Friday, April 16, 2010

Oakland may close medical marijuana dispensary

OAKLAND — Medical marijuana patients soon could have one less
dispensary in the city from which to purchase marijuana after a judge
ruled today that city officials may continue in their quest to shutter
the Oakland Patient Center.

The ruling was made four months after Arturo Sanchez, an assistant to
the Oakland city administrator, decided to revoke a permit issued to the
Oakland Patient Center because, according to Sanchez, its owners failed
to comply with laws regulating the operation of medical marijuana
dispensaries within city limits.

Sanchez ruled in January that the center violated city laws by failing
to notify officials that ownership of the dispensary had changed. The
owners argue that Sanchez's decision was made arbitrarily, and they
suggested that revocation of the permit was done to allow another
dispensary to begin operations in the city.

Under city laws regulating medical marijuana, only four dispensaries are
allowed to operate in Oakland. If the city revokes a permit from any of
those four dispensaries, or a dispensary gives it up voluntarily, that
permit becomes available for any other company that applies through a
city-issued response for proposals.

Attorneys representing the Oakland Patient Center appeared in Alameda
County Superior Court today in hopes of convincing a judge to prevent
the city from acting on Sanchez's decision until a full hearing could be
conducted later this year. The attorneys, Sally Steinhardt and Lisa
Gygax, argued that their clients had attempted to comply with city laws
but were rebuffed by city officials who refused to accept a revision to
Oakland Patient Center's permit.

No other problems related to the dispensary's operation were reported by
the city.

The dispensary's troubles with the city began last year when its
majority owners, Steven and Stacie Petras, agreed to sell the dispensary
to Dona Frank in a deal that is being contested in the Superior Court of
Contra Costa County, where the business is registered. Under terms of
that deal, Frank became the operator of Oakland Patient Center and
inherited the responsibilities mandated under the city's permit,
including getting her name on the permit and paying a $30,000 annual

Gygax said Frank attempted to notify the city of the sale and have her
name placed on the permit but was not allowed to apply. Instead, Gygax
said, the city notified Frank and the Petrases that the city would hold
a hearing regarding revocation of the permit.

Sanchez said today that the city did not learn of the sale until after
it had occurred when the Petrases came to the city asking for help
resolving a dispute between them and Frank over the dispensary's sale.
At that point, Sanchez said, he was forced to revoke the permit because
the city learned the business had been sold without notification to the
city. Such notification is necessary, Sanchez said, to give the city an
opportunity to investigate the a new owner's background to ensure the
business would be legal.

"We cannot conceive of a situation where we want this to be a common
practice, so we have to take a zero-tolerance towards it," Sanchez said.
"There is a process, and Ms. Frank is looking to circumvent that

Sanchez denied an ulterior motive to his decision and said there is no
other business that has inquired about receiving a permit to run a
dispensary. Even if there were, he said, he would not be the person to
decide who gets the permit.

Gygax said the city is mistaken in believing the dispensary's ownership
officially has changed. According to the sale agreement, each side has a
year to make the deal final, and it is dependent on both sides working
toward getting Frank's name on the permit.

"That is simply untrue," Gygax said. "The sale is not complete. The
contract shows it takes a year, and (Frank) has to be added to the

Although Alameda County Superior Court Judge Frank Rosech denied the
dispensary's request to stop the city from shutting down the business,
he gave the business an opportunity to provide more evidence during a
hearing next week.

In the meantime, Gygax said, the business will remain open.

Sanchez said the city has no immediate plans to force the business to
close but will begin issuing $1,000 a day fines against the Oakland
Patient Center for violation of city laws. Eventually, he said, the city
might be forced to shut down the operation.

"We may look at all of our options," he said.

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