2011-12-26 "Pot clubs turning to delivery; With feds threatening storefronts, couriers become alternatives" by David Downs from "San Francisco Chronicle"
Medithrive, a cannabis dispensary in San Francisco's Mission District that was forced to close last month, has re-emerged as a delivery-only service, part of a growing trend in California's billion-dollar medical marijuana industry that's recently come under attack by federal authorities.
Threats of property forfeiture, fines, lawsuits and raids this winter have made brick-and-mortar locations less enticing to pot entrepreneurs. Hundreds of storefronts have closed amid the new federal crackdown. Delivery services remain, offering a lower-profile, albeit more dangerous, alternative.
"It just makes sense. When you have a storefront, you're on the map. You don't have those issues with a delivery service. No one's going to know about it," said William Panzer, an Oakland defense attorney who represents Northstone Organics, a delivery service based in Ukiah (Mendocino County).
California has struggled with cannabis distribution since voters in 1996 gave qualified patients a medical defense for breaking state marijuana laws. Then in 2003, state Sen. Mark Leno's SB420 granted patients the right to collectively cultivate and distribute marijuana.
Under those laws, San Francisco created a dispensary licensing process in 2005 that led to an estimated 24 clubs and one delivery-only service. There are thought to be several hundred thousand Californians with a doctor's recommendation for marijuana.
Cities such as Los Angeles and San Diego chose the opposite path and tried to ban shops with limited success. But the storefront enforcement climate led to the proliferation of fly-by-night mobile services.
Indeed, the number of storefront dispensaries and mobile operators are inversely correlated, Los Angeles Assistant City Attorney Asha Greenberg said.
Federal action -
On Oct. 7, four U.S. attorneys declared a crackdown on the medical marijuana industry, alleging profiteering and exports to other states. Hundreds of warning letters went out to dispensary landlords across the state.
More than two-thirds of San Diego storefront dispensaries closed within weeks, watchers said. Dozens closed in Sacramento County. At least three San Francisco clubs have closed, and one in Oakland moved.
Jack Gillund, spokesman for the U.S. attorney for the Northern District, said his office would not comment on storefront pot clubs being replaced by delivery services.
Medithrive's return as a delivery service echoes the behavior of operators in Southern California. San Diego has about 100 delivery listings. Orange County has 50 and Los Angeles about 100, according to data from leading dispensary locator WeedMaps.com.
"My sense is they're switching out of brick-and-mortars, or just going to the black market," said Justin Hartfield, WeedMaps founder.
"It's like water," Greenberg said. "You close off one pathway, and it morphs and goes in another direction."
Some patients prefer delivery. Medithrive declined to comment, but it is busy.
Calls to the service often go directly to voice mail because of high volume. The company also has an online menu as well as smart-phone apps that feature strains such as Dream Queen for $40 for an eighth of an ounce - about a week's supply for an average patient.
Warning of delivery dangers -
App photos also display Medithrive's shuttered Mission Street store - a high-end affair with flat-screen TV menus.
The Department of Justice's crackdown amounts to a dangerous form of theater, in that it does nothing to curtail supply or demand, said Lisa Gygax, a California dispensary attorney. People feel less safe buying cannabis from a random guy coming up to their house - but they will if options become limited, she said.
"Delivery is dangerous, it's extremely difficult to regulate, but they're extremely successful if there is no safe access," she said. "What else are patients going to do - go to the park?"
San Francisco has one delivery-only licensee, the Green Cross. It is delivery-only because it was pushed out of a storefront during the 2005 San Francisco licensing process, said General Manager Caren Woodson. The Green Cross is seeking a city permit for a storefront because it's the preferred business model, she said.
Risk of robbery -
Safety concerns for drivers are huge, Woodson said, and the service has been robbed once.
Unlicensed delivery services probably underreport robberies, Gygax said.
The conflict between California's medicinal marijuana supporters - including advocates and lawmakers - and federal authorities is expected to worsen. That is likely to bring an awkward social compromise: more delivered dope.
"We sort of predicted this," said Dale Gieringer, head of California's National Organization for the Reform of Marijuana Laws. "I could see cars going around. I could see delivery trucks. It's sort of what one expected. ... I've seen a decline in delivery services in the last four or five years as dispensaries have proliferated. I suppose that will go in the other direction now."
Michael gathers receipts at the Green Cross, a licensed medical marijuana delivery company in San Francisco. Photo: Michael Macor / The Chronicle
Joe, Rigoberto and David package marijuana for delivery at the Green Cross offices, San Francisco's one delivery-only licensee. Several hundred thousand Californians are believed to have a doctor's recommendation to receive medical marijuana. Photo: Michael Macor / The Chronicle
Erick logs in orders coming in over the Internet at the Green Cross. Medical marijuana companies have online menus and smart-phone apps for deliveries. Photo: Michael Macor / The Chronicle