When California Gov. Gavin Newsom last month gave the emerald light allowing cannabis dispensaries to remain open and sell marijuana during the shelter-in-place order, Assemblyman Ash Kalra (D-San Jose) saw no reason why Santa Clara County wouldn’t follow the state’s lead.
Instead, local health officials restricted recreational cannabis to delivery-only and in-house sales to medical marijuana users in an effort to promote social distancing and curb the coronavirus outbreak. “That’s when it raised my eyebrows,” Kalra says.
While Santa Clara County’s more restrictive stay-at-home mandate doesn’t necessarily make a distinction between recreational and medical, the county’s decision makers say the general rule is that healthcare operations get to stay open—dispensaries doling out medical marijuana being one of them.
The ruling, which came in a set of frequently asked questions that popped up on the county health department’s website sent shock waves through the South Bay cannabis industry. Dispensaries and advocates argued that the local rule harkens back to a less enlightened era and runs contrary to the will of California’s voters, who overwhelmingly favored legalized recreational marijuana in 2016.
“The differentiation of medicinal and adult-use cannabis doesn’t really exist anymore,” says Chris Lane, chief marketing officer of San Jose-based Airfield Supply. “Anyone over 21 has the legal right to access cannabis. ... There’s no other essential business that’s experiencing additional rules and regulations.”
Prop. 64’s passage eliminated the need for medical marijuana cards. But while the number of people with prescriptions dwindled, those needing cannabis for health-related reasons didn’t. Restricting who’s allowed through the doors, Kalra says will strain the still-developing cannabis delivery market.
“The cannabis industry is still in its infancy and facing a number of logistical and fiduciary challenges,” Kalra and state Sen. Jim Beall, a fellow Democrat representing Silicon Valley, wrote in a letter to Santa Clara County Public Health Officer Dr. Sara Cody. “Requiring the industry to build delivery capacity under current circumstances is impractical and runs the risk of driving demand to the underground illicit market.”
Dispensaries have already started to see an uptick in delivery sales. Caliva CEO Dennis O’Malley previously told San Jose Inside that deliveries usually bring in one-third of the company’s sales. “But over the course of the course of the past month, we’ve seen this revenue model shift with delivery offerings now securing about two-thirds of our total income,” he said in late March.
Although delivery sales may be booming, Lane says he has concerns about their ability to make all of the orders. “Even if we combined all the efforts of every dispensary in the Bay Area, there’s not enough supply or capacity to meet the demand,” he said.
Wendy Sollazzi, who heads the San Jose Police Department’s Division of Cannabis Regulation, says they’re running the risk of pot users going back to the black market.
“The advantages of keeping licenses ‘recreational’ retail cannabis providers open to the public, while following social distancing requirements, is that people in San Jose are electronically age-verified and they are obtaining lab-tested product,” Sollazzi tells San Jose Inside. “Closing retail stores will redirect their purchases to the illegal market selling untested product and not age-verifying.”
Last week, Kalra and Beall, along with San Jose City Council members Pam Foley, Magdalena Carrasco and Maya Esparza, lobbied the county health department to reverse its decision and allow curbside pickup.
Foley tells San Jose Inside she was especially concerned about seniors who rely on CBD oil for pain management. “A lot of seniors, they don’t have smartphones, and if they do, they don’t want someone to deliver CBD ointment for a drive by,” she says. “[It] makes it very difficult for a population that’s already at high risk.”
But County Executive Jeff Smith and County Counsel James Williams tell San Jose Inside that people don’t need medical marijuana cards for in-person purchases at dispensaries. “The health order doesn’t say anything about medical cards or prescriptions or anything like that,” Smith says. “That’s not required pursuant to the order at all. It’s really an individual is on [the] honor [system]. If they need it for medical purposes, they can go to a dispensary.”
While Smith and Williams say there’s no need for medical marijuana cards, that hasn't been the general understanding for everyone in the South Bay.
A spokesperson for the county health department, who did not give their name, told San Jose Inside in an email last week that businesses could “continue to dispense from storefronts to patients with a physician’s recommendation or medical marijuana identification card.”
“Cannabis users who do not have a physician’s recommendation or medical marijuana identification card are still able to purchase cannabis by delivery, using one of the many delivery services on the market,” the spokesperson added.
The letter from Foley, Carrasco and Esparza to the health department echoed a similar understanding of the rule as they detailed how costly it is to obtain a card—between $45 and $150 to schedule an appointment with a doctor, up to $100 for an application and between $25 to $40 to renew the card each year.
“Today, a resident can walk out of a grocery store with a bottle of Tylenol, but the same person is unable to pull up curbside for pain relief from CBD oil,” the council women wrote. “These individuals in need of relief should not be denied safe access to cannabis during this critical time.”
Even Sollazzi has fallen prey to some of the discrepancies.
While the SJPD won’t be requiring dispensaries to ask for medical marijuana cards at the door, she said the “county needs to provide the direction as to what they consider as being in compliance with the shelter in place order with regards to medical customers.”
On the delivery side of things, the SJPD has a much clearer enforcement picture. Sollazzi said that vehicles are equipped with a GPS tracker and video cameras to ensure drivers are following all the necessary protocols.
