News

Cannabis business files $900K claim against Mountain View after it was blocked from opening

A selection of marijuana buds for sale at a medicinal marijuana dispensary in San Jose. File photo.

A marijuana delivery business is seeking $900,000 in damages from the city of Mountain View, alleging that city staff blindsided them with new restrictions that prevented them from opening.

The company, MWKM Corporation, filed a claim against the city after it was effectively blocked last year from opening a cannabis business on Polaris Avenue due to security deficiencies. The Mountain View City Council reviewed the claim in closed session Tuesday and voted unanimously to reject it.

City planning staff, and later police officials, told the company last year that it must have an enclosed area for loading and unloading cannabis in order to meeting the city's security requirements. Matthew Mahaffey, the owner of the company, argues that this isn't spelled out anywhere in the city code, and that he was strung along by staff for months only to be told the property wouldn't work.

"The Police Department's position that an enclosure is required to satisfy (city code) is without basis," according to the claim. "There is no reason that an enclosure is necessary."

Mountain View is one of only a few cities in the region to allow cannabis businesses to open, passing a law in 2018 that allowed for up to four pot shops to open in numerous commercial locations in Mountain View -- including downtown. Last year, those rules were significantly tightened following pubic pressure, banning storefronts and only allowing up to three delivery-only cannabis businesses.

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The revisions occurred midway through the city's cannabis business application process, changing the rules on 10 businesses that had already gone through a regulatory gauntlet including a full business description, security plan and -- most significantly -- evidence of a legal right to occupy a property or tenant space in the city.

MWKM Corporation's proposal to open a delivery business at 229 Polaris Ave. was the only application to meet the new requirements, and was the sole business initially allowed to move forward. Other applicants were given the opportunity to reapply under the new rules.

In the application, Mahaffey wrote that the state had recently allowed statewide delivery by cannabis businesses, and that this was an "ideal" time to open in Mountain View and serve customers not only in Mountain View but neighboring cities that have outlawed pot sales -- namely Los Altos, Sunnyvale and Palo Alto.

But in October last year, city staff informed Mahaffey that his business had a critical flaw: There was no enclosed area for loading and unloading cannabis products, and it's unlikely that the property could support such a structure.

Sharmi Shah, an attorney representing Mahaffey, wrote in the claim that the requirement is not explicitly stated anywhere, only that a "secure loading area" must be provided. Mahaffey began meeting with police officials to come up with an adequate alternative -- later developing a fenced-off loading area known as a sally port -- only to be told by police in January that it was still inadequate.

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Running out of options, Mahaffey requested in February that he be allowed to scrap the plan and change his location entirely, which was denied two weeks later. The city has yet to give MWKM Corporation a formal denial pending a hearing, which has yet to be scheduled, according to the claim.

Shah alleges that the city gave other applicants the opportunity to find a new location under the changing city rules, and that the same chance was not afforded to MWKM Corporation in its bid to open its cannabis delivery business. It was only when these other businesses reapplied with enclosed loading areas that the city began insisting that MWKM do the same, Shah wrote in the claim.

When asked for comment on the claim, Shah said he is still awaiting a hearing date on the company's conditional use permit.

The claim is seeking $904,947, the majority of which would be to offset "loss of business opportunity" totaling $155,000 per month since December 2019. This assumes 50 deliveries per day at $100 per delivery. The remaining $145,000 would be to offset the cost of getting the business up and running, including renting the property, paying the licensing and legal fees and hiring an architect for the application.

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Cannabis business files $900K claim against Mountain View after it was blocked from opening

by / Mountain View Voice

Uploaded: Thu, Jun 11, 2020, 12:05 pm

A marijuana delivery business is seeking $900,000 in damages from the city of Mountain View, alleging that city staff blindsided them with new restrictions that prevented them from opening.

The company, MWKM Corporation, filed a claim against the city after it was effectively blocked last year from opening a cannabis business on Polaris Avenue due to security deficiencies. The Mountain View City Council reviewed the claim in closed session Tuesday and voted unanimously to reject it.

City planning staff, and later police officials, told the company last year that it must have an enclosed area for loading and unloading cannabis in order to meeting the city's security requirements. Matthew Mahaffey, the owner of the company, argues that this isn't spelled out anywhere in the city code, and that he was strung along by staff for months only to be told the property wouldn't work.

"The Police Department's position that an enclosure is required to satisfy (city code) is without basis," according to the claim. "There is no reason that an enclosure is necessary."

