Butte County Dispensary’s Closure Highlights Risks of Entering Medical Pot Industry

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One day, you’re running a bustling medical marijuana dispensary. The next, you’re essentially out of business, smarting from having the rug pulled out from under you.

That’s exactly what happened to the operators of North Valley Holistic Health, a nonprofit dispensary in Butte County, Calif., that stopped selling marijuana to patients last month.

The cannabis center survived turmoil over the past two years that ensnared its competitors, most of which shut down following government raids in the summer of 2010. The stars, however, aligned against North Valley Holistic in recent weeks, as they have for so many other dispensaries in the state this year.

In October, the landlord that leases North Valley Holistic space received a letter from the federal government, advising it to boot the dispensary from the property or face the risk of prosecution. The government has sent out similar letters to landlords with MMJ tenants across the state as part of its crackdown on California pot operations. The tactic has proved quite effective, as the government can force dispensaries to close without having to devote resources to raids.

In this case, it worked like a charm. After hearing about the letter, North Valley Holistic’s operators decided to stop dispensing marijuana, though they vow to keep the business open by selling related MMJ items. Even without the federal pressure, the dispensary would have had to go this route : supervisors voted to permanently ban medical pot centers from unincorporated areas of the county shortly after North Valley Holistic’s decision. Talk about a double whammy. (Marijuana supporters, though, are now attempting to gather enough valid signatures to force a vote on whether to repeal the ordinance, which could be on the ballot next summer.)

The closure marks the end of the region’s once-burgeoning MMJ industry, which had flourished under state laws allowing the cultivation, sale and use of medical cannabis. At one point, the county was home to nine dispensaries that employed dozens of workers, pumped up government coffers with sales tax money and provided a boost to the economy.

This situation provides a cautionary tale for those thinking about entering the medical pot industry and serves as a reminder to existing MMJ businesses that the landscape can change literally overnight. Butte County is a microcosm of the current environment in across California and in other states such as Michigan. The federal crackdown coupled with bans in an increasing number of communities is forcing dispensaries, growers and edibles companies to close literally overnight. The industry has always been on shaky ground, but it’s now more unpredictable than ever. No MMJ business, it seems, is safe right now.