Pot Shop Calls It Quits in Lawsuit with City Hall

In its ongoing legal battle with Green Well medical marijuana dispensary — formerly located at 500 North Milpas Street — Santa Barbara City Hall appears to have dodged what could have been a damaging bullet. Several weeks ago, dispensary owners agreed to call it quits in exchange for $75,000 to help defray legal expenses accrued while trying to fight City Hall. The terms of the agreement were surprising given that Green Well owners spent nearly $300,000 in legal fees and initially appeared to have an ironclad case.

The Green Well opened for business in January 2010 after reportedly spending $400,000 and nine months securing all the necessary city permits to legally open shop. In addition, Green Well’s owners at the time — James Lee and Nate Reinke — bent over backward to ingratiate themselves with the community, leading cleanup drives and donating to the neighborhood clinics. But in response to growing opposition to storefront marijuana dispensaries, the City Council voted to change the rules of the game and, in so doing, effectively put Green Well out of business. When Green Well was first approved, city regulations required dispensaries to be 500 feet from the nearest school. The dispensary, located 532 feet from Santa Barbara Junior High, complied. But the new language required a separation of at least 600 feet.

Initially, City Hall offered the owners — who have since parted ways — a 180-day grace period, but in the face of intense skepticism by the judge reviewing the case, expanded that to a four-year phaseout period. Whether that would be sufficient to inoculate City Hall from legal attack became moot last May when officials with the Drug Enforcement Agency and the U.S. Justice Department called a meeting with property owners renting space to Santa Barbara’s dispensaries and threatened them with legal action if they did not evict their tenants. To show they were serious, federal officials initiated legal actions to seize the property of three dispensary landlords. Law enforcement officials refer to this event as “The Great Shutdown,” and almost overnight, Santa Barbara’s once flourishing dispensary scene disappeared.