The long road toward medical cannabis in San Leandro ended after the city council on Tuesday night unanimously approved a permit for Oakland-based Harborside to become the city’s first-ever dispensary. In addition to the approval, the council also voiced strong support for placing a tax on gross receipts of medical pot on the November 2016 ballot and fast-tracking permits for additional dispensaries down the road.
Although, councilmembers ultimately sided with a city staff report recommending Harborside primarily because of its experience and business plan, deliberations were momentarily overshadowed by a legal memo from lawyers representing a rival dispensary applicant with local ties to San Leandro’s business and political class, known as the Davis Street Wellness Center. The letter, hand-delivered to the city council on Tuesday, was critical of the city staff’s recommendation, but specifically highlighted Harborside founder Steve DeAngelo’s criminal history related to weed. The letter listed a 1978 drug charge in Virginia and another in 2001 in Maryland.
Several councilmembers hurriedly questioned San Leandro City Attorney Richard Pio Roda and Assistant City Manager Eric Engelbart, the city’s point-person on the dispensary issue, about the letter. However, in 2014, when the council issued guidelines for determining the operator of its first dispensary, said Engelbart, it purposefully excluded a focus on criminal history as it pertains to marijuana.
The letter also suggested legal ramifications for the city by issuing a permit to an operator given that US Department of Justice has been trying to force Harborside into forfeiture. It’s a case that is still pending. San Leandro city staffers, however, do not believe the case will affect Harborside’s future operations in San Leandro.
The vitriol over the hard-fought dispensary permit was also exhibited during public comment when one speaker with ties to the Davis Street Wellness Center called DeAngelo, known nationally in the medical cannabis industry, a “convicted felon.”
“Would you start your business with a convicted felon?” asked Craig Bettencourt, a San Leandro investment banker connected to the Davis Street Wellness Center, but not officially, according to its president. “Is that the face you want to put out in front of your constituents?”
John Oram, the president and CEO of the Davis Street Wellness Center, said Bettencourt’s comments do not represent their opinion of DeAngelo. Oram said he apologized to Harborside representatives Tuesday night. DeAngelo did not attend the council meeting. “Business attacks are one thing,” said Oram, “but personal attacks are another.”
Despite the letter from its lawyers, Oram said his group will not litigate the council’s decision. There’s good reason for that since a majority of the council voiced surprising support for allowing more dispensary permits much more quickly than previously mentioned.
Councilmember Jim Prola, who was one of the first supporters on medical cannabis in San Leandro, asked how long until the council could approve more dispensaries. As early as next meeting, said City Attorney Roda, which would include amending the existing ordinance and restarting the application process sometime in November. “The pie is big enough in San Leandro for more than one dispensary,” added Councilmember Corina Lopez. Support for expanding the number of dispensary so quickly is likely in deference to the Davis Street Wellness Center bid, which is strongly connected to the well-regarded Davis Street Family Resource Center, which has long been supported, in part, by taxpayers in San Leandro.
Councilmember Lee Thomas’s comments, however, were more in line with conventional wisdom in San Leandro when it comes to dispensaries. “I’m concerned about the safety of a business, not just a dispensary, but any business,” said Thomas, who has voiced opposition to dispensaries in the past. “I’m not in a rush to be jumping for another dispensary. I also believe it’s important that we see and evaluate what has worked and what hasn’t.”
In addition, the council also approved accessing a $60,000 a year permit fee on dispensaries. Some councilmembers, such as Lopez and Thomas, said they were concerned the amount could potentially fail to cover the city staff’s expenses regarding dispensaries.
After Tuesday night’s decision, it is almost certain that a vote to place a medical cannabis tax on the November 2016 ballot will occur in coming months, according to statements made by the council. Prola believes a tax on gross receipts should be somewhere between Oakland’s 5 percent and San Jose’s 10 percent.
Meanwhile, a location for the dispensary, to be known as Harborside San Leandro, is yet to be determined, although it likely will be situated in or around the industrial corridor on Doolittle Drive. Dan Grace, a San Leandro businessman, included in the Harborside application, said the proposed site will likely consist of 2000-3000 square feet of retail space. Some aspects of the San Leandro dispensary, such as purchasing, will be done at Harborside’s larger location in Oakland, said Grace.
Correction: The original version of this post erroneously stated that Harborside had been under investigation and was raided by the DOJ in 2012. It is not and was not.