Medical marijuana brings jobs to valley | Central Valley Business Journal

Medical marijuana brings jobs to valley | Central Valley Business Journal

Thursday, 04 August 2011 20:30
Medical marijuana brings jobs to valley Featured
Written by William West
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Photos courtesy of Harborside Health CenterCan California marijuana dispensaries heal municipal tax shortfalls?


Marijuana is effective for fighting the nausea of chemotherapy, and cancer patients are reportedly avid users of medical marijuana. This compassionate use of cannabis was the primary argument behind Proposition 215 that was passed by 56% of California voters in 1996. The proposition made legal the possession and use of marijuana for medical reasons.

Fast-forward to this year and Stockton has approved three permits for marijuana dispensaries. Modesto has permitted no dispensaries. In Sacramento, there are dozens of legal pot shops.

Two things seem true about marijuana in California today. One, there is a lot of money to be made dispensing medical marijuana. Two, a welter of conflicting laws complicate the life of the marijuana businessperson.

Oakland has Oaksterdam University, the mother ship of the marijuana-for-health movement that is named for the wide-open city Amsterdam, Netherlands. Oaksterdam U. teaches the history of marijuana, the legal issues of pot, and how to set up dispensaries.

Harborside, a pot dispensary, also in Oakland, did $22 million in sales in its most recent business year. They have a San Jose location and serve 70,000 patients. The IRS is trying to collect millions of dollars in taxes from Harborside.

In Modesto, one man fights to provide marijuana to sick folks like him. The city council has rejected his application for a business permit for a dispensary twice. He is undaunted.

“Once you are learned about being terminally ill, what can they do to you?” Mark Gray said. He was given a terminal diagnosis a few years ago and during treatment the chemotherapy, not the cancer, almost killed him. That’s when he found the efficacy of medical marijuana.

Gray offered the city of Modesto a plan that would pay them $6 million in taxes in 2 years at the current rate. The city council voted it down. One major reason was the experience the council had with a previous marijuana dispensary owner. A young man learned how to open a dispensary and then when the business was doing well, mocked the city council and the city attorney on a video. The city council saw the video and the next step taken was a call to the Drug Enforcement Administration.

The DEA started an investigation that revealed the young man was a for-profit drug enterprise selling meth, cocaine, and other drugs, not simply medical-use marijuana.

The result was a 22-year prison sentence. This young man had purchased a home in Del Rio Country Club, was driving a $180,000 Mercedes Benz and felt untouchable.

Medical marijuana dispensaries must be set up as non-profits.

Gray believes the council has a knee jerk reaction after their initial experience.

After Gray’s $6 million proposal, an unidentified councilman told him that if he voted to okay a dispensary it would be the end of his political career.

Another councilman said that if they legalize pot in Modesto it would be smoked in front of Costco.

Gray estimates that there are about 8,000 medical marijuana patients in the Modesto area. He bases his guess on the number of people that went through the now-defunct dispensary, adjusting for scammers who didn’t have a genuine medical need. Another way he arrives at his estimate is to note that the number on his Stanislaus medical marijuana card is 2542, so he figures there were 2,541 enrollees before him. A call to the Stanislaus County Health Department to verify these numbers was not returned by press time.

Gray hasn’t been able to open a dispensary, but he has what he calls a clinic next to the State Theater. In the clinic, you can be processed to get a medical marijuana card. Medical history is entered into a form and clients talk to a doctor via a video hookup. If the doctor feels that your history and condition qualifies you as a candidate for medical marijuana, he will give you a recommendation letter. No doctor can give an actual prescription because under federal law, marijuana is still classified as a restricted substance. They are only allowed to give a recommendation letter.

That letter is the key to getting a card.

Each county has to issue cards under state law. The card allows a possessor to grow a small number of pot plants at home and carry up to an ounce on his person. If stopped by an officer of the law, the card is presented and the card number is punched into a database. If the card clears the possession of cannabis is allowed. No name is on the card, according to Gray, just a photo of the owner and the card number. This is done for privacy concerns. Many medical marijuana users fear their name in a database could cause them trouble, hence the no-name card.

“On average we get about 150 people come through and get their cards,” Gray said. “We charge $99 and pay the doctor $35. People think this is a big money business, but here at this clinic we lost $28,000 last year. “

The inherent clash set up by a California state law allowing use of marijuana and a federal law that bans that use is a conundrum that creates uncertainty for many. Banks that are federally chartered are loath to open checking accounts for marijuana dispensaries, for example. The U.S. Attorney General has said that he won’t enforce federal marijuana statutes in states where laws allow medical use. Still, local U.S. Attorneys General have gone after pot shops in certain venues. Many local U.S. Attorneys have sent warning letters to local municipalities that are trying to craft regulated local marijuana markets, indicating that prosecutions for violating federal laws are a risk.

There is confusion and uncertainty about these inconsistent laws. The courts will be busy hearing jurisdictional appeals for the foreseeable future.

Discrepancies between legal authorities exist between various counties and cities within California. Stanislaus County and Modesto won’t license any pot shops. Stockton has just okayed three dispensaries. San Joaquin County is leaving it to the various cities in the county, but has outlawed dispensaries on county property.

