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By SABRINA SHANKMAN
LOS ANGELES -- Daniel Halbert moved here from Phoenix this year to invest his life savings in what he hoped was a golden opportunity: the medical-marijuana business.
But on Tuesday, the Los Angeles City Council told him to shut down his dispensary, part of a broad crackdown against a growing and unregulated marijuana industry. More than 600 dispensaries have taken advantage of a loophole in city regulations to open shop here in the past two years.
The unchecked growth has alarmed some city leaders.
LA's Pot Entrepreneurs May Go Up in Smoke
1:24
The Rainforest Collective, a small Los Angeles shop, dispenses medical marijuana but it's facing possible closure from the city council. Sabrina Shankman reports.
"They were like a rash," said City Councilman Ed Reyes, who is leading the effort to shut down many of the dispensaries. He said a colleague told him that at one dispensary near a high school, the student crowds outside made the pot store look "like an ice cream shop from the 1950s."
The planning committee has begun hearings to close the loophole used by dispensaries to set up shop with scarcely any paperwork or permits.
At the committee's first hearings last week, it told 28 dispensaries to close or face a fine. This week, it was Mr. Halbert's turn.
California legalized marijuana consumption for medicinal use in 1996.
In 2003, the state established legal protections for medical-marijuana users who were issued a doctor's prescription. The law also created more solid legal footing for the cooperatives that distribute marijuana for medical purposes.
Dispensaries, which had numbered just a handful until 2003, began to grow statewide. By 2007, Los Angeles had 183 dispensaries.
That same year, the city attorney's office issued a moratorium intended to block new establishments until the City Council created regulations, such as a ban on operating near schools.
But the City Council never got around to setting any rules on the dispensaries. Meantime, word begin to spread that dispensary owners could open new outlets, despite the moratorium, by filing paperwork claiming a so-called hardship exemption.
Some applications cited the raids by federal authorities targeting marijuana dispensaries as hardships. In other hardship applications, owners simply claimed they weren't aware they needed permits.
View Full Image
Credit: Sabrian Shankman
The Los Angeles City Council is cracking down on marijuana dispensaries, including Daniel Halbert's.
The hardship applications went unchallenged by the City Council, and the number of dispensaries soared to its current level of about 800. San Francisco, by comparison, has about 30 dispensaries.
Mr. Halbert joined the rush in March. He was running a dating service in Phoenix when a friend pointed out an ad on Craigslist from Marc Kent, a former attorney, offering to help people apply for the hardship exemption for a $3,500 fee. He said he has helped people open up more than 100 dispensaries.
"It was pretty much a turn-key operation," said Mr. Kent.
Mr. Halbert made three trips to Los Angeles and toured several facilities that had opened under the hardship clause. "I did my due diligence," he said.
He settled on a storefront on Venice Boulevard in West Los Angeles.
He registered the business as Best Buds, but later changed the outlet's name to Rainforest Collective. He placed a clapboard sign out front and advertised his services with a flashing neon sign in the window.
He decorated his shop with rainforest-themed murals. Clients could select from an assortment of marijuana strains for smoking, as well as "edibles" -- pretzels and cookies with the marijuana baked inside. Total investment: close to $100,000, he said.
Mr. Halbert encourages customers to consume their marijuana on the premises and lures them with such offers as movie nights. "We don't want them to just come here and get their medicine," he said. "We want them to come here and maybe make some friends, have some fellowship."
He said he now has about 1,000 customers, but declined to discuss how much the shop makes. Mr. Halbert said he might try to fight the city order to close and planned to stay open as long as possible. In his hearing before the planning committee Tuesday, Mr. Halbert produced letters of support from residents and local businesses.
Other neighborhood activists, however, have campaigned to shut down the dispensaries.
Cindy Cleghorn, a member of a neighborhood council in a another part of the city, complained her area is overrun.
"It's out of control," she said. Ms. Cleghorn said the new dispensaries violate neighborhood-improvement guidelines and operate in storefronts that are zoned for other uses. "It's not about the marijuana, it's about the land-use issues," says Ms. Cleghorn, who brought her complaints to the City Council.
But because so many dispensaries had opened up without resistance from the city, Mr. Halbert said, "Any business person would assume that the city's fine" with them.
