S.F.'s New Cannabis Don - March 2, 2016 - SF Weekly
SF Weekly

S.F.'s New Cannabis Don

Buying cannabis in San Francisco has been supremely easy for a long time. If walking out the door to one of the city's 28 licensed dispensaries was too onerous — or if “your guy” was out of town, or if you were tired of dealing with the dealers on the street — you could pick up the phone and call one of more than 40 weed delivery services.

The problem was that, with a few notable exceptions, these deliveries were all of varying degrees of illegitimacy. Next to none of them had city permits; a few even didn't care if you were a legitimate medical cannabis patient with a recommendation from your doctor.

This mattered beyond a mere obsession with the rules. For the consumer, there was no quality guarantee. (Problems with lab test results aside, a fly-by-night operation is not going to spend time and money testing its stock for mold, pesticides, or other common contaminants.) For the government, this meant lost revenue from dodged sales taxes and permit fees. And for the cannabis “movement” trying to sell itself as a legitimate industry, this meant trying to explain away one more activity too close to drug dealing.

An unlikely character has come to the rescue in the form of Donald Carmignani. Carmignani — a bull of a man with slicked-back hair, meaty fists, and a penchant for gold chains, bowling shirts that Guy Fieri might envy, and Irish whiskey — is the owner of 214 California Street, a small commercial building a few blocks from Market Street in the Financial District.

Last fall, largely based on the premise of legitimizing delivery, city planners gave the OK for 16 coveted medical cannabis dispensary permits at 214 California, the most weed licenses ever awarded in one fell swoop in San Francisco. (Typically, cannabis sales permits are awarded one at a time.)

This means that Carmignani, a multi-generation San Franciscan from the Marina District, has the distinction of being the city's biggest medical marijuana landlord.

As someone who has lived here all his life and had success in business — he sold off a “information management” company before delving into real estate — Carmignani is also tied to the city's power structure. His father, also a property owner, was for years the landlord of Balboa Café in the Marina District, an eatery owned for years by Lt. Gov. Gavin Newsom's PlumpJack Group. (Conveniently, Newsom happens to be a vocal supporter of marijuana legalization — and also happens to be tight with billionaire Sean Parker, who is bankrolling the adult use legalization initiative vying for the November ballot.)

Mayor Ed Lee appointed Carmignani to a seat on the city's Fire Commission — where current Board of Supervisors President London Breed served before she was elected to office. He held the post for only four months, until an arrest for felony domestic violence precipitated his resignation. (He pleaded guilty to a misdemeanor charge in the fall, and was sentenced to a fine, probation, counseling, and the surrender of several firearms.)

He was not present when 214 California Street was approved by the Planning Commission, largely on the grounds that licensed delivery services would do away with the unpermitted ones and thus be a civic benefit.

But if it will be good for the city, it will be very good for Carmignani — who has managed to secure a commodity, the license to sell weed in San Francisco, at a time of peak demand. And he doesn't have just one, either. Carmignani is the landlord for 16 medical cannabis dispensary permits, which he can rent out at market rate.

And market rate for a license to sell marijuana via delivery? According to people who have had dealings with Carmignani: up to $1 million just to get in the door, and from $7,000 to $10,000 a month in rent. And that's just for a single permit.

Neither Carmignani nor his attorney, Brendan Hallinan, would comment on the financials. But the opportunity they're offering seems to be in demand: Records show that of the 16 permits available, seven delivery services operating out of 214 California received provisional dispensary permits from the Department of Public Health in December. They can begin delivering marijuana when the final buildout on the property is completed, which will be sometime in the next few months, Hallinan told SF Weekly.

For his client, this was a bit of a gamble. Carmignani bought the building in 2011, at the depths of the recession, and managed to hang onto the property despite it falling into default twice, records show.

“He had the building vacant for four years — that's how long it took to get this thing done,” Hallinan said. As for the sky-high rental prices, “he's letting the market dictate.”

And the market has never been higher. Legalization might be around the corner, but moreover, under the recently passed state regulations governing cannabis — the Medical Marijuana Regulation and Safety Act — any business in operation now will have priority for a state license, which will be required starting in 2018.

And getting a license in San Francisco is notoriously hard. If you're a delivery service, you may have no other option than to go through Carmignani, San Francisco's new medical marijuana don.