Nonprofit Newswire | Retroactive Regulatory Nightmare for LA Marijuana Dispensaries

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August 29, 2010; Source: Los Angeles Times | If you want to sell medical marijuana in Los Angeles, you have to operate as a nonprofit—that’s for certain. Beyond that, when it comes to complying with very restrictive, if not bizarre rules, good luck.

Apparently trying to prevent unchecked growth of dispensaries, and to shut down questionable operations, Los Angeles last June passed an ordinance that required pot shops that had registered with the city by Nov. 13, 2007 to apply to stay open. But one of the requirements that seems to be tripping up many of these operations, including ones the Los Angeles Times says are “models,” is that if a dispensary underwent any change in ownership or management in the past three years, it would have to close. City attorneys are extremely strict in how they are interpreting that rule. Owners and managers of the dispensary today must be the same people—no more, no less—as those who held the positions in November 2007. As the Times reports, “Under the city’s interpretation of the ordinance, if a dispensary’s manager died, quit or was fired and was then replaced, it must close. If the business grew and added managers, it must close. If it shrank and let managers go, it must close. If it was sold to new owners, it must close.”

The interpretation of management is also very broad. One shop was told to shut down and the only reason its owners can determine as the cause is because one of its founders became secretary of the board—a new position for her—since 2007, and thus a change in management. Dan Welch, a lawyer for some 60 dispensaries, no doubt speaks for more than just his clients when he says the situation is “completely irrational.” Not only that, but dispensaries trying to find out what the city will or won’t allow aren’t having much luck either. One consultant well-versed in the workings of City Hall says even he has no clue how officials are deciding which groups are in compliance with the ordinance. “It’s a black curtain, and what’s behind it, no one will tell you,” said Dan Fusco. On the surface, this situation appears to be a dangerous precedent for other nonprofits.—Ruth McCambridge