Is Santa Ana the city that finally figures out how to properly manage medical marijuana dispensaries in OC?
Could they be an example to other municipalities who have long struggled over how to make this budding industry work for them?
No doubt marijuana is California’s next gold rush.
The industry has long thrived in the shadows.
Bringing it mainstream and harnessing its enormous economic potential, while balancing regulation and public safety, is what Santa Ana city leaders are grappling with.
There are many fragmented players in the scenario- politicians, pot advocates, and now the investment world and big business.
Blending them all will be the key to success.
This past election Santa Ana voters passed two marijuana initiatives – one presented by city leaders, Measure BB, and another – Measure CC – penned in part by Kandice Hawes Director of the Orange County National Organization for the Reform of Marijuana Laws- NORML.
The city’s BB received a larger percentage of votes, so legally it will be enacted, but Hawes says talks are now taking place to incorporate some of her ideas from CC.
Hawes recently met with Santa Ana’s Planning and Building Department Interim Executive Director Karen Haluza.
Hawes says Haluza was open to the concept of having her involved in the process as the city rolls out this new measure, but will need to sell the idea to the city council.
Though Hawes is happy this dialog is now in play, prior to the election she tried to work with the city so one measure would be presented to voters.
No such luck.
“Different people on council wouldn’t work with us”, she says.
Hawes hopes Haluza can convince council members that working with her on the dispensary issue is the best option- thus avoiding litigation and saving the taxpayers the expense of fighting this out in court.
What ideas does Hawes think the city should change in their measure?
“Little things,” she says.
One point of contention is patient confidentiality. The city’s measure requires dispensaries to keep a list of patient information available to law enforcement. Hawes feels this might discourage folks using the medicine who might be higher profile- or just don’t want their names out there.
And she questions the city’s proposed lottery system to dole out licenses. This type of system has been challenged legally in other cities, and Hawes is concerned about transparency as well.
The location of the proposed medical marijuana collectives is slated for a relatively small area in industrial locations.
Hawes worries about those who aren’t close to bus routes and wonders whether it will make it difficult for ill or elderly patients using this mode of transportation to access them.
“They are basically creating red light districts. Collectives shouldn’t be treated like strip clubs”, says Hawes.
Senator Lou Correa, who is now eyeing the spot on the board of supervisors Janet Nguyen will be leaving, tells me he believes medical marijuana should be strictly regulated, and supports the city’s efforts here.
Correa feels dispensaries must be well regulated, away from schools and neighborhoods, and rules enforced by police, which all seem to be within Santa Ana’s new measure.
Since Correa is one politician committed to figuring out this issue, I suggested he look at how Las Vegas dealt with it this past year.
If there’s one city that handles vices efficiently, it’s Vegas.
Those seeking licenses for cultivation, production and dispensaries in Vegas went through a lengthy process, and the city adopted new land use and business licensing regulations.
Looking at the city’s website on the process, the forms are daunting -not to mention the fees.
Originally just to get into the game required a non- refundable application fee of $500,000. That was later reduced to $250,000- but even so- it’s a lot of dough to gamble with no guarantees.
Of the many who vied for licenses here, only one was a publicly traded company, Terra Tech, headquartered Orange County.
Laguna resident Derek Peterson is the CEO.
Peterson recently received eight licenses in Vegas.
“We spent approximately $1 million going for the permits. The expenses included attorney, lobbyists, engineers, architects, security consultants and more. We anticipate all the projects to cost approximately $12 million to construct and begin operations,” says Peterson.
And he estimates creating close to 100 new jobs in the area.
Two years ago I interviewed Peterson, a former Morgan Stanley investment banker, about trends in the cannabis industry.
He predicted it would be the next investment boom.
“That prediction is coming to fruition. You’re seeing investors not only comfortable with this industry, but rushing to enter it. And you’re continuing to see support among the American public rise. In addition you are beginning to see bi partisan support from a federal level,” he said.
When I spoke to Peterson two years ago, he was about to take his company public.
“We are now a fully reporting issuer, traded on the OTCQB under the symbol TRTC. Our market cap is approximately 100 million” he said.
The company is now poised to become the first public company to hold marijuana licenses in the US.
“As the market grows and matures we’ll see this industry pick up even more speed, which will translate to the public, lawmakers, and regulators supporting legalization efforts,” says Peterson
He believes the benefits of regulation and taxation are enormous, and a much better policy than black market prohibition.
Though some say Nevada’s process prohibited the “little guy’s” ability to compete, it raised the bar professionally -and Santa Ana should take heed.
Peterson says one important aspect was that Nevada state legislators were very supportive of the industry.
This doesn’t seem to be the case in California- at least at the moment- according to Correa.
“We were the first ones out of the gate 20 years ago with the Passionate Use Act and here we are with zero legislation today,” he says.
But he does predict as more investors eye this industry, legislators will take notice.
His hope is federal and state level legislators will present something to voters in 2016 which will bring laws more in line with cities moving forward on marijuana issues.
“This industry is no longer about pot heads; this is about venture capitalist and hedge funds. These folks are smart money people,” says Correa who plans on talking with Peterson.
I think he could learn a lot from this cutting edge entrepreneur.
In the meantime, all eyes will be watching what happens next in Santa Ana.
Will they roll the dice and be winners? Or will they crap out…