Pubdate: Tue, 29 Mar 2016
Source: San Jose Mercury News (CA)
Copyright: 2016 San Jose Mercury News
Author: Ramona Giwargis


S. J. Councilman Says Move Would ' Undercut Illicit Operations'

SAN JOSE - With just 16 sanctioned medical marijuana dispensaries 
left in San Jose, one councilman wants to explore allowing pot 
deliveries to patients' homes as a way to "undercut illicit operations."

"We do know, at least anecdotally, that deliveries are happening," 
said Councilman Ash Kalra, who wrote a memo calling for city leaders 
to look into allowing the 16 pot shops to make home deliveries. "As 
the state looks at the issue, I'm saying let's join them in looking 
at distribution and delivery."

And while the City Council debates that controversial idea Tuesday, 
it also will look at creating a new division to manage the city's 
medical marijuana rules - a move that will cost dispensaries an extra 
$50,000 a year and allow the Police Department to oversee them.

San Jose in 2014 became one of the first major cities to adopt 
ordinances regulating medical marijuana - limiting pot shops to 
mostly industrial areas and outlining how they grow their weed and 
dispense it. To cover the costs of the $1.9 million program, the city 
charged dispensaries an annual fee of $95,000, in addition to taxing 
them 10 percent of their gross receipts. The fee was based on 20 pot 
shops making it through the city's registration process, with revenue 
covering costs of about nine staffers to oversee the program.

Since only 16 dispensaries registered, city officials say they would 
charge each dispensary about $119,577 a year to cover costs. But 
creating a medical marijuana division would mean adding three to four 
new positions and annual costs would spike to $2.7 million. 
Dispensaries would pay $169,895 a year under the new model.

"This is almost a 100 percent increase to what dispensaries pay," 
said Sean Kali-rai, a lobbyist who represents four collectives in San 
Jose. "They're still paying off debt from moving, and now we're 
talking about increasing costs."

Kali-rai said the city's costs should have decreased since fewer 
dispensaries are registered, which reduces City Hall's workload, and 
said the focus should now be on enforcement of the policy.

Assistant City Manager Dave Sykes doesn't disagree. He says the costs 
of regulating medical pot will go down "over time" but it requires a 
bigger investment now to get the program off the ground.

"The current funding for the program is understated, and we're not 
capturing the costs of what we need to manage the program now," Sykes said.

Sykes said his office recommends shifting oversight of the medical 
marijuana program to the San Jose Police Department, similar to the 
Division of Gaming Control, which oversees the city's two card rooms.

Councilman Raul Peralez, a former police officer, also supports the 
idea. "Gaming Control is able to do undercover operations," he said. 
"We're certainly not going to send a city manager's employee to do 
that. Police understand the legal and illegal aspects of the dispensaries."

Meanwhile, Kalra wants city staff to explore the idea of medical 
marijuana deliveries, a practice already in effect in other major Bay 
Area cities such as San Francisco and Oakland.

"It is my sense that if we ignore delivery altogether and ban it, we 
open ourselves up to illegal delivery from other jurisdictions," 
Kalra wrote in a memo.

Angelique Gaeta, an assistant to the city manager who oversees the 
medical pot program, says the prohibition dates back to 2011 and was 
put in place because "it's difficult to track" where medical 
marijuana comes from with delivery services.

The city is working with its 16 legal pot shops on allowing 
deliveries, Gaeta said, but isn't taking steps to open that market to 
all delivery companies without council direction.

"With regard to other folks, we have to explore what that would look 
like and protect our 16 collectives to a certain extent," Gaeta said.

The City Council on Tuesday also will discuss establishing fines for 
pot shops that violate new rules passed in December that include 
displaying an identification badge and limiting cultivation to one site.
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MAP posted-by: Jay Bergstrom