L.A. Uses Law to Close Dispensaries

Los Angeles is busy cracking down on medical marijuana dispensaries under a law approved by voters in May.

Shortly after the ordinance passed, the city informed hundreds of pot dispensaries across the city that they would have to close their doors. Otherwise they would face asset seizure and prosecution.

Now the City Attorney’s Office has published a list that specifies the 134 dispensaries that can stay in business. That leaves as many as 1,000 dispensaries citywide with no choice but to close.

Ordinance D was approved by voters in May. It limits the number of retail medical marijuana dispensaries within city limits to 135. It was adopted after voters tired of years of chaos within the dispensary industry and sought a new regulatory scheme.

But it remains to be seen whether this one will work. Past attempts to shutter dispensaries, ban them entirely or limit the size of the industry have failed. Ordinance D grew out of a botched effort by the City Council to prohibit dispensaries entirely.

The city may have more tools at its disposal this time, though: the recently expressed will of the voters and a decision by the state Supreme Court this spring that gives cities more power to ban and regulate dispensaries.

On top of that, the new law has convinced many landlords to evict dispensaries subject to the ban. So defying the order may be much harder than it would have been in the past.

Ordinance D passed with more than 60 percent of the vote in May. It was one of three choices voters were given in deciding how to regulate medical marijuana dispensaries in L.A. The second-place option would not have put any limit on the number of dispensaries allowed in the city.

The list of dispensaries allowed to stay open is based on the pot shops that were open before a 2007 moratorium on new dispensaries was put in place. With their competition vanishing, these businesses are likely to boom in coming months.

Many of the targeted dispensaries are already out of business or on their way, but others plan to keep their doors open. Some hope the city won’t be able to fully enforce the new ban. Others plan to challenge the law in court or simply defy it in the open.

Operators of banned dispensaries are subject to prosecution and fines, and L.A. could ask the feds for help in quashing these shops, since the Obama administration has aggressively targeted California dispensaries it believes to be in violation of state law.

Some of the closed dispensaries hope to relocate elsewhere. Others will simply give up, while still others will go mobile and adopt a new approach: marijuana delivery. Portable medical weed has been offered in L.A. for years, but it could become a more significant part of the market as closing dispensaries look for a new business model.

Ordinance D imposes additional restrictions on dispensaries. Taxes were increased from $50 to $60 for every $1,000 in sales, operating hours were cut to 10 a.m. to 8 p.m., background checks are required, and no dispensary must be located within 1,000 feet of a school or park.