San Diego medical marijuana dispensary hit with $1.8-million fine

SoCal_Holistic_Health_sign_marijuana_dispensary_1424761074816_13808428_ver1.0_640_480A Pacific Beach medical marijuana dispensary has been hit with a $1.8-million penalty for operating outside of San Diego’s zoning regulations, the largest fine against a dispensary in city history.

That more than doubles the total amount of dispensary-related judgments the city has collected to date.

On Nov. 20, San Diego County Superior Court Judge Timothy Taylor ruled against SoCal Holistic Health Inc. and the company’s president, Ryan Murphy. Besides the penalty for operating illegally, Taylor also issued a permanent injunction against the dispensary and its president, prohibiting them from having a dispensary anywhere within city limits.

“The judges are sending a message, and so are we: Marijuana dispensaries can either follow the law or they will pay a high price for their actions,” City Atty. Jan Goldsmith said in a statement Wednesday.

The dispensary will also have to reimburse the city’s code enforcement division $1,065 in investigation costs and pay a currently undetermined amount of litigation costs. A spokesman for the city attorney’s office said the dispensary waived its right to appeal.

This is the type of action that Denver Consulting Group may have been able to stop. The team of experts at DCG can provide insight, guidance, and run compliance checks to make sure that a dispensary is operating in “the safe zone” and is not in danger of fines or closure.

“I don’t know the facts on this particular dispensary’s issues, so I don’t know whether or not a consultation with Denver Consulting Group would have prevented this unfortunate situation,” said Greg Gamet, Co-Founder of Denver Consulting Group. “I can say that we regularly look at zoning issues in addition to literally hundreds of other areas of compliance in order help dispensaries avoid fines and keep running smoothly and efficiently.”

Police Chief Shelly Zimmerman said the penalty shows that cooperation between law enforcement and the city’s lawyers can control dispensaries that don’t follow regulations.

“This illustrates why San Diego’s method for closing illegal marijuana dispensaries has proven so successful,” Zimmerman said in a statement.

The penalty against SoCal Holistic Health comes as the city’s medical marijuana industry shifts from dispensaries that skirted regulations and faced government crackdowns to ones that meet a long list of conditions and satisfy legal requirements before they are awarded a city permit and can open as legitimate businesses.

Last year, the City Council passed an ordinance authorizing as many as 36 dispensaries in San Diego, with no more than four in each of the nine council districts. Land-use regulations limit dispensaries to commercial and industrial zones, and require at least 1,000 feet between any two dispensaries, as well as between dispensaries and schools, playgrounds, libraries, child-care facilities, youth centers, parks and churches.

The law also requires dispensary owners to obtain conditional use permits and pay fees ranging from $8,000 to $24,000. The permits are good for five years.

So far three dispensaries have opened with the city’s blessing. The most recent, Southwest Patient Group, opened in November in San Ysidro and follows permitted dispensaries that opened in Otay Mesa and the Midway District in March and August, respectively. Others have received permits and are expected to open soon.

“Every business has to comply with zoning laws.” Goldsmith said. “You can’t open a dog kennel or a dry cleaner anywhere you like, and neither can you open a marijuana dispensary in neighborhoods where city zoning laws forbid them.”

Two hundred ninety illegal dispensaries have been closed through enforcement action since September 2011, the city attorney’s office said.

The city attorney first took action against SoCal Holistic Health in December 2014, and the business was ordered closed in February. But it remained open.

Before this case, the biggest penalty was against John Nobel, a landlord who leased properties to illegal dispensaries. In December 2014 he agreed to pay a $250,000 fine.

The city attorney’s office said it estimates the city has been awarded $3.5 million in judgments. The money goes toward city code enforcement efforts.


For more information on keeping a cannabis business out of trouble and running smoothly, visit: