Friday, August 21, 2009

Impact of Dispensaries and Regulations on Communities

DISPENSARIES REDUCE CRIME AND IMPROVE PUBLIC SAFETY 

Some reports have suggested that dispensaries are magnets for criminal activity or other behavior that is a problem for the community, but the experience of those cities with dispensary regulations says otherwise. Crime statistics and the accounts of local officials surveyed by ASA indicate that crime is actually reduced by the presence of a dispensary. And complaints from citizens and surrounding businesses are either negligible or are significantly reduced with the implementation of local regulations. 

This trend has led multiple cities and counties to consider regulation as a solution. Kern County, which passed a dispensary ordinance in July 2006, is a case in point. The sheriff there noted in his staff report that "regulatory oversight at the local levels helps prevent crime directly  and indirectly related to illegal operations occurring under the pretense and protection of state laws authorizing Medical Marijuana Dispensaries." Although dispensary-related crime has not been a problem for the county,  the regulations will help law enforcement determine the legitimacy of dispensaries and their patients. 

The sheriff specifically pointed out that, "existing dispensaries have not caused noticeable law enforcement of secondary effects and problems for at least one year. As a result,  the focus of the proposed  Ordinance is narrowed to insure Dispensary compliance with the law" (Kern County Staff Report, Proposed Ordinance Regulating Medical Cannabis Dispensaries, July 11, 2006). 

The presence of a dispensary in the neighborhood can actually improve public safety and reduce crime. Most dispensaries take security for their members and staff more seriously than many businesses. Security cameras are often used both inside and outside the premises, and security guards are often employed to ensure safety. Both cameras and security guards serve as a general deterrent to criminal activity and other problems on the street. Those likely to engage in such activities will tend to move to a less-monitored area, thereby ensuring a safe environment not only for dispensary members and staff but also for neighbors and businesses in the surrounding area. 

Residents in areas surrounding dispensaries have reported improvements to the neighborhood. Kirk C., a long time San Francisco resident, commented at a city hearing, "I have lived in the same apartment along the Divisadero corridor in San Francisco for the past five years. Each store that has opened in my neighborhood has been nicer, with many new restaurants quickly becoming some of the city's hottest spots. My neighborhood's crime and vandalism seems to be going down year after year. It strikes me that the dispensaries have been a vital part of the improvement that is going on in my neighborhood." 

Oakland's city administrator for the ordinance regulating dispensaries, Barbara Killey, notes that "The areas around the dispensaries may be some of the most safest areas of Oakland now because of the level of security, surveillance, etc…since the ordinance passed." 

Likewise, Santa Rosa Mayor Jane Bender noted that since the city passed its ordinance, there appears to be "a decrease in criminal activity. There certainly has been a decrease in complaints. The city attorney says there have been no complaints either from citizens nor from neighboring businesses." 

Those dispensaries that go through the permitting process or otherwise comply with local ordinances tend, by their very nature, to be those most interested in meeting community standards and being good neighbors. Cities enacting ordinances for the operation of dispensaries may even require security measures, but it is a matter of good business practice for dispensary operators since it is in their own best interest. Many local officials surveyed by ASA said dispensaries operating in their communities have presented no problems, or what problems there may have been significantly diminished once an ordinance or other regulation was instituted. 

Mike Rotkin, fifth-term councilmember and former four-term mayor in the City of Santa Cruz, says about his city's dispensary, "It provides a legal (under State law) service for people in medical need. Because it is well run and well regulated and located in an area acceptable to the City, it gets cooperation from the local police. Because they are under strict city regulation, there is less likelihood of theft or violence and less opposition from angry neighbors. It is no longer a controversial issue in our city." 

Regarding the decrease in complaints about existing dispensaries, several officials said that ordinances significantly improved relations with other businesses and the community at large. An Oakland city council staff member noted that they, "had gotten reports of break ins. That kind of activity has stopped . That danger has been eliminated." 


WHY DIVERSION OF MEDICAL CANNABIS IS TYPICALLY NOT A PROBLEM
 
One of the concerns of public officials is that dispensaries make possible or even encourage the resale of cannabis on the street. But the experience of those cities which have instituted ordinances is that such problems, which are rare in the first place, quickly disappear. In addition to the ease for law enforcement of monitoring openly operating facilities, dispensaries universally have strict rules about how members are to behave in and around the dispensary. Many have "good neighbor" trainings for their members that emphasize sensitivity to the concerns of neighbors, and all absolutely prohibit the resale of cannabis to anyone. Anyone violating that prohibition is typically banned from any further contact with the dispensary. 


"The areas around the dispensaries may be some of the most safest areas of Oakland now because of the level of security , surveillance, etc. since the ordinance passed." 
—Barbara Killey, Oakland 


As Oakland's city administrator for the regulatory ordinance explains, "dispensaries themselves have been very good at self policing against resale because they understand they can lose their permit if their patients resell." 

In the event of street or other resale, local law enforcement has at its disposal all the many legal penalties the state provides. This all adds up to a safer street environment with fewer drug-related problems than before dispensary operations were permitted in the area. The experience of the City of Oakland is a good example of this phenomenon. The city's legislative analyst, Lupe Schoenberger, stated that, "…[P]eople feel safer when they're walking down the street. The level of marijuana street sales has significantly reduced." 

Dispensaries operating with the permission of the city are also more likely to appropriately utilize law enforcement resources themselves, reporting any crimes directly to the appropriate agencies. And, again, dispensary operators and their patient members tend to be more safety conscious than the general public, resulting in great vigilance and better preemptive measures. The reduction in crime in areas with dispensaries has been reported anecdotally by law enforcement in several communities.


DISPENSARIES CAN BE GOOD NEIGHBORS
 
Medical cannabis dispensing collectives are typically positive additions to the neighborhoods in which they locate, bringing additional customers to neighboring businesses and reducing crime in the immediate area. 

Like any new business that serves a different customer base than the existing businesses in the area, dispensaries increase the revenue of other businesses in the surrounding area simply because new people are coming to access services, increasing foot traffic past other establishments. In many communities, the opening of a dispensary has helped revitalize an area. While patients tend to opt for dispensaries that are close and convenient, particularly since travel can be difficult, many patients will travel to dispensary locations in parts of town they would not otherwise visit. Even if patients are not immediately utilizing the services or purchasing the goods offered by neighboring businesses, they are more likely to eventually patronize those businesses because of convenience. 

ASA's survey of officials whose cities have passed dispensary regulations found that the vast majority of businesses adjoining or near dispensaries had reported no problems associated with a dispensary opening after the implementation of regulation. 

Kriss Worthington, longtime councilmember in Berkeley, said in support of a dispensary there, "They have been a responsible neighbor and vital organization to our diverse community. Since their opening, they have done an outstanding job keeping the building clean, neat, organized and safe. In fact, we have had no calls from neighbors complaining about them, which is a sign of respect from the community. In Berkeley, even average restaurants and stores have complaints from neighbors.” 

Mike Rotkin, fifth term councilmember and former four term mayor in the City of Santa Cruz said about the dispensary that opened there last year, "The immediately neighboring businesses have been uniformly supportive or neutral. There have been no complaints either about establishing it or running it." 

Mark Keilty, Planning and Building director of Tulare, when asked if  the existence of dispensaries affected local business, said they had "no effect or at least no one has complained." 

And Dave Turner, mayor of Fort Bragg, noted that before the passage of regulations there were "plenty of complaints from both neighboring businesses and concerned citizens," but since then, it is no longer a problem. Public officials understand that, when it comes to dispensaries, they must balance both the humanitarian needs of patients and the concerns of the public, especially those of neighboring residents and business owners.


"Dispensaries themselves have been very good at self policing against resale because they understand they can lose their permit if their patients resell." 
—Barbara Killey, Oakland


Oakland City Councilmember Nancy J. Nadel wrote in an open letter to her fellow colleagues across the state, "Local government has a responsibility to the medical needs of its people, even when it's not a politically easy choice to make. We have found it possible to build regulations that address the concerns of neighbors, local businesses law enforcement and the general public, while not compromising the needs of the patients themselves. We've found that by working with all interested parities in advance of adopting an ordinance while keeping the patients' needs foremost, problems that may seem inevitable never arise." 

Mike Rotkin of Santa Cruz stated that since Santa Cruz enacted an ordinance for dispensary operations, "Things have calmed down. The police are happy with the ordinance, and that has made things a lot easier. I think the fact that we took the time to give people who wrote us respectful and detailed explanations of what we were doing and why made a real difference." 

Report Shows Benefits of Local Dispensary Ordinances

Study of Local Officials and Patient Experience Details Local Regulations’ Impact

SAN DIEGO – California’s medical marijuana dispensaries are a benefit to both patients and local communities, according to a report released at a press conference in San Diego today as part of the annual League of California Cities convention.