Write to Sabrina Shankman at [email protected]
hxxp://online.wsj.com/article/SB124701451791309199.html
LOS ANGELES -- Daniel Halbert moved here from Phoenix this year to invest his life savings in what he hoped was a golden opportunity: the medical-marijuana business.
But on Tuesday, the Los Angeles City Council told him to shut down his dispensary, part of a broad crackdown against a growing and unregulated marijuana industry. More than 600 dispensaries have taken advantage of a loophole in city regulations to open shop here in the past two years.
The unchecked growth has alarmed some city leaders.
LA's Pot Entrepreneurs May Go Up in Smoke
1:24
The Rainforest Collective, a small Los Angeles shop, dispenses medical marijuana but it's facing possible closure from the city council. Sabrina Shankman reports.
"They were like a rash," said City Councilman Ed Reyes, who is leading the effort to shut down many of the dispensaries. He said a colleague told him that at one dispensary near a high school, the student crowds outside made the pot store look "like an ice cream shop from the 1950s."
The planning committee has begun hearings to close the loophole used by dispensaries to set up shop with scarcely any paperwork or permits.
At the committee's first hearings last week, it told 28 dispensaries to close or face a fine. This week, it was Mr. Halbert's turn.
California legalized marijuana consumption for medicinal use in 1996.
In 2003, the state established legal protections for medical-marijuana users who were issued a doctor's prescription. The law also created more solid legal footing for the cooperatives that distribute marijuana for medical purposes.
Dispensaries, which had numbered just a handful until 2003, began to grow statewide. By 2007, Los Angeles had 183 dispensaries.
That same year, the city attorney's office issued a moratorium intended to block new establishments until the City Council created regulations, such as a ban on operating near schools.
But the City Council never got around to setting any rules on the dispensaries. Meantime, word begin to spread that dispensary owners could open new outlets, despite the moratorium, by filing paperwork claiming a so-called hardship exemption.
Some applications cited the raids by federal authorities targeting marijuana dispensaries as hardships. In other hardship applications, owners simply claimed they weren't aware they needed permits.
View Full Image
Credit: Sabrian Shankman
The Los Angeles City Council is cracking down on marijuana dispensaries, including Daniel Halbert's.
The hardship applications went unchallenged by the City Council, and the number of dispensaries soared to its current level of about 800. San Francisco, by comparison, has about 30 dispensaries.
Mr. Halbert joined the rush in March. He was running a dating service in Phoenix when a friend pointed out an ad on Craigslist from Marc Kent, a former attorney, offering to help people apply for the hardship exemption for a $3,500 fee. He said he has helped people open up more than 100 dispensaries.
"It was pretty much a turn-key operation," said Mr. Kent.
Mr. Halbert made three trips to Los Angeles and toured several facilities that had opened under the hardship clause. "I did my due diligence," he said.
He settled on a storefront on Venice Boulevard in West Los Angeles.
He registered the business as Best Buds, but later changed the outlet's name to Rainforest Collective. He placed a clapboard sign out front and advertised his services with a flashing neon sign in the window.
He decorated his shop with rainforest-themed murals. Clients could select from an assortment of marijuana strains for smoking, as well as "edibles" -- pretzels and cookies with the marijuana baked inside. Total investment: close to $100,000, he said.
Mr. Halbert encourages customers to consume their marijuana on the premises and lures them with such offers as movie nights. "We don't want them to just come here and get their medicine," he said. "We want them to come here and maybe make some friends, have some fellowship."
He said he now has about 1,000 customers, but declined to discuss how much the shop makes. Mr. Halbert said he might try to fight the city order to close and planned to stay open as long as possible. In his hearing before the planning committee Tuesday, Mr. Halbert produced letters of support from residents and local businesses.
Other neighborhood activists, however, have campaigned to shut down the dispensaries.
Cindy Cleghorn, a member of a neighborhood council in a another part of the city, complained her area is overrun.
"It's out of control," she said. Ms. Cleghorn said the new dispensaries violate neighborhood-improvement guidelines and operate in storefronts that are zoned for other uses. "It's not about the marijuana, it's about the land-use issues," says Ms. Cleghorn, who brought her complaints to the City Council.
But because so many dispensaries had opened up without resistance from the city, Mr. Halbert said, "Any business person would assume that the city's fine" with them.
Write to Sabrina Shankman at [email protected]
hxxp://online.wsj.com/article/SB124701451791309199.html
