With medical marijuana collectives disbanded, patients feel further left behind in newly legal marketplace

The day Lonnie Painter dreaded for more than two years came and went this month, wiping out his long-time Laguna Woods marijuana enterprise.

As of Jan. 9, all marijuana collectives in California had to either have all the necessary state and community licenses needed to operate as a cannabis retailer, or shut down. Because cannabis businesses aren’t allowed in Laguna Woods, the deadline meant the demise of Painter’s 10-year-old collective, the Laguna Woods Medical Cannabis Club.

“We had a great system here,” said Painter, 73.

Legislatively, the directive to get licensed or shut down makes sense. The Jan. 9 deadline was a long-planned and well-publicized move to regulate a segment of the state’s cannabis industry — collectives — that are being phased out after thriving for decades under California’s loose medical marijuana laws.

Those laws offered some legal protection to operators who ran what could only be called pot shops. And, while the state recently has started to crack down on unlicensed retailers, many of those shops continue operating as though nothing has changed.

But the former medical marijuana laws also protected smaller, collective-style enterprises, such as Painter’s Laguna Woods club.

Painter for a decade has put on cannabis-information workshops, offered one-on-one advice, and sold marijuana products to some 1,000 residents who joined his collective in Laguna Woods, a city that’s almost entirely within the gated, 55-years-and-up community of Laguna Woods Village.

But when the Jan. 9 deadline kicked in, and Painter was forced to shut down, seniors in the community were left with no local option for medical marijuana aside from outside delivery services.

To Painter and some others, the new rules show how California’s new recreational cannabis laws, coupled with bans in most communities, are making life harder for serious medical marijuana patients.

“What are they going to do now?” he asked.

Paving the way

When California became the first state in the nation to legalize medical marijuana in 1996, the Compassionate Use Act allowed for “caregivers” to grow and possess cannabis for patients who had doctors’ recommendations for marijuana use but couldn’t or didn’t want to grow their own plants.

That concept was solidified in 2003 by Senate Bill 420, which said caregivers could be compensated for their costs to grow cannabis for their patients. The bill also said patients and caregivers could pool their resources “through collective, cooperative cultivation projects,” envisioned to work much like co-ops for more traditional farms.

While neither of those laws allowed for storefronts that sold commercial cannabis at a profit, they were vague enough that people started using the mandates to protect full-fledged dispensaries. Most shops would maintain a semblance of compliance with medical marijuana laws by checking for easy-to-obtain doctors recommendations, signing customers up as “members” and having “volunteers” sell cannabis to thousands of customers.

Cities such as Oakland and Santa Ana chose to welcome medical marijuana dispensaries under their own sets of rules. Most other California cities played cannabis whack-a-mole, with illicit shops popping up overnight, getting shut down by authorities soon after, and re-opening soon after that under a new name or location.

Collective-style operations, such as the one Painter launched in Laguna Woods in 2009, were caught somewhere in the middle.

The Laguna Woods club started in true collective style, with seniors planting and sharing marijuana from the community garden. When the homeowners association banned their weed, Painter began sourcing the club’s cannabis from a 200-acre organic farm in Northern California.

The Laguna Woods club was one of the first collectives in California to start testing products, Painter said, with tens of thousands of dollars spent over the years to check for contaminants such as mold and to test cannabis to find out the true level of THC, which is the chemical in marijuana that makes users feel high. Painter got a seller’s permit from the state and paid taxes on his products, earning enough to cover his expenses after five years in operation.

Residents came to think of Painter, who uses medical marijuana to ease his own arthritis, as somewhat of a shaman. They credited him and his team of volunteers — and cannabis — with helping to ease everything from chronic back pain to the side effects of chemotherapy. And many said they trusted Painter in a way they didn’t trust the mostly young “budtenders” who man the counters at now permitted shops in nearby Santa Ana.

Still, Painter said he lived under the steady threat of having his operation raided or facing arrest under vague California laws and federal laws that still say marijuana in all forms is illegal.

Changing laws

All of that was supposed to change after Californians passed Proposition 64 in 2016.

