hearings that could issue them penalties and fines of up to $2,500 a day if they continue operation. However, he says that his department is choosing to view the case as strictly a land use issue, which is why the city is not sending law enforcement into shut the medical cannabis dispensaries down.

“We’re not going to litigation right from the get-go,“ Hannon says. “We’re not seeing a lot of crime or nuisance activities specifically associated with these businesses. They are just like any other business at least from the standpoint of code enforcement. They are simply operating in the city of San Jose without a permit. They can’t get a permit, so rather then order an immediate closure, we’re going to give most of these businesses 30 days.”

Hannon says that his department has gotten complaints from nearby businesses that were concerned about the dispensaries.

“If people read the news, they know that the mayor has made it real clear that marijuana dispensaries are not legal in the city of San Jose,” says Hannon. “So there is probably a heightened awareness on this issue, so as this starts to open up, folks are going to bring them to our attention in the hope that the city can be quick in closing them down.”

The memo specifically states that the code enforcement is issuing the compliance order for dispensaries that are charging a fee. San Jose Cannabis Buyers Club and others have stated that they are a non-profit institutions.

“Well, I haven’t come across one yet that is,” says Hannon.  “The ones that I’ve been to or seen are selling it for anywhere from $55 to $65 an ounce, so they’ve made it real clear to us that it is a business venture and they are looking to sell either to co-op members or folks who simply have the doctors recommendation.”

Councilmember Peirluigi Oliverio, who is currently backing a proposed ordinance to get the city to regulate and tax pot clubs, said that he expected this response from the department of code enforcement.

“It was only a matter of time,” he said. “I thought it would happen sooner, because code enforcement is based on people calling and complaining. The complaints are either from one or two parties: people who are jealous that they are open, like competition, or it’s people who are adamantly opposed.

“If we had my proposed ordinance in place, we wouldn’t have some of the concerns that people have, because I support a limited number of dispensaries in limited places that are regulated and taxed.”

As it happens, the issue of regulation of medical marijuana dispensaries was supposed to be discussed at the Rules Committee meeting yesterday, but according to Oliverio, city staff mysteriously forgot to post the notification.

“We were supposed to discuss this, and that’s what was told to everyone: Nov. 18. And then by some weird event, someone forgot to post it, which is really strange, especially when you look at the timing of this memo. It’s like, ‘did you purposely not post it because you knew you were coming out with a memo?’
“I showed up and spoke at the public portion of the meeting, and 20 people showed up. And only three or four of them spoke, because a lot of that crowd is pretty shy. So, here was the thing, there was no notification of the meeting, yet 20 people showed up. So, it sort of looks bad when you’re like, ‘oh, sorry, whoops! It was a mistake, we forgot to post it. I think. I guess.’ I would suspect that they are trying to avoid some of the discussion that comes with such a topic.”

Oliverio says that he anticipates that now that code enforcement has issued this compliance order,  the owners of the medical marijuana dispensaries may decide to enter litigation with the city.

He says it’s conceivable that because the city does not have an ordinance barring their activity, and state law says they are allowed to operate, they might decide to take the city to court and let the judge decide.

“So it depends if one of those folks has deep pockets or strong convictions,” Oliverio says.

When reached by phone, the manager of San Jose Cannabis Buyer’s collective, who declined to give his name, said that he was unaware of the City’s recent Code Enforcement memo. He said that the dispensary at 373 S. Monroe Street in San Jose has had no recent interaction with police or city officials.

Erika Taylor Montgomery, who represents the San Jose Cannabis Buyers Collective, was not immediately available for comment, nor were representatives of the Pharmers collective or the Medileaf Collective.

Oliverio believes the correct course of action is clear: “If the voters have approved this by state law, and the president’s attorney general says ‘I’m not prosecuting people in states that are doing it,’ what I’m saying is, let’s have a policy or ordinance that says there can be a limited number of places, and we’ll tax it. It’s pretty simple.”

When reached by phone, the manager of San Jose Cannabis Buyer’s Collective (SJCBC), who declined to give his name, said that he was unaware of the City’s recent Code Enforcement memo. He said that the dispensary at 373 S. Monroe Street in San Jose has had no recent interaction with police or city officials. Erika Taylor Montgomery, who represents the SJCBC, was not immediately available for comment, nor were representatives of the Pharmers collective or the Medileaf Collective.


  1. With such a huge hole in the budget, the city shouldn’t take these actions to block discussions of new, legal revenue streams.

    Just have the discussions.

  2. The issue is not code enforcement, and never was.  The issue is medical marijuana.  Code enforcement is just a way for the city to get rid of the clubs before there can be any public hearings.

    This doesn’t speak well of the city council or the mayor.  So far, they are dodging the issue.  If they really want sunshine, then they grow a spine and hold hearings, with a vote, on the real issue.

