Providing Honest, Reliable Business Counsel For 29 Years


| Apr 27, 2017 | Articles, News


By Beige Luciano-Adams

Santa Monica voters overwhelmingly approved legalization of recreational marijuana last November, with more than 70% casting a ballot in favor of Prop 64 (versus 60% support countywide).

And while medical marijuana has been legal in California for two decades, the city has yet to allow even a single dispensary to operate within its borders. Back in 2015, city officials finally zoned for two medical dispensaries to operate in Mid-City — but applications won’t be considered until the City Council adopts a new ordinance, which the Planning Department aims to present in September.

So why is legal marijuana still nowhere to be found in one of the more progressive enclaves of the Left Coast?

Attorney Michael Chernis, an expert in state and federal cannabis laws who specializes in guiding clients through the matrix — and currently represents two looking to open dispensaries in Santa Monica — chalks it up to a mix of idiosyncratic bureaucracy and the issue getting a low slot on the totem.

“It’s frustrating for those of us in the industry who would like to see patient access. But it’s a little bit of a political hot potato, and also there is a lot happening in Santa Monica … so it’s just not the burning issue we’d like it to be,” Chernis said.

Because Santa Monica is “very deliberate, very professional,” he added, “My guess is we’d be lucky to see a licensed dispensary here in early 2018.”

Simone Cimiluca-Radzins, a managing partner with LIV Consulting, which works with established cannabis businesses, offered a more conservative estimate.

“L.A. has been working on this for one and a half years … and that’s with tons of media, tons of lobbyists,” she said. “Clearly Santa Monica is much smaller, but it takes a while. Even if the city rushed it, there’s no way we’d be seeing dispensaries until the end of 2018 or early 2019.”

Perhaps it should come as little surprise that Santa Monica officials are taking ample time to do things their way — and starting from scratch, rather than copying existing models.

Salvador Valles, the assistant director of planning and community relations who has led City Hall’s efforts on this issue, said his department is about to begin drafting a regulatory framework.

“The reason we need to codify … is we need to establish criteria. We’re looking for a way to make sure we evaluate everyone consistently and equitably,” he said, explaining that such criteria “is intended to be measurable.”

Valles added that a new committee will evaluate applications and rank them; if several companies emerge with similar high scores, at that point the city might use a lottery to narrow the field.

“One thing we do know [is] we don’t want to have a straight lottery system similar to what Santa Ana used. We don’t think that’s a good model,” he said, adding that the city is open to best practices suggestions from industry stakeholders.

One such stakeholder, attorney Bruce Margolin, said he’s offered to hand the city regulatory frameworks he believes have proven successful in other cities.

“It’s a farce. There’s no legitimate excuse any longer [for the delay],” said Margolin, who heads the Los Angeles chapter of the National Organization for the Reform of Marijuana Laws (NORML).

Margolin suggests city politicians are “kowtowing to those people giving the finances to run for office,” and not representing the interests of their constituents.

Cimiluca-Radzins, a Santa Monica resident, was more measured, but called the delay “shocking,” particularly given voter support for Prop 64.

“I feel like Santa Monica is a little more conservative than Venice or Mar Vista … but the discussion should be had sooner rather than later,” she said, arguing that the city is missing out on a treasure trove of local tax revenue.

More The Hague than Amsterdam

Chernis, also a Santa Monica resident, attributes the slow start to a new City Hall lineup that had been anticipating changes with Prop 64 — as well as the lack of an obvious “cheerleader inside city hall making that push.”

Councilmember Kevin McKeown might disagree.

“My hope is that after years of cautious debate we can move more decisively on the legalized marijuana industry than we did on medicinal marijuana. The mandate of voters is clear, and much of the work we already did considering options for dispensaries will be applicable to retail outlets,” McKeown wrote in an email while attending the National League of Cities in Washington D.C. last month.

McKeown acknowledges that Santa Monica remains cautious in light of “outmoded federal policies,” an openly hostile attorney general and its “envied beach location leading to drug tourism, along with other possible impacts,” but wrote that the city is “moving forward on both medicinal and recreational marijuana siting.”

