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Property Liens Remain Intact While
City Attorney Drafts New Medical
Cannabis Collectives Regulations

By Tiffany L. Rider - Assistant Editor

November 19, 2013 – A presentation to the Long Beach City Council is expected next month to review data gathered by the Long Beach City Attorney’s Office and the city’s planning department for the purpose of drafting a new medical marijuana ordinance for the city.

Kendra Carney, deputy city attorney, told the Business Journal that the department is seeking further direction from the city council at that meeting for the new ordinance. “We had to do quite a bit of research, and planning had to do quite a bit of mapping work, [to determine] what it would look like, based on various restrictions presented at the last meeting,” Carney said.

Concurrently, the department continues to work with business licensing and other agencies on 28 properties in town that have, in total, 62 liens related to leasing space for illegal medical marijuana shops. These liens are the result of unpaid citations to property owners who did not evict medical marijuana dispensary tenants, whose operations were banned effective February 14, 2012.

Property Liens

It remains uncertain what the impact of new regulations, that would again allow medical marijuana dispensaries to operate in Long Beach, would be on properties that once leased to these collectives.

Mark Malan, a property owner and lifelong resident of Long Beach, owns several properties in the city with medical marijuana-related liens, including 5115 Atlantic Ave. “These guys (medical marijuana dispensary owners) came to me to rent, and they have a legal right,” Malan said. “I got a legal opinion. I had no idea what I was walking into.”

He told the Business Journal that he is about to lose his property at 743 E. 4th St. According to documents provided to the Business Journal from the city attorney’s office, the property has six liens totaling $66,400.

“The citations got so big I couldn’t refinance the notes,” Malan told the Business Journal. “It’s about to be foreclosed on because the citations are so crushing. I have to walk away.”

Malan said he believes the city should have issued the citations to the medical marijuana dispensary owners and not the property owners. “If I rent a car and speed, I get the ticket,” he said. “Hertz does not get cited.”

According to Assistant City Attorney Michael Mais, the city’s municipal code regulations on medical marijuana administrative citations define the responsible person as including the property owner or tenant or person with legal interest in the real property.

There are certain challenges with citing a business that is no longer in operation, he said, but the city has the legal right to cite either party. “In most code enforcement cases, both are cited, but ultimately it is the property owner,” Mais said.

According to Dennis Strachota, city budget manager, some of the 62 active liens related to medical marijuana date back to 2011, based on citations unrelated to the ban. The procedure for citing a property with a medical marijuana dispensary, Strachota said, involved an initial $100 citation due within 30 days. If not paid or contested, another citation is issued for $200. Citations issued after the first two are $500 per code violation.

If the citations go unpaid or are not contested, the city has the legal right to record a lien against the property with the Los Angeles County Recorder. A lien may be imposed after the first citation goes unpaid; it’s at the discretion of the city. Once a lien or liens are imposed, the property owner must pay them prior to selling the property or refinancing.

“Much like a nuisance that might be emanating from a property, where you can hold the property owner responsible for eliminating that nuisance, in this case, the property owner is held responsible for illegal activity taking place for its tenants,” Strachota said. “We try to have as much communication as possible with the property owner so they can understand the situation and what the possible sanctions are before we take action.”

Since the ban took effect, Malan said much of the medical marijuana dispensary business has gone underground. More of the mobile dispensaries are coming into town to sell medical marijuana, all without paying sales tax to the city, he said. “The city would rather have pushers in their town than have enforced, regulated dispensaries,” Malan said.