City leaders and cannabis advocates say a federal crackdown on cannabis businesses has sent a chill through the real estate market, particularly after the U.S. attorney last year sought property forfeiture from the landlord of the Harborside Health Center dispensary – a case that is still pending.

“Ever since the U.S. attorney took their hard-line stance on property owners, property owners have been hesitant to lease space,” said Arturo Sanchez, Oakland’s deputy city administrator, who oversees the city’s permitting process for marijuana dispensaries. “That was complicated further after the forfeiture action by the U.S. attorney against Harborside.”

The one dispensary that did open over the past year – Blum Oakland on West Grand Avenue in Uptown – also faced reluctance from a landlord. Sanchez said the landlord of one proposed site for Blum had wanted a $4 million bond even though the property was worth only $2 million.

The difficulty in finding dispensary sites marks a shift in a city that stood only a year ago as the vanguard of California’s cannabis culture. The four approved dispensaries would have doubled the number of outlets selling medical marijuana in Oakland – even as the federal crackdown shut down hundreds of other dispensaries around the state.

But then in April, federal agents raided Oakland properties connected to Richard Lee, a dispensary owner, prominent legalization advocate and co-founder of the famed cannabis school Oaksterdam University. In July, federal agents taped their forfeiture notice on Harborside’s front door. “We really need to set some ground rules here where the federal government is going to respect property rights and Californians’ legal access to medical facilities,” said Dale Gieringer, director of California NORML, a marijuana advocacy group.

Gieringer criticized federal authorities for going after dispensaries permitted by local governments while allowing unsanctioned ones to flourish.

Oakland has a variety of restrictions on where dispensaries can be located. They have to be at least 600 feet from various places children frequent, including parks, libraries, schools, and other dispensaries. They are entirely banned from areas zoned residential, Sanchez said.

That in itself can make it hard to find a location, said an operator of one of the four new dispensaries, who asked that his name not be used.

“You have all these other things that prevent dispensaries in certain places,” the operator said. “You couple that with the fact that some people do have a moral issue with it, you really do limit your options.”

Repeated attempts to reach other operators were unsuccessful. Some experts in the cannabis industry said dispensary operators fear speaking out because the two dispensaries targeted by the federal government, Harborside and Lee’s former Coffeeshop Blue Sky, were led by people often in the media limelight. The camera-shy posture of the new dispensaries is most striking with Abatin Wellness, a dispensary planned for Oakland.

Geoff Spellberg, an attorney representing Harborside’s landlord, said property owners have good reason to be worried.

His client never received a warning, he said. The only explanation given by the U.S. attorney’s office for why Harborside was targeted was that it was a marijuana “superstore.”

“In my view, it’s a very arbitrary conclusion that they’re a superstore,” Spellberg said. “When is a medical cannabis dispensary not a superstore?”

Without clear guidelines about what’s legal, Spellberg said he would tell any client that leasing to a dispensary “is a major risk because the consequences are so severe.”

Spellberg’s client’s property is worth $2 million.

“The big concern I would express to a potential landlord is that there’s not enough guidance about what the federal government is going to permit and what they’re not going to permit.”

Matthai Kuruvila is a San Francisco Chronicle staff writer. E-mail: mkuruvila@sfchronicle.com Twitter: @matthai

Article source: http://www.sfgate.com/politics/article/Oakland-pot-dispensaries-delay-opening-4168933.php

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Technology firms are the economic engine of the Bay Area. But so are real estate and restaurants, which would be asked to pay more taxes under a plan pushed by technology companies and investors.

San Francisco’s tax plan is due to be overhauled, and one way to do it is to institute a gross receipts tax instead of a payroll tax. Tech firms and investors like Ron Conway, a Silicon Valley billionaire, like that plan because tech firms spend much more on payroll than they do on sales of products, according to the San Francisco Examiner.

Tech firms pushed a gross receipts tax “hard” during a meeting at City Hall with Mayor Ed Lee and Board of Supervisors President David Chiu, according to reports.

