Features & Columns
High and Dry
TWO YEARS AGO, Dave Hodges opened his cannabis dispensary with the intention of winding up in court. "The original plan was to be raided in two months," says Hodges, a goateed 30-year-old sitting in the private consultation room of his All-American Cannabis Club (A2C2).
"Obviously that didn't happen."
Hodges first set up shop as San Jose Cannabis Buyer's Collective in 2009, becoming the city of San Jose's first storefront dispensary. He's butted heads with the city ever since and is currently involved in two spearate lawsuits.
First, a March 2010 compliance order from the city to Hodges' landlord forced SJCBC to move to its current location near San Jose International Airport. SJCBC was then reorganized into A2C2. A month later, Hodges filed a lawsuit against the city claiming it had illegally pressured landlords into closing cannabis businesses. Then, as the City Council was mulling Measure U's proposed tax rate of up to 10 percent on cannabis dispensaries, Hodges crafted a memo to the City Council suggesting a rate no higher than 3 percent.
Now Hodges argues that because cannabis sales are illegal under federal law, paying a sales tax amounts to self-incrimination. He says collectives operate merely as nonprofit middlemen between growers and the patients who donate money toward the cultivation costs. It's a view he's hoping to defend in court.
"And I would rather deal with civil court instead of criminal court," Hodges says. "I don't have any money or assets. In fact, I'm $300,000 in the hole. So if you want to take my money or assets, go for it."
By the time he has his day in court, Hodges could be defending a nonexistent collective. The week before the City Council voted to sharply cut permitted collectives to 10—down from upward of 140—Councilmember Pierluigi Oliverio told Metro, "I can tell you this, if the collective is not paying the Measure U tax and they're not paying their state franchise or sales tax, they're not going to be one of the ones to remain."
Hodges pays neither, and his no-tax stance earned him an audit by the State Board of Equalization. Meanwhile, between 64 and 79 collectives have paid the tax each month since March, generating $1.6 million for the city.
Ryan Fillhardt of Cinnabar Health Collective says that while the city's 7 percent tax is high, he pays it willingly. "The city's short of taxes right now, so there's a lot of us I think that are happy to pay the tax if it's going to go to a good use," he says.
"We're doing what we're told to do, so whatever the city decides to impose on us, that's what we're going to do."
Hodges says that even if he is cut out of the new permitting process, he'll keep business open as usual. He might get his day in court after all.