The Planning Department has assembled a project team to craft a land use ordinance that specifies in which zoning districts collectives and cooperatives can establish storefront facilities and how far they must be from other medical cannabis facilities, sensitive uses, and businesses prone to nuisance activity (liquor stores, adult entertainment, etc.). The Building and Safety Department is coordinating on separate operational protocols, which are likely to include regulations concerning hours of operation, required security, and other measures.

Observers were surprised by a proposal from the Planning Department for a more lenient permit process than the Conditional Use Permit (CUP) proposed by advocates. City Planner Alan Bell told the committee that permits may be available to any collective or cooperative that meets the land use and operational requirements without a public hearing, while other facilities can request an exception to some requirements through an administrative hearing process. We can anticipate some controversy on this topic. Neighborhood groups want more input in the permit process, and even some advocates want a tougher process to allay community concerns.

The City Council’s legislative analyst has already circulated language for the ordinance to various departments for review, but has not yet discussed the matter in detail with newly elected City Attorney Carmen Trutanich. City staff is doing technical analysis on the draft ordinance now. Part of this process includes developing maps showing what territory would be off limits given differing requirements for distances between collectives and sensitive uses.  PLUM Committee Chairman Reyes asked staff to report back on their timeline in two weeks.

A representative from the Code Enforcement said that his department is already enforcing hardship application denials, saying that five facilities have already closed and six have been referred to the City Attorney’s office for further enforcement. Newly elected City Councilmember and PLUM Committee member Paul Koretz was the first member to sound a cautionary note regarding hardship applications. Koretz questioned the wisdom of closing facilities that might ultimately qualify under the new ordinance. It remains to be seen whether this represents a softening of the committee’s hard line approach to hardship applications.

I encouraged committee members to be careful about recommending any regulations containing a laundry list of sensitive uses, pointing out that the well-regulated facilities anticipated by this ordinance would not be problematic for neighbors. Councilmember Huizar echoed this sentiment. He related his positive experience visiting Cornerstone Research in Eagle Rock. The Councilmember said there was no reason that facility could not be near a sensitive use, adding he was rethinking a proposed 1,000-foot requirement in the current draft.

I also encouraged the committee to abandon plans to require collectives to disclose the names of patient-cultivators. Chairman Reyes agreed to hear more on this topic. Reyes also expressed concern about doctors writing recommendations too freely. I reminded committee members that enforcement for doctors falls to the California Medical Board, which has already sanctioned doctors who fail to uphold the agency’s standards.

In a subsequent item, the PLUM Committee also recommended denial of a hardship application for a collective on Venice Blvd. When questioned by Councilmember Koretz about what constitutes a hardship under the moratorium, a representative from the City Attorney’s office said that the decision was a exclusively legislative one, which must only have a “rational basis.” The representative reiterated that the hardship application did not give anyone permission to operate in violation of the moratorium.

(Download the relevant documents from the LA City Clerk’s website.)

Advocates are skeptical, however, of an amendment to the initial motion extending the term of the moratorium for another six months (until march 2010). Councilmembers Reyes, Rosendahl, and Zine proposed that friendly amendment to give city staff more time to write a permanent ordinance regulating collectives. Advocates worry that the extension violates California Government Code 65858, which prohibits cities from using an Urgency Ordinance to establish a moratorium for more than two years. This may generate litigation when the initial two-year moratorium expires on September 14, 2009, and new collectives try to open.

City staff argues that work on the permanent regulations is underway, and therefore, the extension is defensible. This may be true, but delays caused by litigation will certainly complicate the already chaotic path towards regulations. The situation is even more complex because, as a Charter City, Los Angeles has the constitutional right to make its own law. Whether or not state law preempts Los Angeles from adopting longer moratoria under Section 253 of the City Charter is unclear. That section can be read as allowing longer Urgency Ordinances, although it is reasonable to assume a court would disallow an open ended ban on any activity temporarily prohibited under Section 253. This may have to be settled in court if the City Council extends the moratorium beyond two years.

What the city needs now is clarity and concrete progress. The City Council would be wise to leave the original deadline in place and prod city staff into action on the final ordinance before the original two-year ICO expires.

The City Council will consider the amendments at 10:00 AM on Friday, June 19, in Council Chambers (Room 340) at City Hall – 312 N. Spring Street at Temple Street in downtown Los Angeles.

The message that medical cannabis patients pay sales tax resonates with the media, community, and elected officials, who see this revenue as a partial solution to the state’s budget woes. Few would be so enthusiastic, however, if they stopped to consider the burden sales tax places on sick and dying patients – or that the estimated $100 million in medical cannabis sales tax is only 0.4% of this year’s $42 billion budget shortfall.

Americans for Safe Access (ASA) argued against sales tax on medicine in 2005, but the BOE ruled that medical cannabis did not qualify as a tax-exempt prescription medicine. There is more work to be done in persuading the BOE to abandon this position, and in adopting state legislation to relieve this burden from patients and protect some of the state’s oldest MCDC form crushing liabilities for uncollected sales tax.

The BOE erred in making medical cannabis subject to sales tax, but MCDC operators must collect and pay the tax until we can change the policy. Penalties for failing to comply are severe. Additionally, California Attorney General Jerry Brown mentioned sales tax compliance as one of the criteria state law enforcement should consider when evaluating the legal status of an MCDC when he published his landmark guidelines for medical cannabis last year.

In response to pressure from ASA, the BOE updated its policy to allow MCDC operators to file a “waiver for an incomplete application” when applying for a Seller’s Permit. The waiver allows the applicant to decline to state what he or she sells or to identify the suppliers – thus avoiding self-incrimination. You must obtain the waiver from a BOE field office.

My goal is to help new operators organize and operate their collectives in ways that are as safe and legitimate as possible in the current legal climate.  A well-run collective is good for patients and for the grassroots movement to defend medical cannabis rights.  A poorly run collective, however, is dangerous for patients and brings the integrity of our movement into question.  Patients, operators, and advocates will all benefit from making our collectives the best they can be.

This site contains answers to frequently asked questions and other useful information.  Of course, you will want to talk to an attorney and accountant before you open your collective.  My advice is not a substitute for help from other professionals.

Operating a medical cannabis dispensing collective is a very important and compassionate project.  It is also a lot of hard work.  You should think hard about your level of commitment and the risk you’re willing to take before you begin this project.  Some operators would do better for themselves, the patients, and the grassroots movement for medical cannabis if they decided not to operate dispensing collectives.  There are easier and safer ways to earn a living.  This is a line of work that is most appropriate for people who are committed to compassion – and to the cause of medical cannabis. If you are not committed to upholding the letter and the spirit of the law and to conducting your business affairs in an ethical and reputable manner, then you should not pursue this line of work. You will do more harm than good.

New operators also do well to reflect honestly upon their motives for opening a dispensing collective.  Your motives will influence how you operate your collective and the decisions you make regarding your patients and community.  The consequences for making bad decisions are serious for you, the patients, the community, and medical cannabis in general.  If you say that your motive is compassion, then your actions should reflect this. Neighbors, elected officials, and police officers can tell when you’re being insincere.  Do not put yourself and others at risk by failing to examine your motives.

I need to include a disclaimer to be very clear about my participation in conversations with new collective operators: I am not an attorney or an accountant. The contents of this message do not constitute professional legal or financial advice, nor am I recommending that you take any specific actions. This information is for educational purposes only. The contents are my own opinions.

Good luck with your project.  Please keep me posted on your progress and let me know how I can help.