Update, Feb. 27: The City Council voted 7 to 2, with Councilwomen Sophie Hahn and Susan Wengraf dissenting, to approve The Apothecarium’s application.
Original story, Feb. 25: A cannabis dispensary that got permission to open a facility on Shattuck Avenue in 2016 now wants to operate a store on Telegraph Avenue instead, which would mean that three cannabis retailers would be clustered in a six-block-long area.
The Apothecarium will ask the City Council Tuesday night for permission to operate at 2312 Telegraph Ave. near Bancroft Way, just a few hundred feet from UC Berkeley. While a new cannabis retailer will bring the city of Berkeley hundreds of thousands of dollars in new tax revenue, another retailer says The Apothecarium’s proximity will undermine his business, which could mean fewer dollars for the city overall.
Marc Weinstein, who opened Hi-Fidelity at 2465 Telegraph Ave. in May, right next door to his Amoeba Records store, said The Apothecarium poses a threat to his business. It cost him and his partners, David Prinz, $3 million, with permitting and remodeling fees, to open the cannabis retailer. The business may just break even this year and tough competition would hurt them, he said.
“It’s a strange position I find myself in,” said Weinstein. “Eight months after opening having to go through this existential battle against this big corporation. It really will hurt us.”
Weinstein wants The Apothecarium to find a location in another part of Berkeley that is underserved rather than one about two blocks away from his business.
That’s not as easy as Weinstein makes it sound, said Ryan Hudson, the executive director of The Apothecarium.
For decades, Berkeley had three medical cannabis dispensaries — Berkeley Patient’s Group (BPG), Cannabis Buyers Club Berkeley (CBCB) and the Patients Care Collective. The latter is located at 2590 Telegraph Ave., about six blocks from The Apothecarium’s proposed site. In 2016, the City Council decided to allow a fourth, and in May awarded a permit to iCann (which still has not opened its Sacramento Street location although it is under construction). The City Council then decided to allow to more cannabis operations and, on Sept. 20, 2016, gave permits to Amoeba’s Hi-Fidelity and to The Apothecarium.
The hope was not only to increase the number of places where medical cannabis patients could get medicine (this was before recreational cannabis was legal), but to increase Berkeley’s tax base. In 2017, the three original cannabis retailers generated more than $1.6 million in taxes, according to city documents.
All those who applied for a permit had to prove that they had signed leases with landlords. The Apothecarium said it had a lease for 2578 Shattuck Ave.
But after being granted a permit, the landlord reneged on The Apothecarium’s lease, said Hudson. Lawsuits are now pending on the matter. It took the cannabis group 18 months to find a new location, he said.
There are so many restrictions on where a dispensary can operate it is very difficult to find a spot, said Hudson. First, it must be in an area of Berkeley zoned for cannabis. Second, the retailer must find a landlord willing to lease to a cannabis operation. Many landlords are leery of that since cannabis is still illegal under federal law and the federal government has threatened to seize the assets of those leasing to cannabis retailers. (In fact, BPG had to move out of its San Pablo Avenue location in 2012 for this reason and had to fight off a federal lawsuit in its current location. Berkeley became a cannabis sanctuary city to fight this trend.)
“That has had a chilling effect on landlords wanting to rent to our types of business,” said Hudson.
Thirdly, banks will not do business with people who have cannabis operations, so the building cannot have a mortgage, said Hudson. Fourth, Berkeley law requires a ground-floor retail operation and the business needs 2,000 to 3,000 square feet in which to operate.
Cannabis operations must also be 600 feet from any K-12 school and 600 feet from any other cannabis retailer.
“When you apply all that criteria, the available spaces dwindle, completely,” said Hudson. “Anyone who claims it’s easy to find a location for a cannabis (facility) has never tried. Hi-Fidelity never had to look.” (Weinstein already leased the space, which is next door to Amoeba Records.)
If the City Council turns down The Apothecarium’s request, it might mean there would be a long delay before a sixth cannabis retailer started operating, Planning Director Timothy Burroughs wrote in a memo to the City Council. The Apothecarium would have to find another location and then “repeat the City’s Council-approved location selection process,” he said. If it decided to bow out, the city would have to start a new selection process for a new operator all over again. Either way would incur staff time and cost, he said.
There are no limits on the number of cannabis retailers that can be in any particular district.
