As the Santa Barbara City Council joined the attempt to navigate the legal minefield that is medicinal marijuana distribution, it became clear that there is no easy road to a better ordinance.

The ordinance, which began the revision process this summer, allows for storefront models of distributing medicinal marijuana to patients with a doctor’s recommendation.

Public meetings during the past few months have consistently drawn a crowd of residents — many of whom attend every meeting — and Tuesday’s evening council meeting was no exception.

This time, a more fundamental issue was discussed: the difference between for-profit dispensary models and nonprofit collective models. Councilmembers passed a motion to direct the city Ordinance Committee toward revising the requirements to fit a collective model that conforms to the attorney general’s guidelines.

Big distinctions include the financial model — for profit or not — and where the marijuana comes from. For collective models, only members of the cooperative provide and use the product.

Technically, the current ordinance doesn’t require applicants to be nonprofit — or even to state whether they intend to be for-profit or nonprofit — but it does say they must adhere to state laws. The attorney general’s guidelines have stated that for-profit, retail dispensary models are probably not legal under state laws, but nonprofit, closed loop collective models usually are, even with a storefront. 

The Ordinance Committee now faces the task of applying its new recommendations to a collective model. California law allows small groups of people to form cooperatives and they can be difficult to prosecute, even if necessary, City Attorney Stephen Wiley said.

The city can’t ban collectives but can regulate them, Wiley said.

Since the application process requires following state laws, some so-called “dispensaries” are already operating as more of a collective model with a storefront.

The storefront on 500 N. Milpas St. hasn’t opened yet, but James Lee and Nathaniel Reinke have been operating as a collective since August, after their application was approved by the staff hearing officer. It’s a nonprofit organization, and all of the product comes from patients, making it a closed loop distribution system, Lee said.

While both owners agreed with the need to somehow regulate whatever distribution system is allowed, banning storefronts altogether could force patients back into the black market, Reinke said.

The committee’s revised recommendations for the old dispensary model are nearly complete, and some members want to continue with the work in order to enforce the stricter regulations as soon as possible.

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Santa Barbara City Councilman Dale Francisco, a member of the Ordinance Committee, talks about the need to comply with state laws regardless of the measures taken by the city. (Giana Magnoli / Noozhawk photo)

There are three approved “dispensaries” (which all have storefronts, but not all are for-profit), two are being appealed, one had its permit revoked, five are pending and there are several nonconforming (which existed before the ordinance and must conform to the ordinance in order to stay in business) and illegal or disputed, some of which also have existed for many years before the ordinance. Many of the illegal or disputed dispensaries are under investigation or litigation.

To be considered a primary caregiver, the person must live in the city or county of the patient as well.

Most of Tuesday’s public speakers — of which there were 45 — praised the idea of a collective model, increased regulation and continuing with the Ordinance Committee recommendations to strengthen the legislation.

The audience was made up of residents who live near existing or proposed storefronts, educators, doctors, dispensary and collective owners, public health officials and community members.

The secondary effects of dispensaries — and collectives — may not vary much, senior planner Danny Kato said. There’s no guarantee that the collective model would deter reselling.

Reselling and selling to nonqualified minors has been an issue for the community, and school administrators, teachers and parents often have attended meetings and asked for increased regulation and a cap on the number of dispensaries to limit availability of marijuana.

Santa Barbara School District Superintendent Brian Sarvis said Tuesday that many students have come to school high or in possession of marijuana, and have said that they got it directly or indirectly from dispensaries.

One dispensary is close to El Puente, the school where many expelled students are referred — often because of drug problems. 

A public health official said statistics show that one-fourth of 11th-graders have used marijuana currently — within the past 30 days.

Further discussion of a moratorium — most likely halting some activity in the application pipeline and preventing future applications until a new ordinance is adopted — will be placed on an upcoming City Council agenda.

The moratorium could propose a unique form of limbo for each of the various classifications of in-progress applications. The hold could last for nearly a year, and the city has determined that applicants have no vested rights.

The recommendation to prohibit medical marijuana storefronts in existing mixed-use buildings most likely would put an end to JoAnna LaForce’s Farmacy proposed for Paseo Chapala, which gets an appeal Dec. 10 — perhaps after a moratorium is voted on.

She asked the council to consider keeping her application’s place in line while she looks for another location. Her “joyful work” wouldn’t be worth it if her presence in the building makes residents freak out, she said.

Hans Edwards’ Mission Street location permit was revoked after the County Education Office revealed that there is a special-needs school on the same block, and his application is pending a motion to reconsider with the Planning Commission on Thursday.

Attorney Derek Weston appeared Tuesday on behalf of Heather Poet and the SB Patients Group, a nonconforming dispensary.

The dispensary is reincorporating as a nonprofit and complies with all of the ordinance’s requirements except location, Weston said. He urged the council to consider working with dispensaries that have been operating for many years in the area without having serious issues, as they had good insight. 

SB Patients Group has to conform (move locations) or shut down by the given date.

Councilwoman Iya Falcone and Councilman Dale Francisco brought the issue of the ordinance back before the City Council. Falcone and Mayor Marty Blum support a moratorium that would halt all applications in the pipeline and prevent future applications. The three approved dispensaries/collectives would be unaffected, and it isn’t yet decided how the nonconforming locations would be handled.

Santa Barbara is not alone in this difficult situation. Cases are going through courts, and other cities have adopted ordinances regarding medicinal marijuana distribution, but the legal landscape is still uncertain as there’s little precedent.

Nearby jurisdictions such as Los Angeles and West Hollywood are struggling with the same issue: What kind of medical marijuana distribution will the city allow, and how can those outlets be regulated to fit into state law that’s still being interpreted?

The Los Angeles City Council recently rejected a ban on dispensaries, but its district attorney said he will prosecute anyway, according to the Los Angeles Times. The city adopted a moratorium in 2007, when there were 186 dispensaries, and now there are as many as 1,000 within the city limits. Its council may look at ordinances that regulate dispensaries this week.

West Hollywood recently passed an ordinance allowing collectives only in commercial zones, Blum said.

Tuesday’s four-hour meeting drew to a close at 10 p.m., and Ordinance Committee members Francisco and fellow Councilmembers Grant House and Das Williams will begin the process of changing the ordinance to a collective model in their Nov. 24 meeting.

Noozhawk staff writer Giana Magnoli can be reached at gmagnoli@noozhawk.com.