Pubdate: Fri, 25 Nov 2011
Source: San Francisco Chronicle (CA)
Copyright: 2011 Hearst Communications Inc.
Pabe: D1
Author: Chris Roberts


The federal Department of Justice's crackdown on medical marijuana 
dispensaries in California has meant the loss of thousands of jobs 
and millions of dollars in tax revenue, according to cannabis 
advocates and government statistics.

An estimated 2,500 people statewide have lost their jobs since late 
September, when California's four U.S. attorneys sent letters that 
threatened jail sentences for dispensary owners and the possible 
seizure of buildings that house the pot clubs, said Dan Rush, 
director of the United Food and Commercial Workers' national medical 
cannabis division. The union began organizing medical marijuana 
workers in May 2010.

Of those jobs, which union officials say include people who are 
directly employed by marijuana dispensaries as well as those with 
indirect ties to the industry, about 50 have been lost in San 
Francisco and dozens more around the Bay Area.

Three city dispensaries have closed since receiving warning letters 
from Melinda Haag, the U.S. attorney for Northern California.

Before closing Nov. 12, Medithrive in San Francisco's Mission 
District employed 17 people at its storefront near 16th Street and 
another five at its warehouse, said P.J. Johnston, a spokesman for 
the dispensary. Another 15 jobs were lost when Divinity Tree in the 
Tenderloin neighborhood closed Nov. 11, said Charles Pappas, chairman 
for the collective.

Representatives for Mr. Nice Guy, the third to close, did not reply 
to requests for comment, but industry experts say the Valencia Street 
dispensary employed at least a dozen people.

Wages and benefits

The average wage at Medithrive was $17.80 an hour, Johnston said, 
while a job at Divinity Tree started at $20 an hour, according to 
Pappas. Both included full health care benefits.

"These are all good, single-earner, breadwinner jobs," Rush said. 
"How many places can take a hit like this to their economy? It's insane."

The state Board of Equalization collected an estimated $100 million 
in sales taxes from medical marijuana dispensaries in 2010, agency 
spokeswoman Anita Gore said.

Only Divinity Tree officials would discuss their tax bill: The 
dispensary, which with 7,000 registered members had less than a third 
of Medithrive's 26,000 patients, "never paid less than $200,000" a 
year in taxes since opening in 2007, Pappas said.

Subsidized services

In the Bay Area, where some dispensaries must also pay a local tax, 
the medical marijuana industry helps subsidize government services. 
That's in addition to spending thousands of dollars on advertising 
and hiring professional services such as lawyers and accountants.

Some of this economic activity is disappearing even as the 
dispensaries remain open. Medithrive, for example, spent $209,000 
this year on advertising, $64,000 in payroll taxes, and $4,000 in 
local permit fees, Johnston said.

Since the crackdown, San Francisco's 23 remaining dispensaries have 
canceled much of their advertising, according to Stephanie Tucker, a 
spokeswoman for the city's Medical Cannabis Task Force.

Ad revenue

Medical marijuana advertising constitutes about 10 percent of the ad 
revenue at alternative weeklies like the San Francisco Bay Guardian, 
Executive Editor Tim Redmond said. "It's a significant source of ad 
revenue for us. It not only hurts us, it hurts any newspaper trying 
to sell ads."

Chronicle President Mark Adkins, however, said the federal crackdown 
generally has not affected the newspaper's ad revenue and paid 
business listings. "Our policy has not changed, and we will continue 
to accept legitimate medicinal marijuana dispensary advertising," he said.

Were San Francisco's medical marijuana industry to be extinguished, 
thousands of jobs would be lost, Tucker said. When ancillary jobs 
ranging from construction workers to architects to planners to 
lawyers and accountants are factored in, San Francisco's medical 
marijuana industry employs "1,500 people, conservatively," she said. 
In Oakland, medical marijuana employs 400 people, Rush said.

In an e-mail, Haag did not comment on the issue of jobs, but said 
that her office had received "many phone calls, letters and e-mails 
from people who are deeply troubled by the tremendous growth of the 
marijuana industry and its influence on their communities." She 
signaled that more warning letters - and more closures - could be on the way.

More complaints

"Since my office sent the letters," she wrote, "we have received even 
more complaints relating to schools, and now from cities that have 
banned dispensaries yet still have them opening and refusing to abide 
by local law."

California state law allows dispensaries to operate within 600 feet 
of a school or park; stricter San Francisco law requires a 1,000-foot boundary.

Thus far, San Francisco's elected officials have been silent on the 
issue, with the notable exceptions of state Sen. Mark Leno and 
Assemblyman Tom Ammiano. Both Democrats have sponsored 
cannabis-friendly legislation in Sacramento, and both appeared at a 
rally denouncing the raids.

But so far they've been unsuccessful in either scheduling a meeting 
with Haag or eliciting action or a statement from other state 
officials, such as Gov. Jerry Brown, who as attorney general wrote 
the guidelines for California's legal marijuana providers.

Restraining order sought

Legal action pursued by the dispensaries has also been unsuccessful. 
Dispensaries in all four federal court districts in California sued 
the Justice Department this month, seeking a temporary restraining 
order against federal prosecutors' actions. The case has not yet been 
scheduled for a hearing, said San Francisco attorney Matt Kumin, who 
is representing the dispensaries in court.

Meanwhile, "monetary costs are certainly in the hundreds of thousands 
monthly," Kumin said. "Lost jobs, unemployment benefits, lost taxes, 
loss of secondary economic impacts. Who is served? DEA jobs and budgets."
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MAP posted-by: Keith Brilhart