As deadline nears, pot providers want rules eased.

Mayor calls for more study while some rally behind taking issue to voters on possible June ballot measure

SAN JOSE — With just weeks to go before a December deadline for compliance, medical marijuana providers are still balking at some of San Jose’s rules and city officials are offering to ease them.

Nineteen pot providers have been seeking to meet San Jose’s regulatory requirements by Dec. 18. The rules, adopted in June 2014, restrict pot stores to select industrial and commercial areas away from schools and parks and impose a host of security, tax payment and other requirements. Dispensaries that fail to meet the requirements by the deadline face closure.

But one rule in particular requiring pot stores to demonstrate that their marijuana is cultivated locally and not from collectives around the state remains a sticking point. City officials plan to ask the City Council to ease the rules Tuesday, allowing another five months for shops to sell through products obtained from “third-party” vendors and letting San Jose pot clubs buy and sell to one another.

Angelique Gaeta, an assistant to the city manager who oversees the medical pot program, wrote in a staff report that the proposed changes will “provide those medical marijuana collectives that are working their way towards registration with greater flexibility and opportunity for success.”

But Mayor Sam Liccardo says that that proposal needs more study. And marijuana providers say the olive branch doesn’t go far enough and are planning a City Hall rally Tuesday to drum up support for a ballot measure that would let city voters consider looser rules in 2016.

“I don’t care what the hell is motivating the mayor,” said Oakland-based attorney James Anthony, who helped organize Sensible San Jose, a political committee that crafted a June 2016 ballot measure to replace the city ordinance with more relaxed regulations. “We are going to rouse the troops and generate public awareness. … It’s time to give up on the city and go to the voters.”

The current rules require San Jose medical pot collectives to cultivate their own weed either on-site or at a single offsite location within Santa Clara County or neighboring counties. Gaeta said this “vertical integration” model helps track the weed from “seed to sale” to prevent diversion to kids, blackmarket sales and find the source of bad batches of marijuana.

But pot clubs say that rule makes it hard to keep up with demand since it takes months to harvest the weed. They add that the rule also makes it diffi-

cult for stores to offer “edibles,” such as ice cream and cookies, that come from collectives around the state and are preferred by patients who don’t want to smoke the marijuana.

City officials say the proposed changes would ease the burden of meeting demand under the new model. In addition to allowing the shops to transfer pot among themselves and to dispense weed they have on hand from thirdparty vendors for five months after the Dec. 18 deadline, other suggested revisions include:

Allow collectives to n manufacture marijuana at their dispensaries or an off-site location with more space.

Allow the transportation n of marijuana from one site to another from 6 a.m. to midnight.

Decrease the length n of time surveillance video must be stored from 90 days to 30 days to reduce dispensary costs.

Require collective n owners and employees to wear badges issued by police to show they’ve been fingerprinted and had a criminal-background check.

Disqualify collective n owners or employees convicted of unlawful use of a firearm in the last 10 years.

With the City Council poised to defer the decision Tuesday and only three council meetings left this year, it’s unclear when elected leaders will take up the issue again.

But medical marijuana advocates aren’t waiting for the council to decide on the changes.

The rally Anthony plans in front of City Hall on Tuesday will protest the tweaks to what he calls San Jose’s “impossible” medical pot ordinance. He likened it to “rearranging the deck chairs on the Titanic.”

The ballot measure Anthony drafted makes vertical integration optional and lifts city zoning restrictions on where pot shops can operate but still requires them to register and pay taxes.

Gaeta also suggested limiting personal-use marijuana cultivation to indoors only — within a 50-square-foot space — to address growing concerns over backyard pot gardens that invite thieves. She suggested creating a city medical marijuana division, similar to gaming control, to oversee the rules.

Advocates gave the city six suggestions for revisions to the ordinance — but they say Gaeta recommended only two of them to the City Council: Allowing marijuana transfers and off-site manufacturing. Gaeta wouldn’t recommend allowing medical pot shops to receive products from collectives around the state or allowing outdoor cultivation.

Without these changes, critics say medical weed sales will be forced to go underground into the black market.

A drop in city-sanctioned pot sales could spur a decline in revenue for San Jose. A measure approved by voters in 2010 allows the city to charge a 10 percent tax on all medical marijuana transactions. San Jose has collected more than $19 million over the last five years.

Sean Kali-rai, a lobbyist with Forest Consulting, LLC, representing six medical marijuana shops, said the city treats the pot businesses unfairly.

“They certainly don’t treat Apple or Cisco this way. They bend over backwards and give them incentives,” Kali-rai said. “If they’re paying taxes in the city, they should be treated like any other business.”