As cities across the the county spend thousands of dollars shuttering medical marijuana dispensaries, Santa Ana is considering ending the costly battles by legalizing, regulating and taxing sales.

With some 50 illegal medical marijuana collectives still operating, Santa Ana leaders say they have been somewhat forced into this position after petitioners gathered enough signatures for a ballot measure that would repeal the city’s ban on medical marijuana collectives.

“There is no other city where people have gathered enough signatures to get a petition on the ballot,” said Mayor Miguel Pulido. “We can’t just pretend that it’s not on the ballot.

“That is putting us in a position where we need to do something proactively.”

Already on the ballot, the Medical Cannabis Restriction and Limitation Initiative would set up a process for dispensaries to register with the city and in return pay a 2 percent tax.

On June 17, the City Council will vote whether to place a competing measure on the ballot to require a 5 percent tax and allow about eight or 12 collectives to operate.

In the nearly two decades since California became the first state to allow medical marijuana, the cannabis industry – which remains illegal under federal law – has grown significantly and Orange County cities have dealt with the issue in various ways.

Lake Forest has spent nearly $1 million to shut about 40 medical marijuana dispensaries. Garden Grove briefly allowed dispensaries to legally register in its attempt to better regulate them, then switched course less than six months later and started closing down pot shops.

But in Costa Mesa – another battleground city where law enforcement has been called to close shops – medical marijuana activists have circulated a petition to allow eight medical marijuana dispensaries.

Costa Mesa City Councilman Gary Monahan said he’s been communicating with petitioners in hopes of coming up with an initiative that works for all. “I think competing ballot measures don’t make sense. If we do something together it’s going to be a lot better for everybody.”

But in Santa Ana as Mayor Pro Tem Sal Tinajero phrased it, “We have an ordinance that has received the proper amount of signatures to get on the ballot … We must react. These other cities don’t have what we have facing us and what are we going to do, sit?”

DUELING PROPOSALS

The proposal already on the ballot in Santa Ana would allow dispensaries to operate only in certain zones. The measure also calls for at least one collective or cooperative for every 15,000 residents.

Kandice Hawes – principal officer of the Committee to Support Medical Marijuana Ballot Initiative PAC – has said the initiative’s guidelines were worked out after proponents met with police to learn about resident complaints.

Under the measure, loitering and smoking on the premises is forbidden, and patients are restricted to be at least 18 years old.

“We feel that people do want medical marijuana collectives,” Hawes said. “They want them to be controlled and safe, and they want the participation of the city and the police departments.”

City officials said the city-backed initiative could permit a maximum of about eight collectives, establish distance requirements from schools and parks, and place a separation requirement from other medical marijuana collectives.

Officials said the measure already on the ballot is alarming because there would be no maximum on the number of collectives permitted and its proposed licensing method is a lot less than what other cities regulating such facilities require.

The city estimates that through its sales tax and other fees, their competing measure could bring the city about $1 million in revenue a year. Tinajero also talked about the possibilities of expanding the number of collectives to 12 to increase revenue.

At the council meeting, Douglas Lanphere, with Temecula-based Cooperative Patients’ Services, called the city’s competing measure “disingenuous.”

“To you, a medical necessity commodity is a revenue source … The City Council does not propose such a sin taxation for other medications,” Lanphere said. “Local government would never consider taxation of insulin, blood pressure medications. Why would the city consider pilfering from the sick and dying citizens of their city?”

Tuesday night, four council members – with Michele Martinez and Vincent Sarmiento absent – agreed with placing the city-sponsored initiative. Councilman David Benavides did not support it.

Benavides expressed concern about the number of youths, who he said, get high in dispensary storefronts and drive while under the influence.

“That is not going to go away if we legalize the dispensaries,” Benavides said. “I think we have the option to put some teeth to what we have in the books right now.”

HARD TO REGULATE

Despite a 2007 measure that outlaws storefront medical-marijuana dispensaries, Santa Ana police and the city attorney’s office have struggled with shutting down illegal collectives.

Residents, nonetheless, complain about a proliferation of marijuana dispensaries, especially along 17th Street.

As of May 1, there were 50 illegal medical marijuana collectives in the city, according to a city staff report. That number is up from a low of 16 last year, but down from the high of 68 the year before, the report said.

“It’s not an opinion. It’s a fact that since the ban, more dispensaries have opened up in the city … If we don’t play defense and come up with our own ordinance this can also get out of control,” Tinajero said.

Through joint enforcement efforts with the Drug Enforcement Administration, the city has shut down 177 collectives and fined illegal shops more than $138,000 since enforcement began in 2010.

STATE SENATE BILL

A measure from Sen. Lou Correa, D-Santa Ana, that would set up a system for regulating how medical cannabis is sold in the California, recently cleared the state senate.

The bill would require medical marijuana dispensaries to get a state license and approval from local officials in order to see patients.

The conflicting rules surrounding the industry have put a strain on cities and local law enforcement officials, Correa said, adding that his bill would create a “much-needed” regulatory framework.

“We cannot continue to be blind to this issue,” he said during the floor debate. “This does not legalize marijuana, but rather it says that if we’re going to have medical marijuana in our society, let’s regulate it properly.”

Under SB1262, dispensary owners would have to get a license from the state Department of Consumer Affairs. They would have to show approval from local officials before a state license could be issued.

Register reporters Laura Olson and Scott Martindale contributed to this report.

Contact the writer: amolina@ocregister.com