Bay Area marijuana advocates and attorneys say the confusion has been created by a set of frequently asked questions on the health department’s website that says recreational cannabis can’t be purchased on a “take-out” basis.
“Medical dispensaries can dispense under healthcare industry exemptions,” the FAQs read. “Non-medical cultivation, supply and dispensing of cannabis are prohibited, with the exception of deliveries directly to residences.”
Oakland-based cannabis attorney James Anthony called the FAQs problematic because, “they create an artificial distinction between medical and non-medical based on some unknown authority that does not exist in state law.”
Anthony has since launched a petition, which has garnered more than 21,000 signatures, urging Santa Clara County to reverse its decision and “not roll back Proposition 64.”
While it’s been widely reported that the stipulation was crafted under the guidance of District Attorney Jeff Rosen as part of an extended stay at home order issued March 31, the decision has actually been a part of the county’s FAQ since March 22.
A letter exclusively obtained by San Jose Inside from Assistant District Attorney David Angel to Rosen, however, shows that the DA’s office did meet with county counsel in regards to the “legal status of cannabis dispensaries.” In the email, Angel references a letter sent by South Bay cannabis attorney James Roberts.
“Mr. Roberts argues that there is no legal distinction between recreational and medical use,” Angel wrote. “This is both legally irrelevant and factually false. It is irrelevant because the public health order is not about legal categories. For example, there is no pre-defined legal distinction between landscaping for fire prevention and landscaping for aesthetic reasons, but one is allowed under the ordinance and one is not.”
Angel further explained that it is “not our job to give the dispensaries legal advice as to what they would need to demonstrate to remain in compliance with the law.”
You asked for me to meet with county counsel concerning the legal status of cannabis dispensaries, and the letter that you were sent by James Roberts on behalf of his clients, the sixteen dispensaries in the county. He takes the position that since cannabis is legal, there is no legal distinction between recreational and medical use. Therefore, we cannot enforce a distinction. He alludes to the coming of rampant “black market” sales if dispensaries cannot remain open to all customers.
I won’t bury the lead—this is nonsense.
I spoke with county counsel, Chris Arriola and Brian Buckelew. We all have the same position.
Dr. Cody’s ordinance allows for any adult to purchase cannabis for home delivery. As we know, there is a vibrant and robust on-line, delivery market for cannabis, so it is hard to imagine any individual who cannot secure cannabis in this way. (In fact, I’m pretty sure I could have ordered cannabis and had it brought to my home in less time than it took for Mr. Roberts to write his letter, and for sure in less time than it took for me to research this!)
Dr. Cody’s ordinance only allows dispensaries to cater to in-store clients who are purchasing medicinal marijuana. The purpose of this is really no different from any other small local business. We need to shelter in place and that includes people who want to buy cannabis.
Mr. Roberts argues that there is no legal distinction between recreational and medical use. This is both legally irrelevant and factually false. It is irrelevant because the public health order is not about legal categories. For example, there is no pre-defined legal distinction between landscaping for fire prevention and landscaping for aesthetic reasons, but one is allowed under the ordinance and one is not.
There is no pre-defined legal distinction between a job fair for teachers and a job fair for medical techs to give Covid tests, but one is prohibited and one is allowed. Therefore, his argument that there is no statutory distinction between recreational cannabis use and medical cannabis use is legally irrelevant.
It is also false. There is a legal distinction. There is no sales tax imposed on a medicinal cannabis purchase, but there is a rather hefty sales tax imposed for non-medical purchases. Because of this, all dispensaries are already equipped to legally distinguish between medical and non-medical purchases, because they don’t charge sales tax on medical purchases.
The County’s order is legally coherent and quite clear: Dispensaries can only make on-site sales for medicinal cannabis. They cannot allow customers for any other reason. However, they can deliver cannabis for any type of purchaser.
Now, enforcement is a different question. It might be difficult to prosecute or investigate such a case, because law enforcement would need to track the actual status of each client. I would be surprised if we got many cases due to the relatively intensive investigation that would be required. However, where we might get a case would be if a dispensary flagrantly refused to comply. In that case, law enforcement would see a high amount of foot traffic, lines out the door, a store whose business seemed no different than before. Under those facts, I think an investigation would be relatively easy.
Finally, I want to note that it is not our job to give the dispensaries legal advice as to what they would need to demonstrate to remain in compliance with the law. For example, we tell bars that they cannot serve to people under 21, but we don’t tell them how to prove that. We don’t tell them to card everyone or just people who look young. We just tell them that serving alcohol to minors is a crime. Similarly, we should not be drawn into telling the dispensaries exactly what they should do to make sure they only make medical sales on-site. If it were me, I would say just sell to people with a medical license. However, if they can prove that they were somehow limiting the sales to medicinal cases with some other method, that might be fine. We shouldn’t be advising them on the minimum they need to do to comply with the law.
All that having been said, the big picture is clear: Social distancing works. There is a pandemic. The County order allows for delivery of cannabis. The County does not allow dispensaries to sell cannabis to on-site customers unless it is for medicinal purposes.
Please let me know if you would like more on this issue or would like me to follow up.