Pubdate: Sat, 13 Feb 2010
Source: Record Searchlight (Redding, CA)
Copyright: 2010 Record Searchlight
Contact:  http://www.redding.com/
Details: http://www.mapinc.org/media/360
Author: David Benda

MARIJUANA CO-OPS EVOLVE AS THEY MATURE

Trusted Friends, one of the oldest medical marijuana  collectives in 
Redding, was doing brisk business last  summer.

One of the few cannabis clinics in Shasta County,  Trusted Friends 
generated about $200,000 in sales in  July.

"At times, I had 250 patients a day coming through,"  said Executive 
Director Jess Brewer, whose co-op opened  in December 2008.

Fast-forward.

Today, the competition to accommodate medical marijuana  patients in 
Redding is fierce.

Some estimated the city had upward of 40 collectives  operating 
before Redding enacted new rules, which  require cannabis clinics to 
register with the city so  the businesses could be regulated. About 
20 collectives  have submitted applications to operate in Redding 
since the ordinance went into effect.

Simple economics have cut into Brewer's bottom line,  and at times, 
he has had to scale back his work force.  Trusted Friends boasts 
3,000 members and two locations.

"I might be crying sour grapes, but that doesn't help  my business," 
Brewer said of the proliferation of  medical marijuana co-ops. "This 
town should not have  more than seven."

Ironically, Redding dwarfs Oakland (a city with a  population about 
four times bigger than Redding's),  where officials have capped the 
number of medical pot  co-ops within city limits at four.

Meanwhile, medical cannabis is treated like any other  retail item in 
the state, so sales tax is tacked on to  each transaction. In Shasta 
County, that means an  additional 8.25 percent is added to cover the tax.

But while marijuana co-ops need a seller's permit, the  state Board 
of Equalization (BOE) doesn't require the  holder to state what it 
specifically sells.

"So some dispensaries can be listed as either health  food stores, 
general merchandise, pharmaceutical  facilities," BOE spokeswoman 
Anita Gore said. "So we  don't have a good handle on the number of 
dispensaries  or the exact amount paid in taxes."

However, it's estimated that medical pot generates $200  million in 
annual sales in California, with roughly $18  million in sales tax 
receipts, Gore said.

In July, Oakland voters approved a 1.8 percent tax - on  top of state 
sales tax - on gross receipts of cannabis  businesses. Oakland 
officials estimate the tax will  raise $294,000 in additional revenue in 2010.

While cannabis collectives charge sales tax, some north  state 
operators are leery about labeling their  transactions "sales."

Jamie Kerr, CEO of 530 Collective in Shasta Lake, said  it's one of 
the contradictions of California's medical  pot law.

"Legally, I can't sell it, but it still requires a  seller's permit. 
It's the first of many incongruities  that exist" in the law, Kerr 
said. Kerr's collective,  which opened in September, has nearly 340 members.

The marijuana sold at collectives comes from members,  who will bring 
in the excess cannabis they grow.

Brewer at Trusted Friends will buy marijuana from his  members for $5 
a gram, then turn around and sell it for  $10 a gram, plus sales tax.

The indoor growing season, manipulated by lights, is a  year-round 
cycle. The harvest for growing marijuana  outdoors typically starts 
in October, Brewer said.

About 300 of Brewer's members, or 10 percent, sell the  marijuana 
they don't use back to Trusted Friends.

In 2004, when California expanded state rules for  medical marijuana 
to allow patient co-ops or  collectives to distribute the herb, the 
caveat was do  it without making a profit.

But the law also allows designated primary caregivers  to charge for 
their labor and services, which means  marijuana cooperatives can 
have employees and pay  salaries.

Brewer at Trusted Friends said his employees make an  average of 
$12.50 an hour. As director, Brewer  estimates he made about $50,000 in 2009.

Kerr at 530 Collective said her co-op has not generated  enough 
business to pay wages. The co-op makes enough to  pay the rent, 
utilities and insurance, and to keep an  attorney on retainer.

However, Kerr believes that by next month, 530  Collective will hire 
a part-time employee.

"I want to provide medical benefits (to employees),  retirement 
options, but we are not there yet," Kerr  said.

By contrast, Trusted Friends' monthly payroll has  ranged from 
$10,000 to $38,000. Brewer pays $5,000 to  rent two buildings and 
$1,000 a month in utilities.

California's medical marijuana law doesn't dictate how  much a 
collective employee can make or what's  considered a reasonable salary.

The attorney general's office said the salary question  is something 
for the courts to resolve.
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MAP posted-by: Keith Brilhart