By Afra Barrios
CNN Special Investigations
(CNN) — San Francisco, known for its hippie influence and flowers, is known for its appetite for cannabis.
In 2013, the city legalized adult possession of marijuana for all adults aged 21 and older. In 2016, voters in the city approved Proposition E, which gave them the right to purchase cannabis for recreational use.
The easing of regulations has brought in an influx of visitors who will soon be able to join ranks with San Francisco’s cannabis tourism boom.
Since 2014, at least 35 companies have opened retail stores in San Francisco. Only existing dispensaries could apply, so on September 1, 2017, all of San Francisco’s 334 marijuana shops had to shut down.
The city’s efforts were intended to bring in stability while sorting out enforcement problems before legalization, said Joe Rahaim, chief operating officer of the San Francisco Society of Police.
All of those unlicensed cannabis shops reopened after the city implemented its new marijuana ordinance. That ordinance bars the city from collecting taxes on marijuana until later this year.
Solving the problem
“As it stands now, we have a fair amount of inventory that’s parked. It’s sitting in the warehouse not moved and not sold,” Rahaim said.
To ensure it can sell its inventory before July, the San Francisco Society of Police and the city issued a temporary cease-and-desist order for a number of dispensaries.
“We said to them: ‘You have a year to cure yourself or we’re going to stop collecting taxes,’” Rahaim said.
The city decided to work with the regulated dispensaries and issue a long-term tax deal.
“I’ve known people who want to start up like they just want to do it,” said Mayor Ed Lee. “There’s always some people that say: ‘You gotta be kidding me.’ And so I’ve always heard them, but I’ve always been interested in hearing it and I’ve always made sure that when they did say they were doing it legally and they would be operating in a way that’s consistent with the law, that I always said to them: ‘Yeah, but this is a complex issue that requires a long-term solution.’”
The city reached an agreement with the Marin Institute and the Marin Community Foundation, which each have marijuana shops in the city.
“The mayor has come up with what they call a multi-year moratorium that’s always going to last until June 30, 2018, but they want to bring clarity and stability to the cannabis industry,” Rahaim said.
The deal preserves existing revenue without imposing additional taxes, and the fund will expand over time.
“I would encourage people to follow my lead. Be prudent,” Lee said. “Just be responsible. If you want to give millions of dollars to the public, spend that in a way that makes sense.”
Some industry advocates are critical of the effort, arguing that legalization will result in more drug dealing instead of healthier lifestyles.
“Every dollar that the city spends on enforcement is one less dollar that they could spend on drug and alcohol prevention,” said Vince McMahon, executive director of Harm Reduction Task Force.