Pubdate: Thu, 17 Mar 2016
Source: SF Weekly (CA)
Column: Chem Tales
Copyright: 2016 Village Voice Media
Author: Chris Roberts


Eleven years is a lifetime in technology, real estate, and the 
California cannabis industry. But to find a taste of 2005 in 2016 San 
Francisco, all you have to do is head south on Mission Street past 
Cesar Chavez - do not be afraid, Valencia Street ends, yet the city 
continues - and pull up on the narrow block of 29th Street that 
connects Mission to San Jose Avenue.

Here, after you're buzzed in past a mirror-glassed door, a handful of 
people - some old, some crippled, some indigent - can be found 
lounging on well-worn couches. There are black-light posters on the 
walls, and New Orleans jazz wafts softly through air heavy with the 
sweet smell of cannabis from the counter at one end of the room. It's 
run-down, it's homey, it's comfortable. It's very, very chill.

Bernal Heights Cooperative is what almost every "medical marijuana 
club" in San Francisco looked like in 2005, back before anyone had 
heard of a dab or a vape pen, back before tech and Wall Street 
investors took an active interest in California's multibillion-dollar 
medical marijuana industry. It was well, well before new dispensaries 
fell all over each other to be compared to a Starbucks or an Apple 
store in the city's lifestyle magazines.

There were a few dozen clubs just like this in the city in 2005. But 
as of 2016, Bernal Heights Cooperative is one of the only old-school 
weed clubs left. And it's on life support.

Following a script employed by several other would-be marijuana 
entrepreneurs, the dispensary's building has been sold, and the new 
landlords want Bernal Heights Cooperative gone, the current operators 
say. But that won't mean the end of legal cannabis on the premises. 
No: It will mean a new, slicker, investor-backed dispensary replacing 
the cutty, neighborhood one.

Put another way: good old San Francisco-style gentrification and 
displacement for the cannabis industry. Evictions - but for weed.

This has happened several times before in San Francisco. The old 10th 
Street dispensary, a second home for many SRO dwellers, is now Urban 
Pharm. The Hemp Center on Geary Boulevard in the Richmond District, 
where marijuana millionaire Berner was slinging bud just a few years 
ago, is now Harvest. (Both are new, slick, and winning rave reviews.)

Both 10th Street and Hemp Center had significant issues - neither 
operator was good with paying taxes, for one - but the way in which 
they were shut down and replaced is its own separate conundrum. And 
with millions in investor capital flowing into the local weed scene, 
it threatens the city's cannabis industry as we know it.

In San Francisco, you need two major permits to sell medical 
marijuana. Your "medical cannabis dispensary" (MCD) permit comes from 
the Department of Public Health. But it's useless unless your MCD 
permit is tied to a specific location that receives zoning approval 
from the city's Planning Commission. You can't have one without the 
other - and the difficult one to get is from Planning, where waits of 
over a year just for a hearing are not unheard of, and where 
dispensary projects meeting all city rules have been denied a permit 
(almost always for political reasons).

Planning is your risk, your exposure. And as SF Weekly has reported 
before, enterprising would-be weed merchants have figured this out - 
and how to get around it. It's simple: You buy a building that 
already has a dispensary, get rid of it, and then use the 
already-entitled land use to open up a new one.

One fellow, veteran Oakland real estate investor Marty Higgins, is 
turning this into his business model. Records show an LLC controlled 
by Higgins purchased The Hemp Center's building, removed The Hemp 
Center, and put in Harvest without the risk of a Planning hearing. 
When Bernal Heights' building fell into foreclosure, he did the same 
thing, buying that building in September.

Higgins did not respond to a request for comment from SF Weekly. 
(Matthew Mills, an attendee at the recent "Marijuana Investors' 
Summit," says Higgins was there, seeking investors, claiming interest 
in "two or three" San Francisco weed stores.)

But his business model may be at risk.

"We're working on legislation to close that loophole," says 
Supervisor David Campos, who represents the area. "It allows someone 
to circumvent the whole approval process - it defeats the purpose of 
the existing approval process if you can forego it just by buying the 

Campos says he plans to ask the City Attorney before the end of the 
month to draft legislation to update the city's medical cannabis 
permitting laws.

When he does, it will be the first significant update to the city's 
rules on its cannabis businesses - which, at 28 licensed dispensaries 
and counting, could be a $150 million industry.

That is, if Campos's legislation passes the Board of Supervisors, 
which has not passed a substantive update to the Medical Cannabis Act 
since its inception in 2005. A task force report issued in 2011 was 
ignored; a plea from the Planning Commission to update the rules in 
2014 is still in draft form.

Bernal Heights has had its own issues. Its old owner-operator 
embezzled millions of dollars from the dispensary before skipping 
town, according to current operators Sean Killen and Sean DeVries - a 
tech guy and a legal clerk who stumbled into the operation - agreed 
to take over in the fall. The pair believe they have the business in 
a good position, but believe that Higgins could move to evict them at 
any time. They're trying to reopen a "New" Bernal in the site of San 
Francisco's last gun store, which closed last year, but - as 
investors have discovered - they could end up waiting six months to a 
year for a Planning hearing.

More than nostalgia is at risk. It's hard to envision the hard-luck 
folks lounging on Bernal's couches allowed a spot at a place like 
Harvest, where entry to the "VIP lounge" costs $150 a month.

Local weed clubs are literally being taken over by outsiders with 
lots of capital. Then again, in 2016 San Francisco, it wouldn't be 
only hostile takeover.
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MAP posted-by: Jay Bergstrom