Features & Columns

San Jose Cannabis Collectives
Face New Regulations in San Jose

Pot shops seek legal means of security as San Jose considers
various regulations for the growing medical marijuana sector
MEDICINAL PURPOSE: Marilyn Gomez, who found that medical marijuana eased her rheumatoid arthritis, now works at the Papadon's dispensary. Photograph by Alex Stover

Marilyn Gomez was 9 when the pain first flared up in her right knee, leaving it fever-hot, swollen and locked. Within a year, the shooting sensation spread to every joint in her body, from her toes to the hinges connecting jaw to skull. Bone grinding on bone, every time she moved or spoke.

Doctors eventually diagnosed her with juvenile rheumatoid arthritis, an autoimmune disease—rare in children—that inflames the joints and worsens with age. The prognosis came with powerful prescriptions. For more than a decade, a wheelchair-bound Gomez felt like a zombie. Opiates made her tired, sweaty and nauseous. Steroids made her face swell up, her hair fall out and her skin delicately thin. Her teenage years were small and dark and full of sleep.

One day, pained by seeing her daughter immobilized by the side-effects as much as the disease, Gomez's mom dispatched a driver to deliver cannabis capsules. Gomez, 20 at the time, lay in bed, recovering from a surgery in which a doctor snapped her bones to straighten out her twisted ankles. She popped one pill—25 milligrams—then another, unsure of what to expect. As the THC metabolized, relief flooded her broken body.

"My muscles relaxed," Gomez recalls. "The pain was gone, but I didn't feel like throwing up. My mind was clear again."

Blow Back

With complaints of rising crime and an uptick in marijuana-related suspensions at local schools, city officials last month began sending letters to pot shops asking them to close or face $2,500-a-day fines. And as the City Council comes close to voting on an ordinance that would outlaw marijuana businesses in 99 percent of the city, Gomez stands at the forefront of a campaign calling for sensible regulation. She's one proponent of an initiative filed Monday that would ask voters to protect existing dispensaries from closure.

The 32-year-old mother of two now works for Papadon's, the company that delivered her first batch of medicinal marijuana in 2002, legal 1996 under the 1996 Compassionate Use Act. On her daily dram of edibles, Gomez has managed to reduce her steroid dose by 97 percent, rarely visits her doctor and never refills her synthetic opioid prescriptions. Her motorized wheelchair sits in a corner of the garage, piled with junk crates, collecting dust. Sometimes her hands tense and curl, but muscles that once contracted so tightly around her stiffened joints now slacken enough to let her move.

La Vie BUSINESS, MAN: Victor Medina, manager at La Vie, says he's trying to relocate his collective after the city sent a letter ordering his club to close by the end of the month. Photograph by Jennifer Wadsworth

"If you look at her, you wouldn't think she was in so much pain," her older sister LeAnna Gomez says. "Except for her hands, where you could see her joints swollen, you'd never guess."

In March, the council meets to discuss a way to regulate pot shops, which lie in a legal no-man's-land between state rules that allow them and federal laws that don't. Gomez plans to be there to share her story.

"People may think we're a bunch of stoners or druggies, but we have families who rely on us," she says. "This is a real business. This is the only thing that's allowed me to live. This is the only way I've ever made a living."

Last time San Jose tried regulating its burgeoning pot sector, it imposed a cap of 10 dispensaries and enacted a 7-percent marijuana business tax. That was back in 2011. The debate leading up to the decision painted marijuana activists in a bad light. One dispensary, which has since gone out of business, promised a nug of weed to each customer who spoke out against the motion. The result was painful to watch. People stumbled over their words, um-this and um-that—eye-roll-inducing stoner-bro rambling that kept the council members at the dais until well after midnight.

"You got the sense that they were medicated at the meeting," recalls Michelle McGurk, communications head for the mayor's office.

Dave Hodges, a pro-pot activist who operates All-American Cannabis on Stockton Avenue, says that's not the image the industry wanted to present. He's determined to never let it happen again, certainly not this time, with so much more to lose.

"I think we all cringed," Hodges says. "We weren't organized. That was a mistake."

The 2011 ordinance to cap dispensaries passed, but opponents mustered up enough signatures—about 50,000—for a referendum. Rather than hold a special election, the city scrapped the plan. Without local legislation allowing them to operate, marijuana businesses are illegal, as far as the city's concerned.

