Fate of San Diego Dispensaries, Local MMJ Industry on the Line as City Council Debates Ordinance

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The San Diego medical marijuana community is holding its collective breath as the city considers legal changes that would pave the way for dispensaries and lead to a revival of the local MMJ industry, which has been decimated in the past two years.

On Monday, the San Diego City Council will hear an ordinance put forth by Mayor Bob Filner that would allow dispensaries to operate in specific commercial and industrial areas.

If the measure passes, dozens of dispensaries would likely open this year, and the city could eventually have 100 or more MMJ centers according to some estimates. That would create additional business opportunities for support companies and professionals, including lawyers, consultants, landlords, electricians and cultivation equipment suppliers.

Annual marijuana sales could hit $50 million once all dispensaries are up and running, according to MMJ Business Daily’s estimates, adding roughly $1 million to the city’s coffers.

But the measure faces some opposition, and whether it will pass is anyone’s guess at this point.

“It’s looking, somewhat ominously, like it’s going to be an incredibly tight vote, but I’m very hopeful that we’re going to pull it off,” said Ken Cole, president of One on One, which is one of the only dispensaries that survived recent MMJ turmoil in the city. “I’m going at (council members) nonstop on the compassion side. We’ve got to get them to realize that this about their mothers, grandmothers, uncles and the guy they work with. We’re talking about ordinary everyday people.”

Cole said the vote at this point appears split 4-4. There’s one open City Council seat that will be filled soon. The two candidates are both Democrats, though one has come out in support of medical marijuana and the other against it.

Here are some key business-related highlights of the ordinance:

– Medical marijuana centers would have to meet a host of requirements tied to everything from security to signage.

– Dispensaries would have to fork over $5,000 each year in permit fees and pay a 2% annual excise tax on medical marijuana transactions.

– Centers would need to operate as nonprofits, meaning they could only accept “donations” from medical marijuana patients who have valid state-issued MMJ identification cards and also have submitted their doctor recommendations for cannabis to the California Department of Public Health’s central registry.

– Dispensaries would have to set up shop at least 600 feet away from schools, parks and childcare facilities and 1,000 feet from another MMJ center.

Under the ordinance, medical marijuana “vending machines” also would be banned. (MedBox Inc., a publicly traded company that sells automated MMJ dispensing machines, believes its technology would still be allowed under the mayor’s proposal. The firm recently said it hopes to help open 30 dispensaries in the city that feature its machines.)

The move to change San Diego’s medical marijuana laws comes after a turbulent period that saw hundreds of dispensaries open rapidly several years ago and then close just as quickly after the city began a crackdown in 2011.

Local and state laws have long been murky when it comes to dispensaries. The City Council passed an ordinance two years ago that set clear rules for dispensaries in a bid to clear up the situation. But it ended up rescinding the measure after MMJ advocates who felt the rules were too restrictive mounted a successful petition drive challenging the ordinance. The move backfired for the industry, as the city then forced most dispensaries to close.

As recent as January, there were just a handful of dispensaries. But more centers as well as delivery-only services have sprouted up in the past two months after the mayor moved to ease up on the industry.