Richmond limits number of pot clubs to three, puts tax measure on November ballot

By Katherine Tam
Contra Costa Times
Posted: 07/28/2010 12:00:00 AM PDT
Updated: 07/28/2010 05:26:03 PM PDT

Richmond reversed course Tuesday night, capping the number of medical marijuana dispensaries it will allow at three and reviving tougher regulations it nixed a week ago.
Pot clubs will be restricted to regional commercial districts, which are major shopping hubs such as Hilltop Mall. The police chief will review applications and grant the permits after holding public hearings.
The City Council gave unanimous initial approval to the new regulations Tuesday night. The ordinance will return for final approval Sept. 21, yielding to requests from residents for more time to digest the plan and give feedback.
The council also voted to place a measure on the November ballot for a 5 percent tax on gross sales receipts of marijuana, regardless of whether it's medicinal or recreational use.
The new regulations on dispensaries are a dramatic change from what the council narrowly approved last week, when officials set no limit on the number of pot clubs and allowed them to be in major and smaller commercial areas. Critics feared that would turn Richmond into the region's marijuana headquarters. Mayor Gayle McLaughlin, who was in the majority vote last week, said she changed her mind after the police chief advised that it is better to have a tighter ordinance now that can be loosened later after review, instead of the other way around.
"This is something new and it may need tweaking as we move along," McLaughlin said.
Other big changes include adding parks and community centers to the list of sensitive areas from which a pot club must be at least 500 feet. Patients also cannot purchase more than one ounce a day.
Other provisions will stay the same. Dispensaries must be nonprofit collectives managed by people who pass criminal background checks. They must be least 1,500 feet from high schools and 500 feet from other schools or day care centers.
Eight confirmed dispensaries have opened in Richmond, most within the past year. Officials started seeking court injunctions in March to shut them down, arguing in court documents that they were not a permitted use when they opened. One site closed this month after the city won a court injunction; hearings on the others are pending. One club was evicted by its landlord after the city sent a letter warning of the non-permitted use.
None of these clubs would be grandfathered in under the new law. And because the ordinance restricts collectives to regional commercial areas, about half the existing clubs would not qualify at their current locations. Officials plan to issue a request for qualifications, essentially allowing people to apply and compete for the three permits. The criteria for evaluating the applications has not been crafted yet.
The City Council plans to meet in closed session next week to discuss the pending lawsuits against the existing clubs. Some council members want to let the dispensaries stay open until the city picks the three that will receive permits, so patients can have uninterrupted access to marijuana.
Richmond now joins a flurry of cities in asking voters whether to tax pot clubs. Pot clubs require more attention from police and fire, and should be taxed more heavily than other businesses, said Councilman Tom Butt who proposed the ballot measure for the council's consideration. And if pot clubs are going to operate here, the city might as well collect sales tax from them, he said.
How much revenue the measure would generate depends on how brisk sales are. Marijuana is a multimillion dollar business -- Berkeley's three dispensaries reported $18.5 million in gross receipts this year to the city, which levies an 0.12 percent tax -- meaning revenue for Richmond could be substantial.
Taxing dispensaries is becoming more common. Oakland levies a 1.8 percent tax on medical pot clubs now, and will ask voters this fall whether to increase it to 5 percent on medical dispensaries and 5 percent on cultivation activities. The tax proposal is 10 percent on nonmedical uses, if California voters pass the measure to legalize recreational marijuana use in November.
Berkeley will pose a similar question to its voters. Its November ballot measure proposes a 2.5 percent tax on medical pot clubs, and up to 10 percent on recreational ones if the statewide measure passes.
Richmond is studying whether to license and tax farms that cultivate medical marijuana for local dispensaries. Oakland voted Tuesday morning to allow up to four farming permits limited to industrial areas in West and East Oakland.
Katherine Tam covers Richmond. Follow her at Twitter.com/katherinetam.

