The great duopoly debate

Picture this: Thousands of medical-marijuana patients in and around Chico, with only two dispensaries from which to get their medicine.

That’s the way things are looking, based on what the City Council requested be added to the city’s draft ordinance regulating dispensaries within city limits.

“I think it’s the most ridiculous thing in the world,” said Rick Tognoli, who runs Scripts Only Service (SOS), a dispensary in an unincorporated area near Chico. “The free market should decide.”

What makes this subject so interesting is that Tognoli’s viewpoint—which many others in the community share—is exactly what city staff recommended to the council at its last meeting on the subject March 3. The land-use restrictions in the ordinance, as it was proposed, would limit the number of dispensaries to 10 or fewer, staff explained. Nevertheless, the council voted to allow just two dispensaries, which sent the ordinance back to city staff to revise.

“We had recommended an ordinance that would limit the dispensaries to three zoning districts in town,” explained Planning Services Director Mark Wolfe in a recent phone interview. “We had done some analysis of what that might mean as far as the limitation on the number [of dispensaries]. The probable maximum was around eight.”

Citizen Collective, which has been working with the city to create an ordinance, has been waiting for laws to be put in place before opening its doors. Lobbyist M. Max Del Real, who represents the dispensary, said he’s very much in support of limiting the number of such entities in Chico. In fact, members of the Citizen Collective board were among the first to publicly discuss restricting the number of dispensaries.

“The city needs to go slow. It can’t just create open, porous corridors—then it will become another L.A., and L.A. sucks in regard to this issue,” Del Real said. He pointed to cities like Oakland and Stockton, where the number is limited.

Others, like Tognoli and Robert Galia, who runs North Valley Holistic Health—one of the few dispensaries still open in Butte County since last summer’s raids—find the limitation to be counterintuitive and, overall, bad for patients.

“Two is not enough. We’re getting 25 to 30 new patients a day—that’s a lot,” said Galia. “Where are they going to go? They can’t all go to two places.”

North Valley Holistic Health, like the seven other dispensaries that were raided last June, has been fighting an uphill battle to stay open for patients. Several shut down in the months following the raid—though no charges have been filed. Tognoli recently closed SOS, which now takes appointments only. Doctor’s Orders, headquartered in Sacramento, just shut its doors in Chico as well. NVHH has started a petition drive to help it gain one of the two spots in the city, so it can operate without the fear of code-enforcement fines.

SOS, however, doesn’t want to play the city’s games and is solely pushing for no numerical limitation on dispensaries in Chico.

“The free market should decide,” Tognoli said. “We were able to support eight before; we should be able to support eight again.”

So, what would creating alimitation of two dispensaries mean? For one, it would require a subjective review process be set up to decide which two operators would get permits.

“My sense is there is some demand out there for these permits and it’s going to be a lot of work reviewing them,” said Wolfe, adding that he’s been approached by about 10 different individuals or groups over the past few years who want to open up shop in Chico. “Permits would have been issued over the counter if the applicants met certain criteria. By limiting it to two, now we have to go about deciding which two are going to get this.”

Councilman Andy Holcombe sees several problems with imposing a limit on dispensaries, including the process of subjectively deciding which dispensaries get permits.

“It’s incumbent upon the city to come up with a system to evaluate and judge which are best,” he said. “It’s a very slippery slope as far as ensuring it’s fair and supportable against court challenge, and it opens us up to potential problems that are best avoided at the outset.”

Councilwoman Mary Flynn, however, who made the motion to vote for imposing a limit on the number of dispensaries, said she’s committed to that plan.

“Given that we’re venturing into uncharted waters, it makes sense for us to limit the number of dispensaries,” she said. “As we learn about what’s involved, and the impacts on the community, then we can revisit it.”

Del Real believes setting a limit and then choosing the best two of the bunch of applicants would be good for Chico, and clearly the majority of the City Council agreed with him.

“In government, you have to have certain regulations to prevent excess.” Del Real added. “I’d be happy with one if my client got that permit, but we tried to do what was best for everybody.”

Flynn and Del Real both argued that having a limited number of dispensaries would have no impact on their ability to fulfill the needs of the community. But others, like Tognoli, Galia and Holcombe, believe the more access, the better.

“Any time you have a monopoly—two is just about the same as one—the quality of service drops,” Galia said. “When you’re the only game in town, you don’t have to worry about keeping prices down and doing a good job for your patients.”

Tognoli added that a majority of patients he sees are on disability, and they not only need low prices, but also physical access that just two locations may not adequately provide.

“It’s not a monopoly—it’s a guarantee you’re going to have a good person following the law,” Del Real countered. “Otherwise, you’re welcoming bad players.”

But limiting the number of dispensaries, while it might work in other cities, may not be best for Chico, Holcombe said.

“What ever happened to ‘Let the free market decide’?” Holcombe asked. “Any council action to arbitrarily limit the number of medical-marijuana dispensaries beyond the limitations in the ordinance itself is poor planning and policy and is bad for the city. I’m not that concerned about what other cities are doing—I want to do what’s best for Chico.”