The measure legalized recreational marijuana sales starting Jan. 1, 2018, while preserving individual medical marijuana rights.

But the law also triggered a state regulation that said collectives had to disband or get licensed by Jan. 9, 2019. And it put the power to welcome or ban licensed shops in the hands of each California city.

After being the first city in Orange County to permit cannabis shops, Laguna Woods reversed course two years ago and joined the 80 percent of California cities that, today, ban retail shops. That means Painter can’t pursue a license for his cannabis club.

“We’ve been stabbed in the back by our city council,” he said. “As soon as it becomes legal to do the business end, we got shut down.”

Councilwoman Shari Horne, a supporter of medical marijuana rights, said no landlords in the city with limited commercial space were willing to lease property to cannabis shops in the nine years they were legal in Laguna Woods. She also noted that while Laguna Woods residents overwhelmingly voted in favor of legalizing medical marijuana in 1996, they narrowly voted against Prop. 64 in 2016.

“I don’t want to force something on people (who) don’t want it,” she said.

It’s not clear how many collectives statewide were still operating without licenses on Jan. 9. The Bureau of Cannabis Control doesn’t track that information, spokesman Alex Traverso said. And the California Department of Tax and Fee Administration, which requires all cannabis operators to get sellers’ permits, doesn’t distinguish between traditional shops and collectives, according to spokesperson Casey Wells.

The state cannabis bureau put out public messaging throughout 2018 letting collectives know about the law change and the deadline. And Traverso said they did issue temporary licenses in December to some businesses that were operating as collectives while awaiting approval for permanent licenses.

But Painter said when he mentioned the looming deadline to another local marijuana delivery service, they had no idea what he was talking about. And he said it was clear the owner planned to continue operating after Jan. 9.

“He just wanted to keep making money,” Painter said.

What’s next?

In the days since the deadline, the state cannabis bureau hasn’t taken any enforcement action against collectives that so far have refused to shut down, Traverso said.

The agency, he added, plans to take the same approach it has with all unlicensed businesses. First, they’ll try to get collectives to comply by educating them on the law and showing them the steps they must take to get licensed. If that doesn’t work, Traverso said the penalties will be the same as for any other unlicensed business conducting commercial cannabis activity.

In Laguna Woods, it might be a couple more weeks before many residents start feeling the pinch.

Painter said he sold off his remaining inventory at rock-bottom prices and gave some products away before the Jan. 9 deadline. His former patients, he said, should be set for a while.

Horne said she’s still confident there will be a marijuana shop in Laguna Woods one day. She said she was cheering an effort backed by Painter to collect signatures for a city ballot measure that would have again legalized stores. But Painter said this week that he’s “folded,” overwhelmed by the process and attorney’s fees.

“I’ve been doing this for 10 years,” he said. “It was just becoming too stressful.”

California law now allows licensed delivery services to go anywhere in the state, meaning residents in communities where shops are blocked can get cannabis via delivery, much like ordering a pizza.

Laguna Woods residents can also visit the local Mother’s Market & Kitchen store to buy products with CBD, a compound in cannabis that is purported to have some medical benefits without making consumer high, Horne noted. And, under state law, any resident can grow up to six plants per household for their own use. And Horne pointed out a Santa Ana marijuana shop, Bud & Bloom, runs a free bus from Laguna Woods to its front door each month. Also, many licensed stores offer discounts for seniors and medical marijuana patients, helping to bring down the price of products that are tested, taxed and regulated.

As for Painter? He says he has no idea what’s next.

State law says by the start of next year, the bureau has to study adding an option for nonprofit licenses, with a potential break on taxes and fees. But Painter said he’s too tired to pursue that route.

Before retiring and paying cash for his home in Laguna Woods, Painter was a self-employed restaurant owner in Laguna Beach. Today, he said he gets just $300 a month in retirement benefits. And his wife recently died of cancer, leaving him to go it alone.

“I thought I was going to have a career when cannabis got legalized,” he said. “After all this time, 10 years of work building this great collective with so many people, then it gets legalized and I’m shut down, with no job.”

He sighed.

“What do you do when you’re 73 years old?”