Relatively free from local land-use rules—or at least true enforcement—pot clubs continued springing up over town, some near homes and schools. The count peaked at somewhere around 140 clubs, but dwindled back down to fewer than 80, according to the city. Even now, though, around 1,200 people rely on San Jose's marijuana industry for a paycheck. By comparison, San Francisco has 24 pot clubs and Oakland only five.

The city tried to get some sort of handle on the local green rush. In 2013, empowered by a state Supreme Court ruling last summer that backed local governments' right to regulate or even ban cannabis businesses, the city upped the marijuana tax to 10 percent. San Jose's Finance Department says it expects to collect $5.4 million in revenue from the assessment before the end of this fiscal year. That's up from $3.7 million collected in 2011-12 and $4.2 million in 2012-13 when the tax remained at 7 percent.

Last year's tax receipts place the city's declared cannabis sales at $60 million. A source with deep industry knowledge estimated that about two-thirds of dispensary sales are undeclared, which means that the city could be missing out on $12 million in annual tax revenues and that marijuana is now a $175 million annual business in San Jose.

Ten collectives chose not to pay the tax at all, including Hodges', arguing that it's illegal in the first place.

"It's taxation without representation," Hodges says. "Combine that with the city's continued stance that 'all collectives are illegal' in San Jose and statements that the tax money will be used to close collectives, we have no reason to pay it."

In December, the council convened once more to discuss an enforcement plan. Councilwoman Rose Herrera proposing an outright ban. The council then delayed voting on any ordinance until March, but, at the urging of Councilman Pierluigi Oliverio, directed city staff in the meantime to send warning letters to dispensaries adjacent residential neighborhoods. Over the holidays, 28 clubs were identified as directly adjacent and 13 pot clubs got a warning letter in the mail, a compliance order from Code Enforcement, demanding they shut down by the end of January and warning of a $2,500-a-day fine.

All but two collectives challenged that order and requested an administrative hearing on the matter.

At an emergency meeting three days before Christmas, a few dozen people met at Papadon's, where talk ranged from recalling anti-marijuana councilmembers and unionizing more pot clubs to flipping dispensaries into delivery services to avoid closure.

"There's no point in moving since we won't know for another three months where the city ordinance will allow us to operate—if at all," SV Care co-owner Ace Salvador said at the meeting.

"We're being out-politicked," says Bruce Broadwater, who owns Greenjeans Place on S. Bascom. "We want them to manage us, not ban us or get rid of us."

Savvy to the fact that there's a rush to relocate, landlords are demanding jacked-up rents, says Victor Medina, a manager at La Vie, a hole-in-the-wall dispensary on South Bascom Road.

Warning businesses close to residential neighborhoods and other "sensitive-use" areas like rehab clinics, churches and schools isn't an effort to shut anyone down, according to the city.

"We just want to make sure they're in compliance with state law, at least," says Angelique Gaeta, an assistant city manager. "And federal law that requires 1,000-feet distances from certain facilities. The intention is not to look at the number of dispensaries and put a cap on it. It's to make sure they're in the proper zone."

Her office, code enforcement and police have fielded complaints about pot resale, people hanging out and smoking in the parking lots, and noise.

"It's stuff that shouldn't be occurring at these types of places," Gaeta says. "They need to be discreet, especially if there might be kids around, coming back from school in a neighborhood. Honestly, if a dispensary is respectful of its neighbors, we're not going to hear about it. It's the ones that aren't that we single out."

On Monday, Hodges filed an initiative with the City Clerk, but some expect at least one other initiative to make its way to the City Clerk's office in the next week or two. The "Medical Marijuana Regulation for San Jose Act of 2014" seeks to set a minimum of 50 clubs. It also asks the city to form a cannabis commission, similar to the appointed advisory bodies that oversee library services, senior citizen issues, transportation and other sectors.

Pot proponents expect to spend $200,000 on the initiative, which could either go to the council for a vote or, if it garners 20,372 signatures by May, get placed on the November ballot. By then, a statewide measure may have landed on the ballot, too, one that could legalize pot cultivation, use and possession.

"Maybe it's political for some people, but it's really a social justice issue, and more people are starting to see it that way," Gomez says. "People who can't afford expensive health care, people in pain, we need safe access to our medications. That needs to be on the forefront of people's minds."

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