The report by the advocacy group Americans for Safe Access details the impact of regulatory ordinances in cities around the state, based on information from local officials involved in the process. Three of those officials, Oakland City Councilmember Desley Brooks, Santa Rosa Councilmember Lee Pierce and Santa Cruz City Councilmember Mike Rotkin, were on hand in San Diego to describe how their cities had arrived at regulations and the positive results they’ve seen.

“The experience of cities and counties that have enacted dispensary ordinances has been uniformly positive,” said Steph Sherer, executive director of Americans for Safe Access. “Patients rely on dispensaries, but communities benefit, too.”

In addition to the information gleaned from nine-months of interviews with city officials about the effects of regulatory ordinances, the report covers some of the political background and current legal status of dispensaries and outlines the important issues to consider in drafting dispensary regulations. It describes how regulated dispensaries help revitalize neighborhoods, bring new customers to neighboring businesses, and reduce crime in surrounding areas.

Amanda Reiman, Ph.D., of the University of California, Berkeley was also present at the press conference to discuss her recent research findings on why and how cannabis dispensaries benefit patients. Those findings are also summarized in the ASA report. Among the benefits for patients are access for the most seriously ill and injured, a safer environment for patients than having to buy on the illicit market, and improved health through social support services.

Copies of the report are being distributed to local officials attending the California League of Cities conference, which began today at the San Diego Convention Center. Copies may be downloaded athttp://www.americansforsafeaccess.org/downloads/dispensaries.pdf.


What is a medical cannabis dispensing collective?

A medical cannabis dispensing collective is an organization operating in compliance with state law and comprised entirely of legally-qualified patients and their primary caregivers that receives medicine exclusively from its members and provides it exclusively to its members. Collectives are sometimes called dispensaries, compassion clubs, or cannabis centers. The exact terminology varies, and terms are sometimes used inter-changeably. I prefer the term dispensing collective to clearly associate theses organizations with California law as discussed below.

Are collectives legal under state law?

Yes. California Health and Safety Code §11362.775 authorizes patients and caregivers to "associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes" [italics added]. Unfortunately, the law gives no further clarification as to what constitutes a collective or cooperative association. The nature of these associations is evolving in step with California law and legal precedents.

In August 2008, the California Attorney General (AG) published guidelines for medical cannabis that state that "a properly organized and operated collective of cooperative that dispenses medical marijuana through a storefront may be lawful under California law," provided the facility substantially complies with the AG's guidelines. You should read "What the Attorney General's Guidelines Mean for Medical Cannabis Dispensing Collectives in California" at http://www.AmericansForSafeAccess.org/AGGuidelines for a detailed discussion of collectives and cooperatives under California law.

Does a collective have to be a nonprofit organization?

California Health and Safety Code Section 11362.765(a) says that nothing in the law authorizes the cultivation of medical cannabis for profit. This statue does not mandate the establishment of a statutory nonprofit corporation as described in California Corporations Code Section 5000, et seq. However, operators may choose to organize a medical cannabis collective as a California nonprofit corporation, as discussed in greater detail below.

Regardless of the organizational structure, a medical cannabis collective should operate in a "not-for-profit" manner. Not-for-profit operation describes the behavior of a business or association that is not operated for a commercial purpose, or to generate profits for its owners. Any business, regardless of its formal structure, can operate in a not-for-profit fashion by reinvesting excess revenue (after salaries and other overhead) in services for members, advocacy for patients' rights, or other noncommercial activity.

The term not-for-profit is sometimes confused with the term nonprofit. A nonprofit corporation is a specific statutory entity organized under California Corporation Code Section 5000, et seq., to carry on a non-commercial activity. Nonprofit corporations include churches, schools, some hospitals, social clubs, and service organizations. Some nonprofits are exempt from federal and state taxes because they do educational, religious, or charitable work. The Internal Revenue Service will not recognize providing medical cannabis as a tax-exempt activity, and state tax-exemption is contingent on federal approval. Therefore, a medical cannabis collective organized as a nonprofit corporation will report and pay tax like a traditional C-Corporation. It is important to remember, however, that a corporation is still a legitimate nonprofit organization under California law, even without tax-exempt status.

Many collective operators choose to incorporate their collectives as California Nonprofit Mutual Benefit Corporations, as described under California Corporations Code 7110,et seq. Doing so gives the collective a bona fide nonprofit identity, something that resonates with elected officials, law enforcement, media, and neighbors. This is a sensible choice for most operators, and increasingly the norm for new facilities.