Does the size of the cannabis retailer matter?
When The Apothecarium first applied for a Berkeley permit, it had two other stores, one in San Francisco and one in Las Vegas, and presented itself as a local operation. It now has three stores in San Francisco and a cultivation and edibles operation. On Feb. 11, however, TerrAscend, a Canadian cannabis producer, paid $118 million in cash and stock to acquire The Apothecarium.
“With more than 200 employees and $45 million in combined revenue, Apothecarium made for an attractive buy to TerrAscend, which recently has been making moves to enter the U.S. market,” wrote The Green Market Report, a cannabis news site.
“Teaming up with a larger company means that we will be able to bring the Apothecarium dispensary experience to more people, in more cities around the country,” Hudson said in a statement, according to the news site. “Our customers won’t see major changes inside our dispensaries.”
Weinstein said the acquisition has completely changed the balance of power. Now that The Apothecarium is a huge corporation, it should definitely buy a new building, preferably somewhere where there is parking, like Solano Avenue, he said.
“The Apothecarium has access to enormous capital,” said Elisabeth Jewel, a government consultant who is working on behalf of Hi-Fidelity. “Now they are a chain store. Why do they have to be two blocks away from a store with a loyal customer base that is trying to build a business? There are so many underserved areas in Berkeley. They can buy an entire block.”
The city of Berkeley is aware that The Apothecarium has been acquired but would not comment on how or if that would influence the application.
“We’re reviewing the issue, and we don’t have any further comment beyond that,” said Matthai Chakko, a spokesman for the city.
Hudson said that nothing would change with the acquisition. He and his other partners would continue to be closely involved in all operations.
People see pros and cons to third cannabis retailer on Telegraph
The question of whether to allow The Apothecarium to open on Telegraph Avenue and Bancroft Way has divided Berkeley.
The Cannabis Commission was split on The Apothecarium’s application and voted to make no recommendation to the City Council. On one hand, members believe that Berkeley needs more cannabis retailers, said Charles Pappas, a member of the commission. On the other hand, the location is not ideal, he said. It does not have parking, which is important for older and medical marijuana patients. Clustering is not a good idea either, he said. Many commissioners wondered why the group could not have found space elsewhere.
“It’s not a great spot,” said Pappas. “I also have a hard time believing they couldn’t find another place to rent.”
The board of the Telegraph Business Improvement District is also split on whether The Apothecarium should move to the street, said Stuart Baker, its executive director. While TBID wants “energizing spaces” on Telegraph (Sam’s Market, where The Apothecarium would locate, is not doing well, he said) there is a lot of loyalty toward Amoeba.
“This is a legacy business and it is one of our cornerstone businesses in the district. Anything that endangers that is difficult for us to fathom,” said Baker.
Amoeba’s business has picked up about 8 to 10% since Hi-Fidelity opened next door, said Weinstein.
But five top UC Berkeley officials issued a “statement of concern” about the proposed new operation.
“The opening of dispensaries near campus could introduce new products to students who may be particularly vulnerable to marketing and promotion due to their newly achieved independence, academic stress and social pressures,” said the statement, which was signed by Stephen C. Sutton, vice chancellor for Student Affairs, Catherine P. Koshland, vice chancellor of undergraduate education, Joseph Greenwell, associate vice chancellor and dean of students, Dr. Anna Harte, interim assistant vice chancellor and Walter Wong, the university registrar.
But others support the idea: “A community-based dispensary with a strong tradition of educational efforts is appropriate in the neighborhood of a world-class university,” wrote a commenter on the city’s Berkeley Considers website. “I believe Apothocarium will be a great help for people who need cannabis,” wrote another person.
There is irony in how Weinstein and Jewel are framing this fight. When the City Council was considering Hi-Fidelity’s application in 2016, then-City Councilman Darryl Moore expressed concern it would cannibalize the business of Patients Care Collective at 2590 Telegraph Ave. He compared Hi-Fidelity to a Walmart and suggested a David-versus-Goliath battle was brewing. Now Hi-Fidelity is characterizing itself as David and The Apothecarium as Goliath.
Patients Care Collective has not weighed in on The Apothecarium’s application. Berkeleyside has reached out to them but has not yet got a response. Hudson said his company buys cannabis from PCC.