Pubdate: Sat, 05 Jan 2013
Source: San Francisco Chronicle (CA)
Copyright: 2013 Hearst Communications Inc.
Author: Matthai Kuruvila
Page: C1


Nearly a year after Oakland permitted the establishment of four new 
medical marijuana dispensaries, three have yet to open, in large part 
because landlords have been unwilling to rent to them.

City leaders and cannabis advocates say a federal crackdown on 
cannabis businesses has sent a chill through the real estate market, 
particularly after the U.S. attorney last year sought property 
forfeiture from the landlord of the Harborside Health Center 
dispensary - a case that is still pending.

"Ever since the U.S. attorney took their hard-line stance on property 
owners, property owners have been hesitant to lease space," said 
Arturo Sanchez, Oakland's deputy city administrator, who oversees the 
city's permitting process for marijuana dispensaries. "That was 
complicated further after the forfeiture action by the U.S. attorney 
against Harborside."

The one dispensary that did open over the past year - Blum Oakland on 
West Grand Avenue in Uptown - also faced reluctance from a landlord. 
Sanchez said the landlord of one proposed site for Blum had wanted a 
$4 million bond even though the property was worth only $2 million.

The difficulty in finding dispensary sites marks a shift in a city 
that stood only a year ago as the vanguard of California's cannabis 
culture. The four approved dispensaries would have doubled the number 
of outlets selling medical marijuana in Oakland - even as the federal 
crackdown shut down hundreds of other dispensaries around the state.

But then in April, federal agents raided Oakland properties connected 
to Richard Lee, a dispensary owner, prominent legalization advocate 
and co-founder of the famed cannabis school Oaksterdam University. In 
July, federal agents taped their forfeiture notice on Harborside's 
front door. "We really need to set some ground rules here where the 
federal government is going to respect property rights and 
Californians' legal access to medical facilities," said Dale 
Gieringer, director of California NORML, a marijuana advocacy group.

Gieringer criticized federal authorities for going after dispensaries 
permitted by local governments while allowing unsanctioned ones to flourish.

Oakland has a variety of restrictions on where dispensaries can be 
located. They have to be at least 600 feet from various places 
children frequent, including parks, libraries, schools, and other 
dispensaries. They are entirely banned from areas zoned residential, 
Sanchez said.

That in itself can make it hard to find a location, said an operator 
of one of the four new dispensaries, who asked that his name not be used.

"You have all these other things that prevent dispensaries in certain 
places," the operator said. "You couple that with the fact that some 
people do have a moral issue with it, you really do limit your options."

Repeated attempts to reach other operators were unsuccessful. Some 
experts in the cannabis industry said dispensary operators fear 
speaking out because the two dispensaries targeted by the federal 
government, Harborside and Lee's former Coffeeshop Blue Sky, were led 
by people often in the media limelight. The camera-shy posture of the 
new dispensaries is most striking with Abatin Wellness, a dispensary 
planned for Oakland.

Geoff Spellberg, an attorney representing Harborside's landlord, said 
property owners have good reason to be worried.

His client never received a warning, he said. The only explanation 
given by the U.S. attorney's office for why Harborside was targeted 
was that it was a marijuana "superstore."

"In my view, it's a very arbitrary conclusion that they're a 
superstore," Spellberg said. "When is a medical cannabis dispensary 
not a superstore?"

Without clear guidelines about what's legal, Spellberg said he would 
tell any client that leasing to a dispensary "is a major risk because 
the consequences are so severe."

Spellberg's client's property is worth $2 million.

"The big concern I would express to a potential landlord is that 
there's not enough guidance about what the federal government is 
going to permit and what they're not going to permit."
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MAP posted-by: Jay Bergstrom