SF Gate 11/24/11
The federal Department of Justice’s crackdown on medical marijuana dispensaries in California has meant the loss of thousands of jobs and millions of dollars in tax revenue, according to cannabis advocates and government statistics.
An estimated 2,500 people statewide have lost their jobs since late September, when California’s four U.S. attorneys sent letters that threatened jail sentences for dispensary owners and the possible seizure of buildings that house the pot clubs, said Dan Rush, director of the United Food and Commercial Workers’ national medical cannabis division. The union began organizing medical marijuana workers in May 2010.
Of those jobs, which union officials say include people who are directly employed by marijuana dispensaries as well as those with indirect ties to the industry, about 50 have been lost in San Francisco and dozens more around the Bay Area.
Three city dispensaries have closed since receiving warning letters from Melinda Haag, the U.S. attorney for Northern California.
Before closing Nov. 12, Medithrive in San Francisco’s Mission District employed 17 people at its storefront near 16th Street and another five at its warehouse, said P.J. Johnston, a spokesman for the dispensary. Another 15 jobs were lost when Divinity Tree in the Tenderloin neighborhood closed Nov. 11, said Charles Pappas, chairman for the collective.
Representatives for Mr. Nice Guy, the third to close, did not reply to requests for comment, but industry experts say the Valencia Street dispensary employed at least a dozen people.
Wages and benefits
The average wage at Medithrive was $17.80 an hour, Johnston said, while a job at Divinity Tree started at $20 an hour, according to Pappas. Both included full health care benefits.
“These are all good, single-earner, breadwinner jobs,” Rush said. “How many places can take a hit like this to their economy? It’s insane.”
The state Board of Equalization collected an estimated $100 million in sales taxes from medical marijuana dispensaries in 2010, agency spokeswoman Anita Gore said.
Only Divinity Tree officials would discuss their tax bill: The dispensary, which with 7,000 registered members had less than a third of Medithrive’s 26,000 patients, “never paid less than $200,000” a year in taxes since opening in 2007, Pappas said.
In the Bay Area, where some dispensaries must also pay a local tax, the medical marijuana industry helps subsidize government services. That’s in addition to spending thousands of dollars on advertising and hiring professional services such as lawyers and accountants.
Some of this economic activity is disappearing even as the dispensaries remain open. Medithrive, for example, spent $209,000 this year on advertising, $64,000 in payroll taxes, and $4,000 in local permit fees, Johnston said.
Since the crackdown, San Francisco’s 23 remaining dispensaries have canceled much of their advertising, according to Stephanie Tucker, a spokeswoman for the city’s Medical Cannabis Task Force.
Medical marijuana advertising constitutes about 10 percent of the ad revenue at alternative weeklies like the San Francisco Bay Guardian, Executive Editor Tim Redmond said. “It’s a significant source of ad revenue for us. It not only hurts us, it hurts any newspaper trying to sell ads.”
Chronicle President Mark Adkins, however, said the federal crackdown generally has not affected the newspaper’s ad revenue and paid business listings. “Our policy has not changed, and we will continue to accept legitimate medicinal marijuana dispensary advertising,” he said.
Were San Francisco’s medical marijuana industry to be extinguished, thousands of jobs would be lost, Tucker said. When ancillary jobs ranging from construction workers to architects to planners to lawyers and accountants are factored in, San Francisco’s medical marijuana industry employs “1,500 people, conservatively,” she said. In Oakland, medical marijuana employs 400 people, Rush said.
In an e-mail, Haag did not comment on the issue of jobs, but said that her office had received “many phone calls, letters and e-mails from people who are deeply troubled by the tremendous growth of the marijuana industry and its influence on their communities.” She signaled that more warning letters – and more closures – could be on the way.
“Since my office sent the letters,” she wrote, “we have received even more complaints relating to schools, and now from cities that have banned dispensaries yet still have them opening and refusing to abide by local law.”
California state law allows dispensaries to operate within 600 feet of a school or park; stricter San Francisco law requires a 1,000-foot boundary.
Thus far, San Francisco’s elected officials have been silent on the issue, with the notable exceptions of state Sen. Mark Leno and Assemblyman Tom Ammiano. Both Democrats have sponsored cannabis-friendly legislation in Sacramento, and both appeared at a rally denouncing the raids.
But so far they’ve been unsuccessful in either scheduling a meeting with Haag or eliciting action or a statement from other state officials, such as Gov. Jerry Brown, who as attorney general wrote the guidelines for California’s legal marijuana providers.
Restraining order sought
Legal action pursued by the dispensaries has also been unsuccessful. Dispensaries in all four federal court districts in California sued the Justice Department this month, seeking a temporary restraining order against federal prosecutors’ actions. The case has not yet been scheduled for a hearing, said San Francisco attorney Matt Kumin, who is representing the dispensaries in court.
Meanwhile, “monetary costs are certainly in the hundreds of thousands monthly,” Kumin said. “Lost jobs, unemployment benefits, lost taxes, loss of secondary economic impacts. Who is served? DEA jobs and budgets.”
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This article appeared on page D – 1 of the San Francisco Chronicle