September 25, 2013

San Diego’s Medical Marijuana Industry Faces Uncertainty Amid Mayoral Shakeup

SanDiegoskyline

At the start of 2013, the future seemed exceedingly bright for medical marijuana businesses in San Diego.

The city’s new mayor, Bob Filner, went to bat big-time for the industry, pushing for regulations that would allow dispensaries to operate in San Diego, speaking at a medical marijuana event and taking the extraordinary step of instructing local police to stop prosecuting centers.

As a result, a handful dispensaries that had closed in recent years reopened their doors, and new ones set up shop. Scores of entrepreneurs started putting together business plans, anticipating new regulations that would make dispensaries legal on a local level.

It appeared San Diego would become one of the hottest medical marijuana markets in the country, with some observers saying as many as 100 dispensaries might open, leading to an estimated $50 million in annual sales.

Now, however, the future of San Diego’s medical marijuana industry is cloudy and entrepreneurs are in a holding pattern.

Filner’s political career has collapsed amid allegations of sexual misconduct and other charges, forcing him to resign last month.

The scandal, which dragged on for months, diverted Filner’s attention and put his plans to aggressively pursue MMJ regulations on hold.

His decision to step down has introduced a new level of uncertainty going forward, as the industry has lost its biggest – and most powerful – supporter.

The impact of his resignation was immediate. Earlier this month, the interim mayor – Todd Gloria – instructed police to once again enforce local zoning code violations by medical marijuana dispensaries. That means the dozen or so dispensaries that have opened this year could face legal action and likely will have to close, and new ones most certainly will not open any time soon.

Gloria reportedly is working on a new measure to approve and regulate dispensaries in the city, but the proposal won’t get in front of the city council until early next year.

And it remains to be seen who will get the mayoral job going forward – the city will hold a special election Nov. 19 to choose a new mayor. There’s no guarantee the next top city official will be friendly to medical marijuana, and dispensary regulations might not actually materialize.

“Inspections (of dispensaries) have commenced again and are being forwarded to the city attorney for prosecution. Not the constructive dialog we seek,” said James Slatic, chief executive officer of MedWest, which provides extracted cannabis oils, pills and other products.

Still, there are some promising signs for the future. Slatic said he and other MMJ entrepreneurs remain hopeful, adding that the industry is “becoming a political force that politicians are starting to respect.”

And the industry has found a new supporter in city councilman David Alvarez, who has approached cannabis advocates for an endorsement and for donations.

For now, entrepreneurs will have to sit tight and see how it all shakes out, as there is too much uncertainty to predict whether the industry will be able to make a comeback in San Diego.

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