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Only permitted marijuana outlets can make house-calls in San Diego — leaving independent drivers to feel they’ve been cut out of an industry they helped build. The city’s legal operators say the system is both fair and reasonable.
Marijuana may be legal, but with only so many permits available, many of the players who whetted the appetites of the local marketplace with quick deliveries are on the sidelines.
That’s left hundreds of independent drivers, who previously operated in a grey area of the law, with three options: partner with one of the few legal storefronts, shut down the business altogether, or join what some have begun ironically calling “team black market.”
Most appear to be turned off by the illegal route, though. It brings the risk, not only of prosecution, but of being banned from the state licensing system. As of Friday, there were 20 San Diego-based companies listed on WeedMaps, an online marketplace, yet the state had greenlighted just 12 of the city’s 17 licensed medical marijuana shops to sell recreationally. The imbalance could indicate some unlicensed deliveries are still operating.
While California is fine with independent drivers who don’t work with a retail shop, San Diego chose to go ahead with every other part of the supply chain except those drivers. Only those who are attached to a storefront are allowed. The San Diego City Council in September punted any further discussion of independent deliverers to an unspecified date in the future.
The drivers now accuse the city of creating an oligarchy of marijuana retailers and shifting their enforcement efforts onto delivery services.
“The whole thing was poorly thought out and as time progresses…it’s been a continuous lobbying effort by the monied interests to push out the small mom and pops,” said Elizabeth Wilhelm, president of the San Diego Cannabis Delivery Alliance.
She complained that some of the same people who are trying to cut independent drivers out of the industry used to operate illegally.
“It’s very frustrating to have to confront someone who literally was in your shoes only a year or two or three ago,” she said.
Sam Humeid, founder of Flame & Leaf, a home-consultation company that also makes medical deliveries, said he closed his doors on Jan. 1 to lead by example. Meanwhile, he’s applying for an independent delivery license with the state and then plans to approach local cities.
He understands that the retail shop owners have only a few years to recoup their expenses — consultants recommend business owners to start with between $250,000 and $1 million in capital — before larger companies are allowed in the marketplace. But he’s been alarmed by the retail industry’s advocacy for more law enforcement.
“The double talk is crazy,” he said.
Both Humeid and Wilhelm pointed to statements made by Phil Rath, a United Medical Marijuana Coalition lobbyist who played a key role in the creation of San Diego’s non-retail licensing system. He represents 10 of the locally licensed outlets and supports regional efforts to shut down illegal operations.
Rath said the retail outlets were awarded the right to deliver because that was the simplest way to ensure drivers would be above board. The already-permitted stores collect taxes and secure their inventories — there’s a regulatory hammer dangling over their heads.
“If you’re running a thriving business out of your house, you’re probably in possession of tens of thousands, or hundreds of thousands, in product and cash, and you’re doing it outside the normal legal framework, which brings with it all the risks of violence that the illicit drug trade has always suffered from,” he said.
The independent deliverers, he added, are pushing “a solution in search of a problem.” He conceded that the demand is high, but said the licensed outlets have the capacity to serve many more.
Will Senn, the founder of Urbn Leaf, said his company has partnered with Eaze as a way to bring down their comparatively high costs. Without regulatory and other fees, illegal operations have an edge. But Senn is confident that the marijuana delivery platform will make Urbn Leaf quicker and more competitive.
Senn said the notion that the regulatory process wasn’t fair or that his business and others are cutting the little guys out of the business was ridiculous.
“Everyone is kicking and screaming,” he said, “but they’re not doing what they should be doing, and go out there and find a location.”
There is a fourth option for independent deliverers in 2018: they can keep lobbying local governments.
California voters approved the adult use of marijuana in November 2016, but gave municipalities the ability to either opt out or establish tougher regulations. Leaders in Vista and other cities in North County oppose retail shops, but are considering delivery services as a compromise.
Bob Knuuttila, founder of Green Life Care, a medical delivery service based in Carlsbad, said he’ll keep asking to meet with officials in North County. Meanwhile, he’s sent his resume in recent weeks to some of the licensed outlets in San Diego, offering to do delivery and in-home consultations with their elderly patients.
“But there’s been no response,” he said.
Correction: An earlier version of this post misquoted Wilhelm.