Tahoe Wellness Cooperative temporarily shuts doors after state denies license
January 10, 2018
After being denied a state license that would allow Tahoe Wellness Cooperative to operate as a for-profit business, South Lake Tahoe's lone medical marijuana dispensary shut its doors — then reopened them just a day later.
It's a confusing turn of events that began on Dec. 31 when TWC executive director Cody Bass announced on Facebook that the dispensary had received its Medicinal Microbusiness Temporary License from the California Bureau of Cannabis Control.
However, a week later TWC received a letter from the bureau dated Jan. 5 telling the dispensary that after review of the application and supporting documentation, the temporary license was invalid because they "have not been authorized by the local jurisdiction to conduct the commercial cannabis activity for which you have applied."
"The local government did not want to permit Tahoe Wellness to operate as a state-licensed microbusiness, so we could not issue the license. Local governments control this process," said Alex Traverso, spokesman for the bureau. "If Tahoe Wellness wanted to remain a cooperative, they can. But when they applied for a state license, that meant they wanted to start operating on a for-profit basis."
TWC operates as a nonprofit as is mandated by city code for medical marijuana dispensaries.
However, the dispensary made the decision to shut its doors on Jan. 7, and a dozen protesters carrying signs with messages like "Protect your right to safe access!" and "Call City Council!" took to the sidewalk along U.S. 50 near TWC.
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"There's a great deal of confusion as we make this transition to a dual system of state and local licensing," said James Anthony, attorney for TWC. "That nonprofit requirement has never been clear… Tahoe Wellness has always operated as nonprofit. Their application to the state, in my opinion, does not mean that has changed. It's still a nonprofit cooperative."
"Our understanding is that as of Jan. 1 to operate in the state of California, you require a state license and if you don't have one you're arguably operating out of compliance with these regulations," continued Anthony. "It has since been clarified sufficiently that we can continue operating at this point."
It is unclear if TWC will reapply for the state license.
Anthony claimed that denial of the state license was due to the city incorrectly informing the bureau that TWC did not have a permit to operate. TWC and the city are currently in a legal battle over the validity of the dispensary's permit renewal, which was deemed incomplete because the landlord of the Bijou Center refused to give written consent on the form despite a long-term lease. An El Dorado County judge issued a stay, allowing TWC to remain open without city interference pending a court decision on the permit.
A court also is working to decide if TWC is the rightful owner of the shopping center after the landlord backed out of the purchase agreement and subsequently declared and was denied bankruptcy.
The city maintains that TWC's decision to close was purely voluntary.
"We did not tell them to close. We made that clear," said City Manager Nancy Kerry.
"After the state issued the license, the city informed the state that there was no local license to operate. They have a court-ordered stay in place which prohibits the city from taking any action or enforcing the closure or the ceasing of operations by Tahoe Wellness Cooperative," added City Attorney Nira Doherty.
As of Monday evening, the dispensary was once again open for card-carrying members to purchase medicinal cannabis — and for registered voters to sign a petition that seeks to rewrite South Lake Tahoe's medical marijuana ordinance.
The proposed changes to the medical marijuana ordinance allow the sale of recreational cannabis at medical marijuana dispensaries in South Lake Tahoe. The petition also gives medical marijuana dispensaries vested rights and allows them to cultivate marijuana, operate a distribution center within any industrial zone, and provide delivery services. The petition needs 1,036 signatures — 10 percent of the South Lake Tahoe voter base — to get the measure on the ballot.
TWC's Anthony said any claims that the closure was an attempt to drum up support for the ballot measure are "absurd."
"The very mission of Tahoe Wellness Cooperative is not only to provide cannabis to medical patients but a community gathering space. It was not lightly that they reneged on their mission," he said.
Meanwhile the expiration date for the 45-day temporary ban of recreational retail sales, cultivation, edible production and testing is fast approaching. City Council approved the ban on Dec. 12 to allow time for a subcommittee to construct regulations for the new industry. They are expected to extend it for the allowed 10 months and 15 days at the Jan. 23 council meeting. The ban can be ended prior to that, however.
City councilmember and subcommittee member Tom Davis said he has no plans to ban the sale of recreational cannabis.
"…our local voters by 64 percent said they want recreational marijuana, so for me as a lawmaker that's a mandate," Davis previously told the Tribune.
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