However, there is a pot collective located on San Joaquin County land on the eastern edge of Stockton. This collective was once located in Stockton but had its business license revoked. City officials indicated the owner hadn’t been up front about the nature of his business when they issued a license.

Now that San Joaquin County has passed a “no-pot-shops” policy, there will be a legal battle because the collective claims they were in existence before passage of the policy and they should be grandfathered in. No one from the collective would speak on or off the record for this story.

Meanwhile, two of three permitted dispensaries are about to open in Stockton in the next few months. A third is being disallowed because the Planning Commission felt it was too close to residences, even though the residences are in an area that is zoned commercial. The business is appealing the decision.

One of the new dispensaries is to be located in the Eastland Plaza Shopping Center. The executive director spoke at length about the nature of the business and her excitement at coming to Stockton from her current position at the Fruitridge Health and Wellness Collective in Sacramento.

Stefanie Gepert, executive director of Collective 99, will run the new medical marijuana dispensary in Eastland Plaza. The landlords will include Anthony Barkett, developer of the Downtown Plaza Cinema.

“I was the office manager and am now the business manager at Fruitridge Health and Wellness Collective,” Gepert said. “I came on board when they were one month old. My role was to create organization and structure and put systems in place. I was to oversee accounting, human resources and marketing.”

Marketing is a high priority in the Sacramento medical marijuana world. There are approximately 100 dispensaries in and around the Sacramento metropolitan area.

Gepert trained a support staff of three people to run accounting, human resources and marketing. Now she says she is ready for a new opportunity and challenge. The Chico State graduate is going to take the knowledge she learned in her two years at Fruitridge and open a new collective in Stockton.

It will be known as Collective 99. Previously it was going to named Collective 209 but local government informed them that the moniker “209” would connect to a gang. Thus it was changed to “99,” reflecting the historic freeway nearby.

“When I graduated from college I was in outside sales,” Gepert said. “I did sales for a company whose clients were home builders. I was the liaison between marketing coordinators and would create sales office design environments. Needless to say, that industry contracted rapidly.”

She came to the medical marijuana world because a friend from Chico State, Caleb Counts, was the executive director of the Fruitridge Collective.

Gepert grew up in Santa Rosa and also has experience working at a winery in Sonoma County. Her degree from Chico State is in Business Administration with what they call in that curriculum an “option” in marketing. An option is a little less than a minor.

The business administration background and a penchant for organization are evident in Gepert’s well-thought out and detailed answers to interview questions. Gepert and the Fruitridge Collective belie whatever residual public perception that pot shops are all hotbeds of stoners. For example, the collectives have boards of directors. They are non-profit corporations and the same team of attorneys, CPAs and other business advisors will support Collective 99.

“Fruitridge is working very well,” Gepert said. “The patients are happy and the compassion program is working. When I got the opportunity to work at Fruitridge I was hesitant. I didn’t understand the business. Then I got to know patients and build relationships. I’ve seen patients in tears to get Farmers Market produce (part of the compassion program), swearing it’s the best thing in their life.”

To combat the negative view that many attach to the medical marijuana world, namely that it is a bunch of stoners looking for a way around the law, the Fruitridge Collective is part of an organizing effort for professional standards. The Sacramento Alliance of County Collectives and the Sacramento Alliance of Collectives bring owners together to work with and not against city councils and county supervisors.

Gepert plans to continue that sort of professionalism with Collective 99, which will be a separate business entity from the Frutiridge Collective.

“We heard of a need in Stockton,” Gepert said. ‘Patients were coming from Stockton to Sacramento because they had no choice down here.”

When a patient comes to Fruitridge Collective he already has a recommendation, according to Gepert. They play no role in getting a client certified with a letter. They have no doctors and no arrangements with doctors. They will require a letter, and then will verify that the letter is bonafide and not a forgery. Some of their clients will also have a medical marijuana card but she never sees them.

“We check their California ID and check their recommendation letter,” Gepert said. “We use a website at the California Medical Board.”

At this point the Collective 99 store location is basically empty. The collective is having contractors up to Fruitridge to show them things that work and some things they would like to do better in this new business.

Where does a pot dispensary, or collective, get their merchandise?

“Currently, patients can grow an allotment of marijuana and tend to have a surplus,” Gepert said. “More than they consume themselves. They come in with their surplus and we reimburse them for their time and effort. These are all qualified and verified patients who have gone through our checking process.”

Last modified on Thursday, 04 August 2011 20:34
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William West

William West has spent a decade writing for local and regional publications. These include the San Joaquin Farm Bureau News, San Joaquin Medical Society's "Physicians Magazine", S.J. Magazine, and the Central Valley Business Journal. He is a winner of the Stockton Arts Commission Short Story Contest. He is published in an anthology called "To Ethiopia with Love". Before devoting himself full-time to writing, he was a major account sales executive with Verizon Wireless for 13 years. Prior to that he had a computer consulting business, managed a ComputerLand store, and managed the largest home electronics store for CBS Pacific Stereo in San Jose. He attended UOP. He strives for straight-up journalism that informs, educates, and delivers insight.

E-mail: wwest@cvbizjournal.com