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Coming to a Store Near You: Pot?

Leslie Hennessy, seen here at his store on Second Street, would like to sell marijuana should Proposition 19 pass, if it is licensed by the federal government like alcohol and tobacco
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Leslie Hennessy, seen here at his store on Second Street, would like to sell marijuana should Proposition 19 pass, if it is licensed by the federal government like alcohol and tobacco
 
Dispensaries, liquor stores want piece of the action if Prop. 19 passes

Leslie Hennessy, owner of Hennessy’s Wines & Specialty Foods in San Francisco, waved his hand over a glass case that sits next to his cash register, across from the deli section where he sells cheeses, gourmet salads and olives.

Inside the case were colorful boxes of Macanudo and Romeo y Julieta cigars. But Hennessy imagines that the case will soon contain another smokable product — marijuana, packaged attractively because “a rolled up joint in a baggy isn’t going to do it,” he said.

“It would be very similar to the way we sell cigars, where it’s humidity controlled, where it’s under lock and key and there are certain times when it would be sold,” said Hennessy, 63, who markets his own wine and once led the California Retail Liquor Dealers Association.

Hennessy said that he had even begun to negotiate prices with marijuana suppliers.

A week before Californians vote on Proposition 19, which would legalize marijuana for recreational use, businesses are preparing to enter what is expected to be a robust retail market if the measure passes. The activity is particularly intense in the Bay Area, where cities like Oakland, San Francisco, Berkeley and Richmond are positioning themselves to take advantage of the burgeoning industry.

In Oakland, nearly 300 individuals and businesses have listed themselves as “interested parties” to obtain business permits to sell or grow marijuana. The city’s largest medical marijuana dispensary is considering a 7,000-square-foot expansion if it is allowed to sell to recreational users.

Cafe owners are exploring plans for Amsterdam-like coffee shops where marijuana could be sold and consumed. The California State Package Store and Tavern Owners Association, which represents black liquor store owners, is holding discussions about how to position itself if the measure passes.

“We want to be in the ballgame if it’s going to happen,” said Andre Isler, the owner of Isler’s Liquors in Oakland and a long-time member of the association.

A state report puts the value of California’s marijuana crop at $14 billion, dwarfing even the wine industry. Robert Jacob, who operates the Peace in Medicine medical marijuana dispensary in Sebastopol, said that entrepreneurs of all types were jostling to get a piece of the action.

“So many people want to get into the business, and even aside from actually selling it you have packaging needs, management needs, bookkeeping needs,” Jacob said. “You have every single industry gearing up for the next dot-com boom.”

However, even if Proposition 19 passes — polls show that the vote will be close — it will take a while to gauge the full impact of the law. The measure would allow Californians 21 and older to grow up to 25 square feet of marijuana and possess up to an ounce for personal use. How and where it would be sold commercially would be left up to individual cities and counties.

At the same time, Tom Ammiano, a Democratic state assemblyman from San Francisco, is sponsoring a bill that would place California’s Department of Alcoholic Beverage Control in charge of regulating marijuana. Ammiano’s bill would also allow any store to sell marijuana as long as it has liquor license. That would include liquor stores, most convenience stores and even supermarkets.

Complicating matters is last week’s announcement by Eric H. Holder Jr., the United States attorney general, that the Justice Department will “vigorously enforce” federal drug laws even if Proposition 19 passes. That legal uncertainty appears to be making many businesses cautious.

“There are lots of people that say this will be in the courts for a long time,” said Libba Letton, a spokeswoman for Whole Foods Market, which has several Bay Area stores. “It’s not something we’re interested in getting into now.”

Oakland, San Francisco and Berkeley are waiting until after the election to adopt rules for retail sales, officials in those cities said. In interviews this week, the officials said they were inclined to allow existing medical marijuana dispensaries or similar types of businesses to sell to recreational users if Proposition 19 passed. Customers who are not buying marijuana for medical reasons would be required to present a California identification card instead of a medical cannabis card to be admitted, and they would be permitted to buy only fixed quantities of marijuana.

Leslie Hennessy's tobacco license, seen here at his store on Second Street. Hennessy would like to sell marijuana should Proposition 19 pass, if it is licensed by the federal government like alcohol and tobacco
Adithya Sambamurthy/The Bay Citizen
https://citizen-media.s3.amazonaws.com/uploaded/images/2010/10/hennesy2/original/henessy04_adi_web.jpg?Signature=Y0YoYTEuVDcno9g7TgKaaIKPqvQ%3D&Expires=1359072659&AWSAccessKeyId=AKIAICY2ZBGLHCXTSKJA
Leslie Hennessy's tobacco license, seen here at his store on Second Street. Hennessy would like to sell marijuana should Proposition 19 pass, if it is licensed by the federal government like alcohol and tobacco
Adithya Sambamurthy/The Bay Citizen

“I think we would want to stick with the dispensary idea,” said Laurie Capitelli, a Berkeley City Council member. “I can’t imagine the beer guy driving around with all that marijuana in his Miller High Life truck.”

Oakland’s Harborside Health Center, clean and well-lighted, could be mistaken for a retail outlet — except for the significant presence of private security and the abundance of marijuana sold from behind a long glass counter. The dispensary, off Interstate 880, has more than 58,000 patients, and it sold more than $21 million worth of marijuana last year, according to Stephen DeAngelo, Harborside’s executive director.

DeAngelo said that his operation would be a good candidate for retail sales.

“My hope is that they would look to the existing licensees to handle this new activity,” DeAngelo said. He calculated that Harborside would need to rent an additional 7,000 feet of adjacent office space to accommodate the new business.

The man behind Proposition 19, Richard Lee, founded Oaksterdam University and operates Coffeeshop Blue Sky, which doubles as a medical marijuana dispensary, in downtown Oakland. Lee said he envisioned marijuana cafes flourishing if the measure passed, although the state’s tough antismoking laws would be difficult to get around.

Capitelli, the Berkeley City Council member, said that the existing dispensaries had an obvious financial interest in controlling the retail market. But he added that their expertise, especially on security matters, could be helpful as cities transition from medical to recreational sales.

Jane Brunner, president of the Oakland City Council, said her city would most likely look to the dispensaries for retail sales if Proposition 19 passed — not liquor stores. “We have enough problems with those stores as it is,” Brunner said. “With the dispensaries we have a lot of control. They pay fees, they allow us in to do inspections.”

But other business interests, backed by legislators, are likely to push for opportunities to sell marijuana — many already are. Ammiano, who is sponsoring the bill to put marijuana sales under the control of the Alcoholic Beverage Control Department, said in an interview that liquor stores would be a good option.

“Depending on the community and the location, why not?” he said.

Hennessy, the owner of the wine and specialty foods store in San Francisco, said he intended to proceed very carefully given the legal uncertainty. But he agreed that liquor store owners like him have the most experience to handle the new market.

“We’ve always hoped that the bill would pass and give us another tool to make money,” Hennessy said. “We’ve all been fingerprinted; we have city and state licensing. We’ve just become real experts in dispensing controlled substances.”

This article also appears in the Bay Area edition of The New York Times.

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