Suddenly, marijuana dispensaries are everywhere in Stanislaus County

Specialist Rachael Garner shows samples of cannabis products at The Peoples's Remedy in Modesto, Calif., on Wednesday, May 31, 2017.
Specialist Rachael Garner shows samples of cannabis products at The Peoples's Remedy in Modesto, Calif., on Wednesday, May 31, 2017.

Unlicensed marijuana dispensaries are popping up in Stanislaus County in the regulation-free zone that has followed passage of Proposition 64 in November.

All of a sudden the small unincorporated town of Empire has three dispensaries listed on the Holistic Center, Natural Life and Empire Health and Wellness.

People who keep tabs on this leafy sector of the economy count more than 20 dispensaries in the county, and at least 25 delivery services, and there are more to come.

“They know it is a free-for-all,” said Mark Ponticelli, co-owner of a Modesto medical pot dispensary for 2 1/2 years. “They know the municipalities are not going to enforce anything now. Most of them are not paying taxes or fees. They are paying their employees under the table.”

Cities and counties are not collecting marijuana taxes from these outlets because voters have not been asked to approve taxes. Dispensaries are not able to apply for a local license, but they will need one when the state gets around to issuing licenses next year.

One newcomer, the Oklevueha Native American Church on Scenic Drive in Modesto, has tested law enforcement agencies and laws protecting freedom of religion in the different cities and states where it operates. A security guard at the church said this week that new applicants can show a note from a doctor or can sign up by paying $15.

The membership card says the bearer has the right to carry cannabis and peyote, ayahuasca, psilocyben and mushrooms as sacraments of religious ceremony. Proposition 64 legalized cannabis but not the hallucinogenic agents listed on the back of the card.

Contacted by phone, a person at the ONAC dispensary said he could not say whether peyote and mushrooms are provided to members.

“We are not capable of doing an interview,” he said.

Modesto Police Chief Galen Carroll said officers have made marijuana purchases at the site. “Part of it is they are hiding behind that they are a Native American church,” Carroll said, noting that the department is considering action. An ordinance makes it illegal to operate a pot dispensary in the city

Carroll said the new dispensaries in Modesto are in county pockets, except for the ONAC center.

The Utah-based church has long maintained that cannabis and peyote are sacraments of the church’s religious practice. The Utah Supreme Court ruled in 2004 the Oklevueha church could legally use peyote in religious ceremonies, consistent with a federal law that grants protections for native American tribes.

The church filed suit in federal court after Sonoma County deputies in 2015 seized what the church said was 600 sacramental marijuana plants from a church property near Kenwood. The case was dismissed when ONAC’s lawyers missed legal deadlines and court appearances.

Papers in another lawsuit claim ONAC is an extension of a native American Church in South Dakota and that ONAC founder James “Flaming Eagle” Mooney and another leader are joined with a Lakota Sioux church.

County policy

Stanislaus County leaders are working on a strategy for regulating legal marijuana. Board Chairman Vito Chiesa has said the county could permit a certain number of dispensaries in the unincorporated area and tax them to pay for law enforcement, code enforcement and other government services impacted by legal cannabis.

Chiesa said that enforcing a “dry” county – one with no marijuana businesses – would cost the county $2 million to $3 million a year. The county could set up a process in which proposals submitted by dispensary owners are judged on their merits and licenses are granted to a limited number, such as 10.

Chiesa said the proposals could be scored on the business’ track record, compliance with paying taxes, criminal background, product safety and so forth.

Officials need to work out policy details such as zoning, where to locate dispensaries, advertising rules and safety regulations. “If we don’t have a licensing process by Jan. 1, we are not doing our job,” Chiesa said.

A measure to tax dispensaries is expected to go before Modesto voters in November. Other cities are developing their own policies, with some not intending to allow dispensaries.

Mark Ponticelli and Marlowe Mercado are co-owners of the People’s Remedy dispensary, which serves 200 to 300 daily clients in an unincorporated area of Modesto. The partners say they are trying to set the standard for locally operated medical marijuana dispensaries and welcome regulations to safeguard the public.

The People’s Remedy has a guard posted at the door, a waiting room, clean display areas and courteous staff. Security cameras monitor every room. To pay sales taxes to the state Board of Equalization, a bag filled with $20,000 to $30,000 in cash is driven to Sacramento, the partners said. Owing to the nature of the business, it is hard to maintain relationships with banks, they said.

Mercado said he hopes the county and cities will give consideration to local operators that make a special effort over large corporations. “We have abided by the policies and the law since Day 1. I hope they would see that,” Mercado said.

Ponticelli said the industry could revert to the black market if local jurisdictions impose too many taxes and fees.

Armando Godino, a former lumber yard worker of Modesto, said he uses the People’s Remedy to treat his back spasms. “It is so professional,” he said. “They are very friendly and communicate with the members well.”

Steve Boski, who has one of the longest-standing delivery services in Modesto, said a lot of new dispensaries came out of the Bay Area because “Modesto has been an untapped market.”

Boski said authorities cracked down on his service when marijuana was illegal. He said felony charges in an ongoing case were dropped to misdemeanors with passage of Proposition 64. Now, he watches the city tolerate new dispensaries.

Boski said he has no idea how delivery services might be regulated – it has not been a primary topic for discussion. He said he’s concerned that when fees, taxes and regulations are adopted, it will hurt the smaller operators.

Ponticelli said recently that having a testing facility in Stanislaus County would enhance safety. The facilities can test marijuana for the level of the active ingredient THC and for pesticides, mold, mildew and spider mites.

Chiesa acknowledged a testing facility is another item on a long list to consider with legalized marijuana.

“There will be 40 (dispensaries) before we get around to licensing them,” Chiesa predicted.

Ken Carlson: 209-578-2321, @KenCarlson16