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San Francisco Has One Pot Store for Every 30,886 Citizens—And That’s Not Nearly Enough

San Francisco's restrictive approach to commercial cannabis could keep the black market relevant—and subvert the whole point of legalization.

 

In San Francisco, the town that gave birth to over-the-counter weed sales, there were 28 brick-and-mortar businesses selling medical cannabis as of late August—with a few more scheduled to open in the fall. That’s one pot store for every 30,886 citizens, not counting commuters and tourists. Compared with other West Coast cities, that qualifies us as practically a weed desert. Booming Denver, just shy of five years into Colorado’s legal marijuana era, supports 157 dispensaries—one for every 4,347 souls. (Some suburbs in metro Denver lay it on even thicker: Tiny Edgewater boasts one pot club for every 887 people.) In Portland, the ratio is similar.

Why, then, just a few months before recreational marijuana sales begin in California, are we so relatively bereft of retail weed? The answer is that, even as a flood of new customers is expected to materialize when the first recreational sales begin January 2, a perfect storm of restrictive zoning laws, overly cautious city officials, and reactionary neighbors’ groups has conspired to constrict the market here—in many ways subverting the very point of legalization.

Currently, only about 2 percent of San Francisco is zoned for marijuana sales, and lately even that sliver of the city is becoming harder to cultivate. The result is twofold: First, those lucky enough to have already secured a permit are able to practically print money. (A small, quiet pot store on the city’s outer rim is reportedly being shopped for a staggering $6 million.) They become the marijuana haves, eager to keep the have-nots out.

Second, what few shops there are now tend to be clustered together, leaving entire swaths of the city, like Fisherman’s Wharf and Union Square, without a single place to legally purchase cannabis. That opens the door to black-market dealers and gray-market delivery services, neither of whom pay into city and state tax pools or undertake rigorous testing on their product.

And given the recent actions by some on the Board of Supervisors, it seems unlikely that a wave of new shops is about to spring up suddenly. On September 12, the board passed by a 9–2 margin a 45-day moratorium on all new medical cannabis dispensary (MCD) permits; the moratorium can be renewed indefinitely. “This is our opportunity to get ahead of an industry that’s expected to generate $22 billion by 2020,” says Supervisor Malia Cohen, who spearheaded the moratorium despite opposition from the Chamber of Commerce and others. Earlier, in July, the board also approved a three-dispensary cap in Supervisor Ahsha Safai’s district—one of the few parts of town zoned for cannabis sales. That move, Safai says, was the prelude to finding “the right number” of dispensaries citywide. City leaders only have until December 30 to finalize rules governing recreational marijuana sales.

Safai and Cohen, for their parts, may well be reflecting genuine neighborhood anxieties about pot’s moving in. Safai says the existing shops in the Excelsior are his constituents’ most common complaint. And that’s played out in other parts of the city as well. When the ritzy pot club the Apothecarium acquired a third location in the Outer Sunset earlier this summer, nearby residents screamed bloody murder—and recruited help from a Southern Poverty Law Center–listed homophobic hate group to block it.

Neighborhood opposition or no, those waiting in line for a new MCD permit—and there are several dozen applications on file—are howling conspiracy. “It sets the scene for price-fixing and a monopoly of insiders,” says one aspiring weed merchant of the moratorium. “The only people who stand to benefit are existing dispensary operators.” In fact, the city’s Small Business Commission has said that artificial limits on cannabis are bad policy, and warned Safai that a neighborhood cap would amount to government protection for current pot stores.

The commission isn’t the only one uncomfortable with stifling competition. In addition to dissenting supervisors Mark Farrell and Jeff Sheehy (the lone elected official to cop to holding a medical card), state senator Scott Wiener opposed the moratorium, and in late August, the Planning Commission rejected Cohen’s request to delay consideration of two dispensary applications.

So what is the golden number for pot stores, anyway? More than we currently have, experts say. To serve the permanent residents, the daytime population, and the 25 million annual tourists a city of San Francisco’s size contains, “we need 200,” says Terrance Alan, who now chairs the Cannabis State Legalization Task Force. “We need an increase of tenfold or more.”

Until that critical mass of shops is reached—and spread somewhat evenly around the city—room will remain for a black market. “If we have a million new customers, where the heck are they going to go?” Alan asks. The answer, if you hold one of those insanely lucrative permits, will make you rich.

 

Originally published in the October issue of San Francisco

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