San Francisco-based companies currently pay a 1.5 percent tax on their payrolls, the newspaper reported. Twitter, however, convinced city leaders to write laws allowing for a special payroll tax exemption zone, and Zynga also convinced the city to write an exception on taxation of stock option compensation.

If the payroll tax is replaced with a gross receipts tax, retail, restaurants and real estate would pay almost double the tax currently paid, the newspaper reported. They’d pay 26 percent of the total tax revenue, compared to 16 percent now, the newspaper reported.

The payroll tax currently brings in $400 million a year, the newspaper reported.

“The tech companies don’t seem to be team players,” small-business advocate Scott Hauge told the newspaper.

Any final language on taxation issues will be fleshed out by June, when city leaders would have to make moves to place a change in the tax structure before voters in November.

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Article source: http://www.nbcbayarea.com/news/local/SF-Tech-Firms-Want-Retail-Real-Estate-To-Bear-Tax-Burden-149547085.html

But the failure of the statewide marijuana legalization initiative last fall, and subsequent threats from federal prosecutors, derailed the ambitious plan of city leaders to license four giant farms and thus make Oakland the legal cannabis capital of the country. And with the collapse of Oakland’s vision of marijuana supremacy came disaster for Mr. Ebyam.

Mr. Ebyam is now locked in litigation over the $1.25 million sale of one of his growing operations, and another installation has been decimated by a string of suspicious burglaries — a fitting symbol, perhaps, of an industry that could have been.

“The morality tale of Yan’s grows is perhaps the morality tale of the Oakland ordinance,” said James Anthony, a medical marijuana lawyer in Oakland. “The size, the money — it all attracted too much attention.”

Mr. Ebyam, 33, does not fit the profile of the smooth new-wave entrepreneur. He blurts out his thoughts in rapid fire and is highly intelligent but pays little attention to matters like clothing or social cues. During a recent interview at a coffee shop, Mr. Ebyam, a stocky man with short, curly black hair, didn’t want espresso or cappuccino. He ordered milk and cookies.

In terms of background, Mr. Ebyam seems to have been born for his profession. His parents, who gave him his odd name, grew marijuana to put food on the table while raising him in Willits in Mendocino County, he said. But Mr. Ebyam rebelled against his hippie upbringing, seeking his fortune instead in Silicon Valley.

“When we were little, my brother surfed and I played computer games,” Mr. Ebyam recalled.

In his early 20s, he went into the business of buying and selling computer equipment from bankrupt start-ups. His venture ended badly when he was arrested and pleaded guilty to money laundering in the sale of more than $6 million worth of stolen Sun Microsystems servers and Cisco routers. He was sentenced to two and a half years in federal prison, where, he said, he became an expert chess and Scrabble player.

Mr. Ebyam showed up in Oakland as the medical marijuana bubble was inflating three years ago. He started small but quickly broadened his ambitions, becoming partners with a Los Angles lawyer named Nathan Hoffman. The plan was to grow marijuana on a large scale and sell it to patients in Los Angeles. (Mr. Ebyam said his mother was “amused” that he had gone into the business.)

Searching for a warehouse, Mr. Ebyam met with Jeff Wilcox, a businessman who had been a leading advocate for the Oakland marijuana farm legislation. Mr. Wilcox said he was not impressed with the business plan but that Mr. Ebyam was memorable.

“He seemed really smart, but he was a little different socially,” Mr. Wilcox recalled. “He was going a mile a minute, and he talked a lot — about everything under the sun.”

Mr. Ebyam eventually struck a deal with the Nurisso family, which boasts four generations of Bay Area plumbers. The Nurissos run Broadway Mechanical-Contractors, an industrial plumbing and metal fabrication company, and have big warehouses around their headquarters in East Oakland.

 Ken Nurisso said the family had decided to lease to a cannabis grower because “there’s never been a harder time for commercial real estate to be leased out.”

Mr. Ebyam’s setup was enormous: a total of 454 grow lights in 16 rooms, according to court documents. Industry experts say that 20 to 40 plants can be grown with one light, and an average marijuana-growing installation in Oakland uses about 10 lights.

zelinson@baycitizen.org

Article source: http://www.nytimes.com/2011/05/22/us/22bcentrepreneur.html