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Friday, November 11, 2011

S.F. Medical Marijuana Dispensaries Close: Jobs, Taxes Go Up in Smoke

Posted By on Fri, Nov 11, 2011 at 3:50 PM

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Charles Pappas creates jobs and pays his taxes, to the tune of about 12 full-time, full-benefit positions which start at $20 an hour, and over $200,000 a year to the state Board of Equalization.

The problem is Pappas is chairman of the Divinity Tree, one of the three San Francisco medical marijuana dispensaries which received letters from the federal Department of Justice at the end of September. The letters instructed the dispensaries -- which were too close to either a playground or a school for the liking of federal law, despite "unambiguous" compliance with state law -- to close by the end of business today or face stiff penalties.

Lawyers this week asked a federal judge for a temporary restraining order, a move that could have stayed the government's hand, but a hearing won't be held until next week. So rather than risk the seizure of his landlord's property or the 40 years in prison threatened by U.S. Attorney Melinda Haag, Pappas closed shop.

"Until this latest injustice subsides, there's nothing else we can do," he said, adding that Divinity Tree may join in one of the two lawsuits currently filed in federal court against the feds.

Two other dispensaries received letters from Haag, and are currently weighing their options.

Mr. Nice Guy on Valencia Street and Medithrive in the Mission District also received letters from the feds. It is said that Mr. Nice Guy has become a delivery-only pot dispensary, according to Pappas. However, Medithrive, which is one of San Francisco's biggest, is still "weighing its options," according to a dispensary spokesman.

"It's obviously an extremely difficult time for them," spokesman PJ Johnston said. "They have patients and employees about whom they care very much."

Medithrive is open Friday and plans to be open Saturday, according to Johnston.

Calls to Medithrive's CEO and dispensary manager were not immediately returned. The line at the dispensary was busy when SF Weekly called. A lawyer representing Mr. Nice Guy did not immediately return a telephone message seeking comment.

Jack Gillund, a spokesman for US Attorney Haag, did not immediately respond to an e-mail seeking comment (but considering his last dozen or so responses have been, "No comment," readers can probably fill in that blank with more blank).

SF Weekly will update with more information as it trickles in, but in the meantime, it's certain that the local economy will take a hit.

Pappas estimated his dispensary grosses about $2 million or more annually. At 9 percent sales tax paid to the state, that's $180,000 less to California per year -- plus the 12 to 15 full-time jobs with benefits, and rent to the landlord. Oh, and don't forget the money that went to PG&E to run the lights that grew the medical marijuana.

With a narrow space in the Tenderloin, Divinity Tree is considered one of the city's smaller dispensaries. If all three close, it will mean the loss of dozens of jobs and well over $500,000 in tax revenue.

"It's just sad how smoothly it's all going for the feds," said Pappas, who said he's written to Rep. Nancy Pelosi as well as Gov. Jerry Brown -- who, as the state's attorney general last year, authored a set of guidelines by which dispensaries could operate legally -- without receiving a response.

"We did what you wanted, Jerry -- and now you can't say a word?"

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About The Author

Chris Roberts

Chris Roberts has spent most of his adult life working in San Francisco news media, which is to say he's still a teenager in Middle American years. He has covered marijuana, drug policy, and politics for SF Weekly since 2009.


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