Pubdate: Thu, 28 May 2015
Source: SF Weekly (CA)
Column: ChemTales
Copyright: 2015 Village Voice Media
Author: Chris Roberts


These are good times in the marijuana business. With an adult 
recreational market still on the horizon, the California medical 
cannabis industry is enjoying its biggest boom time yet. Mobs of 
customers are fueling over a billion dollars a year in legal sales, 
but more important are the "investors." The cannabis game usually 
takes unkindly to outsiders, but not when they're carrying suitcases 
of cash, as the strange faces in expensive suits circling around the 
industry at all levels, looking for opportunities to buy into this 
multibillion-dollar game, are.

That said, the San Francisco marijuana industry's wildest success of 
late has nothing to do with selling cannabis. For several days 
earlier this month, a line of people camped outside in the Haight 
Street cold to be the first to stroll past a heavily armed security 
guard into a new clothing store and plunk down $100 for a hooded sweatshirt.

That insane demand is thanks to the brand - Cookies SF, a reference 
to what is easily the country's best-known strain of marijuana - and 
to its relentless pitchman, Berner, the San Francisco native who 
rapped and Instagrammed his way to hanging out with Snoop Dogg and 
became one of the most recognizable names in the industry. Not bad 
for a Sunset District kid who, just a couple of years ago, was 
working behind the counter at a humble cannabis dispensary in the 
Richmond District.

As for that dispensary, it was, as of last week, one of the oldest 
continuously operating marijuana businesses in San Francisco.

It's closed - shut down in what the owner is calling a "hostile 
takeover" and what appears to be a threatening trend for the first 
wave of cannabis businesses that laid the foundation for the 
country's fastest-growing industry.

Monday was the last day at The Hemp Center on Geary Boulevard near 
Park Presidio. The Hemp Center is decidedly old-school: no signage, 
with only a red, gold, and green-painted storefront signaling that 
this is a weed club. Inside, a relaxed doorman buzzes you into a 
cluttered, chaotic back room, where patrons lounge on couches and 
smoke, and handwritten signs advertise the prices and strains of weed 
in large plastic jars.

The feeling is of a disorderly social club, but this is true 
marijuana royalty. Wiz Khalifa hung out here not long ago; you can 
see the video on YouTube. The Hemp Center was the first dispensary to 
carry the now-legendary strain Girl Scout Cookies - and one of the 
last dispensaries in the city to offer an onsite smoking lounge for 
its customers.

That's all over now. After the club's 8 p.m. closing hour Monday, a 
furious disassembly of the premises began. Sheriff's deputies were 
expected to take possession of operator Kathleen Cappetti's keys 
first thing Wednesday morning.

Cappetti's legal situation is complex. According to court records, 
she owned the building outright with her former lover, Richard 
DeNola; after the relationship dissolved, so did the exact nature of 
her property rights. A dispute between the pair is in arbitration, 
but in the meantime, DeNola sold the building. The new owners - one 
of whom, Clara Michelson, is an Outer Richmond dentist - have 
supposedly already leased the location to a new dispensary, which 
will be able to open for business almost immediately - using 
Cappetti's old permit.

"It's a hostile takeover," Cappetti told SF Weekly, noting that the 
new "owners" plan to use a name with the same acronym (THC). "In 
other words, they're just stealing our business."

How can this be - and how can it be legal?

In San Francisco, the permit to sell medical marijuana - which, these 
days, is a highly sought-after license to print money - is tied to an 
address, not an operator. This means that while it's the operator who 
goes through a yearslong process to get approval from multiple city 
agencies to sell cannabis out of a particular location, the operator 
cannot take a permit with them anywhere else - and if they're 
evicted, the landlord can bring in new cannabis sellers of his or her 
choosing without going through the lengthy and expensive process again.

The Hemp Center is not the first San Francisco dispensary to go 
through such a change of ownership. Two SoMa dispensaries have 
undergone similar changes. One, the San Francisco Medical Cannabis 
Clinic on 10th Street, will reopen soon as Urban Pharm, with the 
local, SRO-residing operator replaced with a slicker Sacramento-area crew.

It makes business sense. Multiple dispensaries are currently trying 
to open second locations elsewhere in the city. It's easier and 
cheaper to secure an existing permit than it is to get a new one. 
And, under San Francisco tenant law, it's much easier and cheaper to 
evict a business than it is a residential tenant (there is no rent 
control and no "just-cause" eviction protection for commercial tenants).

Thus, there is little standing in the way of an enterprising weed 
seller convincing another seller's landlord to throw the business out 
and replace it.

"It's not always that simple ... but it is a trend," a prominent 
cannabis land-use attorney told me. "And we're going to see more of it."

This means trouble but also opportunity for less-polished marijuana 
sellers, who are reportedly entertaining offers in the mid-six 
figures for existing permits.

Cappetti plans to stay in the game - or at least try. She's leased a 
space farther up Geary Boulevard where she hopes to open a new 
smoking lounge and do deliveries. Whether she can win a new permit to 
sell cannabis at the new location isn't clear - her new neighbors are 
already taking unkindly to the smell of pot in the area, and she has 
unpaid taxes at the state level, according to records.

She's already watched Berner leave Hemp Center behind for money and 
fame. "That was tough," Cappetti says. Now, The Hemp Center is left 
by the wayside, right as the industry is taking off. "So I'm left at 
home again," she says, "scrubbing the toilet."
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MAP posted-by: Jay Bergstrom