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New law could put some medical marijuana dispensaries out of business

medical marijuana dispensaries

medical marijuana dispensaries

In 2001, Steve DeAngelo agreed to help a friend by attending the delivery of nearly 200 pounds of marijuana in a Maryland trailer park and verifying the quality of the product. In exchange, DeAngelo said he would get 10 pounds of the cannabis that he planned to distribute to medical marijuana patients in that state, where he lived at the time.

Instead, the police swooped in, and DeAngelo ended up convicted of felony possession of marijuana with intent to sell.

Fifteen years later, DeAngelo runs what may be one of  the largest medical marijuana dispensaries in the U.S., but a new law says he will have to get a state license by 2018 — and the state can reject applications from those with drug felonies on their records.

DeAngelo, whose Harborside Health Center in Oakland has annual sales of $30 million, plans to go through the appeal process.

“My argument is simple: Cannabis should never have been made illegal in the first place,” he said.

Still, industry leaders say the new law could hurt hundreds of growers and sellers who planned to apply for state licenses but who have felony drug convictions on their records.

“It’s a huge issue,” said Casey O’Neill, board chairman of the California Growers Assn., a 500-member group representing cannabis cultivators in the state. “Twenty-five to 30% of our members are in this boat” with felony drug convictions, he said.

O’Neill, who grows cannabis and flowers at HappyDay Farms in Mendocino, was convicted of a felony marijuana cultivation charge in 2009. But he believes he will not have trouble getting a license because his conviction was expunged when he successfully completed probation without another offense.

He worries the new law will mostly hurt people of color, who he said bore the brunt of the war on drugs.

“You have populations that have been disproportionately prosecuted for cannabis cultivation, and to then not be allowed to participate in the regulated economy, it’s like a double whammy,” O’Neill said. “It’s totally unacceptable.”

The stakes are high. An estimated 1,250 medical marijuana dispensaries are operating in the state, with sales last year hitting $2.7 billion, according to industry groups.

The stakes are likely to get higher still in November, when voters are expected to be given the chance to vote on an initiative to legalize the recreational use of marijuana. If California voters approve recreational use, the total state market for cannabis could reach $6.6 billion in 2018, according to a recent report by New Frontier, an industry data collection firm, and ArcView Market Research.

Because of that, licenses to grow and sell marijuana will likely be very valuable.

One sign of nervousness over the potential for disqualifications is a bill introduced by Assemblyman Rob Bonta (D-Oakland) that was written in a way to specifically exempt DeAngelo on grounds that he is a major economic driver in the state. But law enforcement officials have fought any effort to make it easier for felons to get licenses.

California voters legalized medical marijuana dispensaries in 1996, but the Legislature only last year approved regulation of the growing, transport and sale of cannabis under the oversight of a new state Bureau of Medical Marijuana Regulation. Gov. Jerry Brown appointed Lori Ajax as head of the new bureau.

The law signed by Brown in October says the state “may” deny a license to an applicant who has been convicted of an offense that is “substantially related to the qualifications, functions or duties of the business” he or she wants to operate.

A substantially related offense includes “a felony conviction for the illegal possession for sale, manufacture, transportation or cultivation of a controlled substance,” which includes marijuana, the law says.


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