Richmond OKs 3 pot clubs, puts 5% tax on ballot

Carolyn Jones, Chronicle Staff Writer
Thursday, July 29, 2010
After several marathon meetings, much hand-wringing and numerous flip-flops, the Richmond City Council voted early Wednesday to allow three marijuana dispensaries in the city and place a 5 percent marijuana tax on the November ballot.
The decision reversed last week's vote, which would have allowed an unlimited number of dispensaries in commercial districts.
"Richmond's been flirting with this issue for a long time," said City Councilman Tom Butt. "But my feeling is, if you're going to allow these dispensaries, you might as well get all the money you can out of it."
The marijuana ordinance is due for a second vote in September, after the council returns from its summer recess, and would go into effect 30 days after that.
The new ordinance would allow three nonprofit dispensaries in the city - in commercial districts only, outfitted with surveillance cameras and subject to oversight by the Police Department. The dispensaries would not be allowed near schools, community centers, parks and other places frequented by children.
"This will guarantee access for medical marijuana users and safety for the surrounding neighborhoods," said Councilman Jim Rogers. "My main concern is that these places do not become a magnet for criminal activity."
Richmond is already home to eight dispensaries, which are operating illegally, said City Attorney Randy Riddle. His office is cracking down on them through injunctions and other measures, he said.
"This will move us from having eight illegal dispensaries to three legal ones," said Butt, who generally has been opposed to legalizing medical marijuana sales in Richmond. "But if we decide we need more, we can always add more."
Richmond becomes the fifth major city in the Bay Area to legalize marijuana dispensaries, following San Francisco, Oakland, San Jose and Berkeley.
With its regulation of small-scale marijuana retailers, Richmond's model is typical of those across California, said Allen St. Pierre, executive director of the National Organization for the Reform of Marijuana Laws.
Elsewhere, the issue is in the realm of state legislatures, which generally are enacting much more conservative, strict regulations, he said.
Oakland's City Council recently passed some of the most ambitious marijuana legislation in the country, regulating growers in addition to dispensaries.
Money is the main reason so many cities, counties and states are suddenly adopting cannabis regulations and taxes, he said.
"The debate used to be about providing marijuana to those who need it for medical purposes," he said. "Now, in these crushing economic times, the narrative has changed."
Oakland, Berkeley, Richmond and San Jose are placing marijuana taxes on the November ballot.
"I've always thought we have enough problems with crime, and the Police Department is busy enough," Butt said. "But maybe we can make some money out of this. That's the motivation."
E-mail Carolyn Jones at carolynjones@sfchronicle.com.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/07/29/BA9B1ELBGG.DTL
This article appeared on page C - 2 of the San Francisco Chronicle
City Council Takes A Mulligan On Marijuana Ordinance

A week after throwing its support behind a medical marijuana ordinance that many saw as one of the most pot-friendly in the area, Richmond’s City Council voted unanimously Tuesday night to scratch a number of the ordinance’s most controversial clauses. In a separate move, the council agreed to allow city voters to decide on a new pot tax.

Mayor Gayle McLaughlin, along with Councilmembers Nat Bates, Jeff Ritterman and Jim Rogers, all reversed course on a number of key aspects of the pot ordinance Tuesday that they had insisted on during their July 20 meeting, agreeing instead to pass a modified ordinance that will cap the number of marijuana dispensaries in town to three, and place new restrictions on how and where such clubs can operate.

“It’s harder to shrink back than to expand [the ordinance],” McLaughlin said Tuesday in defending her about-face, explaining that last week’s first reading of the ordinance was too lax.

In a separate move later in the evening, the council voted to place a November ballot measure before city voters asking whether to charge dispensaries a 5 percent tax on all marijuana sales.

Tuesday’s move to amend the city’s medical marijuana ordinance represents a substantial beefing up of the ordinance’s original rules, which some anticipated would turn Richmond into a regional hub for pot sales.

