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Los Angeles prepared to smoke out pot dispensaries

Eric Matuschek has had his share of bumps and bruises as a Hollywood stuntman, but he hasn't quite felt the pain he faces right now.
/ Source: The Associated Press

Eric Matuschek has had his share of bumps and bruises as a Hollywood stuntman, but he hasn't quite felt the pain he faces right now.

Matuschek stands to lose his livelihood — albeit a more risky one — as the owner of a pot dispensary. He and hundreds of other business owners across Los Angeles have until June 7 to close their clinics or they may be confronted with civil fines and even jail time.

City officials are attempting to harness an industry that exploded in recent years as scores of medical marijuana facilities cropped up and turned the City of Angels into the Wild Wild West of Weed. The city is now attempting to shutter those dispensaries that aren't in compliance with a new ordinance and ensure the roughly 130 that remain meet stringent guidelines.

For Matuschek, the prospect of closing his dispensary, Starbudz, is draining. He invested his life savings, about $70,000, into the pot clinic and signed a three-year lease when he opened his shop in late December.

"I'm totally screwed," said Matuschek, whose credits include "Transformers" and TV's "CSI and "Lost." "I'm in a world of hurt. What am I going to do? I'm committed to this."

California was the first U.S. state to allow the use of medical marijuana in the 1990s, and a few other states have since allowed it as well. Marijuana is still illegal under federal law. Although the Obama administration loosened its guidelines for medical pot-related prosecutions last year, there have been some arrests of dispensary operators in recent months.

While some California cities have banned dispensaries, Los Angeles is one of 35 that opted to create a local law permitting them. In 2005, when discussions first began about an ordinance, there were only four pot storefronts in Los Angeles. As the City Council wrestled with how to regulate the clinics, employing a slow-baked approach, dispensary owners took advantage of a loophole known as a hardship exemption to open their doors while awaiting city approval.

Many shops bearing a green cross or marijuana leaf began spreading through neighborhoods, in some cases mere feet from one another. The argument made by medical marijuana advocates was that seriously ill patients needed accessible and affordable medicine.

But that logic wasn't received warmly by residents, who started complaining.

"There was an over-concentration and people were concerned every other store was becoming a medical marijuana dispensary," said Councilman Jose Huizar. "We are looking forward to getting some of the shady operators out of business."

City officials couldn't even tabulate the number of dispensaries, estimating there could be as many as 1,000 — more than the number of Starbucks coffee shops in the city. A recent survey by police put the number at more than 550.

Earlier this week, the city attorney's office mailed "courtesy" letters to dispensary owners saying they must close by next month. Violating the ordinance could result in six months in jail and a $1,000 fine. Each day a collective remains open past the deadline also could lead to a daily civil penalty of $2,500.

Defiant dispensary owners also could face felony criminal charges if it's shown they are profiting by selling pot, which county District Attorney Steve Cooley says violates state law. The city ordinance, however, does provide for cash reimbursements.

"The best case scenario is everyone packs up and leaves," said Assistant City Attorney Asha Greenberg. "The worst case scenario is to have this tied up in litigation. It depends on how eager they are to follow the law."

Some observers believe it will take a couple of months to weed out the pot clinics that don't qualify under the ordinance.

"The principle here is that you'd rather threaten than act," said Mark Kleiman, professor of public policy at the University of California, Los Angeles. "You have to be ready to make good on whatever threat you issue. Bluffing is fatal. The city should be able to make the dispensary problem melt like a snowman in the sun."

More than 30 dispensaries, including Matuschek's, are part of a lawsuit seeking an injunction to stop enforcement of the city ordinance. The suit claims the law discriminates against the collectives that have business licenses which either didn't register before a 2007 moratorium or opened later.

"They squeezed the toothpaste out of the tube and now they want to put it back in," Matuschek said. "It doesn't work that way."

For those dispensaries that can remain open, they have their own headaches. Owners must undergo a background check, their stores must be 1,000 feet (300 meters) from schools, parks and other gathering sites, and their pot must be tested at an independent laboratory.

Those clinics have six months to comply and must pay more than $1,000 in fees to remain open.

Dege Coutee of the Patient Advocacy Network said cutting the number of dispensaries means the price of medical marijuana is going to skyrocket. She said an eighth of an ounce averages about $45; five years ago the first dispensaries were charging about $120.