For Elizabeth Silva, business manager at Yahaira Kolb Salon in Mission Hills, the smell of marijuana wafting into her storefront has become a frequent irritation. Silva’s salon is next door to a cannabis dispensary on Sepulveda Boulevard, and the pungent odor often fills the business complex. “The smell is super strong,” Silva said. “Because we’re sharing a wall, the smell is crazy.” Cannabis dispensaries and retailers are causing headaches for neighboring businesses across the San Fernando Valley. They complain that the pot shops – many of which are not licensed with state and local agencies – are an unseemly nuisance and at times make customers feel unsafe. Silva said that dispensary patrons often leave empty cannabis containers and packaging strewn about the sidewalk. Some also smoke near the business. “Families don’t feel safe because of that,” she said. Yahaira Kolb Salon is one of 48 local companies that recently completed a survey for the Valley Economic Alliance about how operating near a dispensary affects their business. It found that the smell, lack of parking and increased illegal activities were their main concerns. Fifteen of the businesses surveyed said they would consider moving to a new location if these problems aren’t resolved. Illegal shops To ensure cannabis sellers are operating legally and not disturbing local communities, Los Angeles City Attorney Mike Feuer and the Los Angeles Police Department have launched a citywide crackdown on unlicensed dispensaries. They initiated the effort after California legalized recreational marijuana in January. All businesses selling cannabis in Los Angeles are now required to obtain licenses from both the city and state. As a part of the crackdown, Feuer has filed 14 criminal cases against marijuana businesses for allegedly operating illegally in the San Fernando Valley, according to documents obtained by the Business Journal through a public records request. Feuer’s office had previously identified nine of the targeted cannabis operations in an announcement on May 30. The accompanying map shows the locations charged in Feuer’s action. The dispensary next to Silva’s salon, which is located at 10247 Sepulveda Blvd., is listed as a defendant in Feuer’s charges. While both licensed and unlicensed dispensaries can cause problems for local businesses, illegal shops can also attract “significant criminal activity,” according to the city attorney’s office. The marijuana businesses charged by Feuer were prioritized for prosecution because of reports of additional illicit goings-on at the store locations. Across all of Los Angeles, Feuer’s office has filed a total of 61 criminal cases against 259 different defendants associated with 58 commercial operations, according to the documents. Still, it’s unclear how many underground dispensaries the city will need to shutter for the crackdown to be a success. At a February press conference, LAPD Deputy Chief John Sherman estimated there were between 200 and 300 marijuana businesses operating illegally in the city. But Los Angeles City Controller Ron Galperin told Curbed LA last year there could be as many as 1,700 dispensaries operating in L.A. Just 155 of those currently have approval to sell cannabis. One Mission Hills business owner said that even after the city shut down an illegal dispensary in his building a few years ago, two new ones moved in to take its place. “I’m starting to expect that this is going to be the new norm,” said the business owner, who asked not to be identified. Neither of the two dispensaries located on Devonshire Street appear to have been issued approvals, according to an online list posted by the newly formed Los Angeles Department of Cannabis Regulation. Like Silva, the business owner complained that the dispensaries’ customers often smoke behind the store and toss empty marijuana containers onto the sidewalk. After raising the issues with one of the dispensary owners, he agreed to hire a security guard to watch over the area. The business owner said the guard has helped improve the situation near that dispensary. Valley Economic Alliance President Kenn Phillips said the Alliance’s survey found that hiring security guards was one of the best ways for dispensaries to address local business’ concerns. “The ones that have armed guards on the outside, there was no problem,” he said. “The majority that don’t have them, that’s the problem.” Rising rents? Another consequence of doing business next to a marijuana dispensary is that landlords may be tempted to raise rents. As the multi-billion-dollar legal cannabis industry expands across the country, it’s not surprising that commercial property owners are looking to cash in. In Denver, a report from commercial real estate firm CBRE Inc. found asking rates for warehouse leases jumped by more than 50 percent after medical marijuana was legalized in Colorado. A business owner in Van Nuys said his landlord doubled the rent to $3,500 a month after a dispensary moved in three years ago. (The dispensary does not appear to be approved by the city.) He said the property owner plans to increase it to $5,000 once the lease renews. The business owner, who asked not to be named, fears the landlord will lease more units to dispensaries, which could drive up prices even higher. If the city attorney follows through on his promise to crackdown on unlicensed marijuana businesses, however, property owners may start to think twice before taking on an unlicensed dispensary as a tenant. “Businesses that flout the city’s new cannabis law will be held accountable,” Feuer said in a statement in May. “I urge all property owners and marijuana businesses to follow the law and work with my office and the city’s Department of Cannabis Regulation to avoid facing serious criminal consequences.”