The version of the medical marijuana ordinance that was originally passed 4-3 by the council July 20 did not place a cap on the number of dispensaries allowed within city limits. It also placed the responsibility for granting medical marijuana business licenses to the city manager’s office, and limited medical pot shops to parts of town designated as commercial zones.

All of those stipulations were amended Tuesday: The Richmond Police Department will now oversee permitting and code enforcement for the three permitted marijuana dispensaries, and marijuana clubs will now only be allowed in C-3 commercial zones like the Hilltop Mall – effectively eliminating a number of current dispensaries from consideration for one of the new licenses.

Additionally, the council made amendments Tuesday that restrict patients to purchasing a maximum of one ounce of marijuana from a dispensary per visit, and stipulated that applicants for a marijuana license be scored on a point system, which has yet to be devised.

“This is a disaster,” said John Clay, who runs Pacific Alternative Health Center, a Point Richmond-based dispensary. “The level of ignorance on the council is staggering.”

Every ordinance the council passes must go through two readings before being enacted into law. While most ordinances are approved on second reading with ease, it appears that an avalanche of public feedback swayed the council into revising the ordinance this time. Because of the breadth of Tuesday’s revisions, the newly approved ordinance will have to go through a second reading, scheduled for the third week of September. The council takes its yearly recess during August.

On his popular e-forum, Councilman Tom Butt earlier this week sent followers a letter to the city council from Police Chief Chris Magnus that asked that the council to reconsider it’s initial plans for the ordinance – particularly handing oversight of the process to the city manager’s office instead of the police. On Tuesday, McLaughlin cited Magnus’ letter as one of the reasons for changing her mind.

In addition to modifying the marijuana ordinance, the council on Tuesday voted unanimously to place a 5 percent tax on all pot sales before city voters this November. Councilman Butt, who wrote the measure, initially called for a 10 percent tax, but backed off that plan. Both Berkeley and Oakland are planning to let voters decide on similar pot taxes: Berkeley’s would tax medical marijuana sales at 2.5 percent, while Oakland’s would charge 5 percent of all marijuana receipts. Both of those cities are proposing a 10 percent tax on marijuana sold for recreational use, effective only if state voters approve Proposition 19 this November and legalize non-medical marijuana use.

Richmond’s ballot measure will contain no such distinction between medical and recreational marijuana use – rather, it taxes all pot sales equally. Marijuana dispensaries currently pay a 9.75 percent state sales tax on marijuana they sell, although most of that money goes to the state, rather than to the city.

Tuesday’s agenda also called for the council to direct city staffers to draft an ordinance that would regulate and tax large-scale marijuana farms in Richmond, similar to a move Oakland gave final approval to Tuesday. The discussion was cut short, however, when Councilwoman Ludmyrna Lopez moved to have city staff simply investigate the matter and report back for a study session in January. That motion passed 5-2, with Councilmembers Bates and Maria Viramontes opposing.

Clay, the Point Richmond dispensary operator, was clearly upset by the council’s decisions Tuesday. “We got our butts kicked,” he said as he left the chambers.

One of the most repeated pleas from the dozens of medical marijuana users and dispensers on hand Tuesday was for the council to halt the legal orders dispensaries are facing to close up shop. All eight of Richmond’s current dispensaries have been ordered to shut down for operating without a business license (which is currently impossible for a dispensary to obtain). Several representatives for the collectives suggested instead that the city agree to allow the dispensaries to stay open until the new ordinance takes effect.

The council ultimately agreed to meet next week, during the August recess, to discuss the matter in a closed-session meeting. The last time it considered the matter, the council voted 4-3 in closed session to continue its litigation against the dispensaries – although if Tuesday was any indication, nothing relating to marijuana is set in stone just yet.


NewsHawk: Ganjarden: 420 MAGAZINE
Source: Richmond Confidential
Author: Ian Stewart
Contact: Richmond Confidential
Copyright: 2010 Richmond Confidential
Website: City Council takes a mulligan on marijuana ordinance

* Thanks to MedicalNeed for submitting this article
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