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Weed Monopolies, Thanks to Ed Lee - By - December 23, 2015 - SF Weekly
SF Weekly

Weed Monopolies, Thanks to Ed Lee

San Francisco is the city that does not know how to deal with cannabis.

The city has 22 permitted medical marijuana dispensaries, spread unevenly throughout town, although mostly in SoMa and the Mission.

They are not the most popular spots in some neighborhoods. The large black and brown men working security and the constant traffic of customers rattle leery homeowners, who then squawk to City Hall about crime, blight, and an “unsavory element.” (The first two, at least, are not supported by data; the third is purely subjective).

This situation is at least partially the city's fault. By attempting to discourage the marijuana industry's constant and inevitable growth — by every telling, cannabis sales have done nothing but steadily grow for the past few years — Mayor Ed Lee and other forces in city government have done nothing but create long lines at existing pot clubs and encourage monopolies. And they've quite possibly enriched those lucky enough to currently have a permit to sell weed.

And it could get worse. On Dec. 17, the Planning Commission voted down a proposed Fisherman's Wharf dispensary, even though it met all of the city's zoning requirements and Planning staff had recommended it for approval. At least one commissioner voiced support for slapping a moratorium on all future dispensaries until the city “has a plan in action.” That would be bad news for the dozen or more proposed dispensaries who filed applications to open within the last six weeks — but great news for the 22 already in business, who will be guaranteed more customers.

For years, medical marijuana has been a political third rail in San Francisco. The city has done very little on the issue since 2005, when then-Supervisor Ross Mirkarimi authored the city's Medical Cannabis Act. That law opened up only a small part of the city to dispensaries (the so-called “Green Zone”). Since then, with no exceptions, all cannabis-related laws have closed off additional areas of the city to legal marijuana storefronts. Thus, the most-common neighborhood complaints about weed clubs — they create too much traffic, they're too busy, they're too close to one another — are a direct result of the city's refusal to regulate cannabis sensibly and comprehensibly.

In 2016, with legalization a real possibility, the city may finally take a different tack. Under legislation authored by Supervisor Scott Wiener, the city has set up and seated a “legalization task force.”

A collection of cannabis industry owners, workers, lawyers, and city and school district officials, the task force's mission is to grapple with the possibility of legal, recreational cannabis — if legalization is approved by California voters this fall.

“It's a good start,” said Erich Pearson, the founder of SPARC in South of Market, one of the city's largest and best-known dispensaries, and a task force member. “There's an immediate need to create access for everyday people.”

In San Francisco, the city's bigger dispensaries sell about $12 million to $15 million worth of marijuana every year, according to industry sources and documents shared with investors. With 22 dispensaries in San Francisco, legal cannabis sales in San Francisco could exceed $100 million a year.

But what about the black market? How many more illicit sales are there — be they on street corners, bedrooms, or via renegade deliveries? No hard data on this exists, but looking at the rapid expansion of sales in states that legalized cannabis for adults 21 and over, it could be two to three times as much. (To think that these people are not buying marijuana right now is naïve; they're either patronizing the black market or patronizing their medical marijuana recommendation-holding friends.)

Existing cannabis businessmen like Pearson are directly aided by restrictive zoning and by anti-cannabis policy-makers — but even he believes that more dispensaries, not fewer, is what the city needs.

“We're going to have a lot more cannabis users,” Pearson told me recently. “We're going to need to spread it out.”

That may happen — if the legalization task force has an opportunity to confront medical marijuana, not just suggest rules for a potential legal future. Whether the Lee administration will entertain this notion, or if it will listen to the task force at all — a past Medical Cannabis Task Force's annual report went ignored — is unclear. Wiener did not respond to requests for comment on that point.

If it is ignored, there's one easy place for marijuana to go: east.

In Oakland, available real estate is both cheaper and more abundant (for now). And in Oakland, city leaders are talking about expanding the number of cannabis dispensary permits and generally making things easier for one of California's few sustained growth industries. (Because, after tech and real estate, what else is there?)

“Oakland,” one industry insider told me recently, “is going to be the cannabis capital of Northern California.” If it is, it wouldn't be the first time San Francisco let something good escape across the Bay. Meanwhile, the harder the city pushes back on cannabis, the better it will be for those already in business — including the black market.