The message from Councilmember Gleam Davis at a recent community meeting, meanwhile, was less keen on the recreational side.

At a Mid-City Neighbors meeting last month, Davis outlined the city’s cautious approach to allowing limited medical dispensaries. Citing the chaos of Los Angeles’ foray into medical marijuana business, the current legal limbo and impending federal antagonisms, Davis said the city looked to preempt subjugation to state laws.

“We do not want to live by the state’s rules. We don’t know what they’re going to look like; they may be more permissive than we want in our relatively small, less-than-nine-square-mile-community. And so we’ve directed staff to sort of watch that and think about at some point, ‘Do we need to adopt regulations for recreational marijuana so we don’t have to live by the states laws?’”

In March, council members directed city staff to study other industry options — like non-psychotropic marijuana creams and medicinal products.

“We think for our community that might be most appropriate, rather than a place where people pay $100 to get their medical marijuana card, come and smoke the bud of the day,” Davis said.

The tone at the meeting felt marginally derisive of recreational marijuana use, with Davis facetiously inviting “the stoners to raise their hands” at the mention of Santa Monica’s support for Prop 64.

“I’m the first person to tell you I believe marijuana has medicinal qualities … but we just don’t want it to turn into L.A.,” she said. “They got off to a rocky start, so we’re trying to take it a little slower and a little more cautiously.”

One of the main concerns Santa Monica officials cite is the peril of cash business — the need for amped-up security surrounding quasi-legal operations with whom banks are afraid to do business.

Stanford University professor Keith Humphries, a former senior policy advisor to the White House Office of National Drug Control Policy who also served on California’s Blue Ribbon Commission on Marijuana Policy, argues the days of marijuana’s Wild-West cash economy are numbered. With robberies posing a lower risk than, say, mass tax evasion, he suggests that even those who don’t like medical marijuana are likely to get behind normalized banking.

“I think that will not last much longer. I talked to people in Congress about this. I suspect there’s already 200 votes up there; I don’t think there needs to be too many more,” Humphries said. “Just think about these things politically: Almost half of the states have medical marijuana, those states cover majority of the U.S. population. Those are now businesses. They have lobbyists, have money. They’re getting political friends that will help them.”

The Buzzkill of Federal Aggression

Drug policy expert Mark Kleiman, a professor of public policy at NYU (emeritus at UCLA), said it’s clear that new U.S. Attorney General Jeff Sessions would like to clamp down on the cannabis business and has the legal power to do so — if not the resources to take down illegal marijuana sales. He maintains that Sessions could shut down California’s industry “in a heartbeat” by requesting all applications for state licenses and using those as proof of intent to commit a federal felony.

“All he has to do is take those to a district federal court [and] the judge issues an injunction and uses contempt power,” says Kleiman. “He could do that, and the result would be a massive illicit cannabis market, given that cannabis is a lot more popular than Donald Trump these days.”

But even Sessions talks about respecting medical marijuana.

“So California could just go back to the old system. Essentially cannabis would be legal, but with a doctor’s note first. Or they could let people self-declare their medical need,” Kleiman said.

Humphries tends to agree: “Of all the senators that could be picked for attorney general, he would be at the very marijuana-hating end. So there’s that. The second thing is the political reality: If you look at what happened on election night, recreational marijuana states went for Clinton. So the politics aren’t good, if you are in a recreational state. … Trump tends to take these things very personally.”

Humphries said he wouldn’t put a penny of his own money into the budding recreational pot industry.

“It’s still a federal felony. It is still possible for the federal government to intervene,” he said. “On that I don’t think Santa Monica is alone in some concern and hesitation until they figure out what the Trump administration is going to do, and there have been some signals that are scary — again all on the recreational side, not on the medical side.”

While Chernis is fairly confident Santa Monica would reach the same decisions regardless of threats by the White House, he hesitates to knock their wait-and-see attitude. That detailed approach, he suggests, is also a prophylaxis against corruption.

“It’s definitely taken a long time, but at the same time, there hasn’t been a significant misstep. I’d rather be complaining it’s taking too long than complaining that ‘those guys got special access or got in through the backdoor.’”