Oakland moved to double the city's medical marijuana dispensaries Wednesday, but a federal crackdown on the industry has cast doubt on whether any new dispensaries will be opening anytime soon.
With far fewer applicants than expected, and nearly half of the finalists losing the consent of their prospective landlords, the city approved four potential dispensary operators, only one of which also has an approved location.
The other three will be given four months to find a new location that satisfies city rules requiring dispensaries be located at least 600 feet from schools, parks and youth-serving programs. The city also approved one alternate dispensary group.
Oakland received more than 100 inquiries last year, when it announced it would issue permits for four additional medical marijuana dispensaries. The city's existing four dispensaries generate about $1.68 million a year in tax revenue.
But in October, shortly before the application deadline, federal prosecutors announced stepped-up enforcement efforts against the commercial marijuana industry. In the ensuing months, several Bay Area dispensaries closed, and one of Oakland's four dispensaries, Blue Sky Care Center, was forced to move to a temporary location farther away from a school.
Prosecutors also have sent notices warning dispensary landlords that they risk losing their properties if their tenants are found to be involved in illegal drug sales.
U.S. Attorney Melinda Haag's office declined to comment about Oakland's move Tuesday to increase its dispensaries, but medical cannabis advocates said stepped-up federal prosecution was the primary reason the city received only 12 permit applications.
"I think that people are understandably being cautious given the federal crackdown that's going on," said Dale Gieringer, California coordinator for the National Organization for the Reform of Marijuana Laws.
Even the co-owner of the lone dispensary that received city approval for both its ownership group and location is proceeding with caution. "It's a possibility we open; it's a possibility we don't," said Salwa Ibrahim, whose collective would be located at 21st Street and Broadway.
The other three groups greenlighted for dispensary permits -- Agramed, Tidewater Patients Group and G8 Medical Alliance -- face additional hurdles.
Agramed's Jeff Wilcox said he will try to find a new location after lenders balked at his current property at 1820 Embarcadeo.
Representatives for the other two groups could not be reached Wednesday. The city rejected Tidewater's proposed location because it would have been within 600 feet of East Bay Regional Park District land, and G8's because it would have been within 600 feet of a school.
Both groups had strong ties to the owners of those properties.
Tidewater's proposal was based on it getting a new building and startup loan from the property owners, who include City Hall insiders Carlos Plazola and Ana Chretien.
G8 was to occupy a building at 70 Hegenberger Loop, owned by Dhar Mann, whose cannabis supply shop had failed at the same location.
"Their funders and investors are associated with those properties, so it will be interesting to see if they can get another location," said Mickey Martin, of the blog Cannabis Warrior.
The alternative dispensary group selected by the city is Magnolia Wellness Inc., which also would have to find a new location.
The city rejected AMCD Inc., which had proposed a dispensary at 578 W. Grand Ave., for "questions about truthfulness and compliance with (city) requirements."
Contact Matthew Artz at 510-208-6435.