  3. With public school music and sports programs on the decline, city worker layoffs, budget cuts and the list goes on, we should be thankful these coops/collectives are taxing the medicine to benefit our city. Like it or not, the sale and distibution of cannabis will continue illegally like it always has. Marijuana in California is a billion dollar industry and you don’t want your cut?!? Look at how much we tax tobacco, alcohol and the lottery. We depend on that funding. Why not make it legal, safe to buy and tax it. Sounds like a no brainer and step forward to save our local economy. It will never go away.. Hey San Jose, why turn down millions annualy to save our local economy?

  4. Assuming that medicinal marijuana is legitimately used by those who are seriously ill and have a valid prescription, I can’t understand why Mr. Oliverio thinks these ill people should pay an additional tax because they have cancer. That does not seem too compassionate. These ill people are probably not in a very good financial position to start with and trying to make money off of them is rather tacky.

      • I have no idea. If marijuana has some legitimate medical purpose, and is prescribed for a cancer patient by a doctor, no city has any business taxing them. Do you think a city should be able to tax prescription medications?

        • Should any good or item be taxed more so then another? We do this with wine, beer, liquor, tobacco, gambling, plastic bottles, aluminum cans.  We have also decided to tax income, capital gains, property (which provides shelter) to name a few…

          No difference.

      • City’s and Counties want their sales tax. Even a collective non-profit organization is taxed. Yes, I agree it’s BS because then you have to file for Federal Tax exemption which is an issue. Since they are not “in tune” with the Cali vibe.

  5. It is clear that the law (and public opinion) is moving toward the legitimizing the sale of medical marijuana. Unfortunately, zoning and city ordinances are not in synch with the timing of these laws. I support Councilman Oliverio’s proposed ordinance in concept, however to regulate is one thing, to tax is another. Regulation implies assurances that the businesses are in compliance with current zoning and ordinances, with current licensing and inspections. Taxing implies making revenue from the business operation, which I don’t support. Regulate the business, gain revenue from the licensing and inspection process, but don’t unfairly burden the patients receiving the medications.

    If we tax or regulate these dispensaries out of business, we will force the patients with legitimate medical issues to return to procuring their cannabis the ‘old fashioned’ way, which is counter productive to society as well as the patients themselves.

  6. I wonder why Mr. Horwedel is targeting these 3 dispensaries when there are now literally dozens in and around San Jose? Did these 3 sell him a light bag?

    This is not how I want San Jose spending my tax dollars! Closing pot dispensaries that are operating in compliance with California law is not in the public interest. I think Greg Perry nailed it, this is not about code enforcement. This is a back door attempt to deny people their rights under voter-approved California law.

    Mr. Horwedel should put his energies into fast-tracking the zoning needed to provide reasonable regulation of a legal product. That’s what us taxpayers pay him to do. 

    Marijuana, like it or not, is probably San Jose’s fastest-growing industry. With over a dozen store-front dispensaries and even more local delivery services marijuana sales are now contributing substantially to the local tax base.

    The dispensaries also give people a way to purchase their drug of choice legally without having to deal with the criminal element.

    Legalize it, let people grow it in their backyards and there will be no need for zoning, code compliance, taxes, law enforcement, drug cartels or even baggies! And, whether Mr. Horwedle likes it or not, come November voters in California will most likely legalize adult use of pot.

  7. If the (self proclaimed) mecicinal dispensaries only sold dope to the profoundly ill I suspect there would be few (legitimate) objections. However,studies indicate that nearly 50% of the “medicine” is quickly resold to dopers and other neurotics at a profit—and these civic minded entrepreneurs won’t be paying any taxes.

  8. To those who say legalize it and everyone will grow it in their backyards get a clue. It is legal to grow so long as you meet the requirements. Just like opening any business or making any product has requirements. In this case you have a medical need.

    Even if a portion of the “medicinal product” gets into the open market there are still taxes being generated on the vast majority that does not.

    In Nevada county for example, they est. “legal crops” $165M, other $600M. So who’s fooling who here? Better to get some taxes.

    And having just signed up for a card myself due to chronic pain I sat with cancer patients who need it more than I do. However, I want to try this instead of having to take NORCO which is a strong version of Vicodin. It makes me ill. I cannot sleep as it jacks me up and it makes my muscles hurt more after it wears off. I go for days without needing it but then just sitting reading peoples stupid crap about censoring businesses.  There’s no difference btwn this and a liquor store. Except that what 60,000 AMERICANS die every year from the later. I’ll bet my house that the amount of Americans dying every year from marijuana legal or otherwise is hmm. about zero!

    So get off your high horses. Ban alchohol if you have a problem. I cringe going to a liquor store these days just because of the deadbeats sitting inside. Ewe.  I’ve seen better crowds at dispensaries by far. Especially ones that are smart enough to offer better boutique medicine.

  9. We are always asked to have sympathy for the patients. What about the community that has to live with the effects of the abuse of marijuana? This is an issue for our youth young people are not immune to this substance as it can cause mental illness or make it worse.  Don’t ask me to be sympathetic to someone who has a patient card and buys “acapulco gold”  or brownies for his buddies. And don’t tell me this isn’t happening. This is a well organized lobbying effort with a lot of money behind it.