Mountain View is one of only a few cities in the region to allow cannabis businesses to open, passing a law in 2018 that allowed for up to four pot shops to open in numerous commercial locations in Mountain View -- including downtown. Last year, those rules were significantly tightened following pubic pressure, banning storefronts and only allowing up to three delivery-only cannabis businesses.

The revisions occurred midway through the city's cannabis business application process, changing the rules on 10 businesses that had already gone through a regulatory gauntlet including a full business description, security plan and -- most significantly -- evidence of a legal right to occupy a property or tenant space in the city.

MWKM Corporation's proposal to open a delivery business at 229 Polaris Ave. was the only application to meet the new requirements, and was the sole business initially allowed to move forward. Other applicants were given the opportunity to reapply under the new rules.

In the application, Mahaffey wrote that the state had recently allowed statewide delivery by cannabis businesses, and that this was an "ideal" time to open in Mountain View and serve customers not only in Mountain View but neighboring cities that have outlawed pot sales -- namely Los Altos, Sunnyvale and Palo Alto.

But in October last year, city staff informed Mahaffey that his business had a critical flaw: There was no enclosed area for loading and unloading cannabis products, and it's unlikely that the property could support such a structure.

Sharmi Shah, an attorney representing Mahaffey, wrote in the claim that the requirement is not explicitly stated anywhere, only that a "secure loading area" must be provided. Mahaffey began meeting with police officials to come up with an adequate alternative -- later developing a fenced-off loading area known as a sally port -- only to be told by police in January that it was still inadequate.

Running out of options, Mahaffey requested in February that he be allowed to scrap the plan and change his location entirely, which was denied two weeks later. The city has yet to give MWKM Corporation a formal denial pending a hearing, which has yet to be scheduled, according to the claim.

Shah alleges that the city gave other applicants the opportunity to find a new location under the changing city rules, and that the same chance was not afforded to MWKM Corporation in its bid to open its cannabis delivery business. It was only when these other businesses reapplied with enclosed loading areas that the city began insisting that MWKM do the same, Shah wrote in the claim.

When asked for comment on the claim, Shah said he is still awaiting a hearing date on the company's conditional use permit.

The claim is seeking $904,947, the majority of which would be to offset "loss of business opportunity" totaling $155,000 per month since December 2019. This assumes 50 deliveries per day at $100 per delivery. The remaining $145,000 would be to offset the cost of getting the business up and running, including renting the property, paying the licensing and legal fees and hiring an architect for the application.

Comments

Rossta
Waverly Park
on Jun 11, 2020 at 2:48 pm
Rossta, Waverly Park
on Jun 11, 2020 at 2:48 pm
99 people like this

Seems the city will go to any length to try to deny the will of the MV voters who overwhelmingly supported legalization. The small and vocal opponents and their misplaced fears are getting undue sway over this. They should be more concerned about illegal drug sales that involve violent crime, sales to juveniles, out of country operatives and don't meet any regulations or pay any taxes. While legal business is delayed, the illegal business thrives, selling not just cannabis but other, more dangerous drugs.


Common sense
Old Mountain View
on Jun 11, 2020 at 2:50 pm
Common sense, Old Mountain View
on Jun 11, 2020 at 2:50 pm
44 people like this

Completely forseeable. This legal action was part of what the City Council knowingly invited when it changed rules mid-stream, failing to follow through in good faith on the ordinance passed in 2018. From the article:

"The revisions occurred midway through the city's cannabis business application process, changing the rules on 10 businesses that had already gone through a regulatory gauntlet. . ."

The "public pressure" cited in the article was from a noisy minority that has stubbornly refused to acknowledge *repeated* general referenda supporting cannabis retailing in MV. Among that noisy minority was a large, highly organized contingent apparently containing many who weren't even MV residents, many of whom didn't appear to distinguish cannabis from opium. One or more City Council members seem to've been scarcely better informed.


Name hidden
Bailey Park

on Jun 11, 2020 at 3:00 pm
Name hidden, Bailey Park

on Jun 11, 2020 at 3:00 pm

Due to repeated violations of our Terms of Use, comments from this poster are automatically removed. Why?


The Business Man
Castro City
on Jun 11, 2020 at 3:05 pm
The Business Man, Castro City
on Jun 11, 2020 at 3:05 pm
7 people like this

This is unfortunate.

The real problem is that the City council makes policies, and either doesn't comply with them or they change them so rapidly that they are meaningless.

This arbitrary and capricious action is involving more than this story.

They make policy regarding inclusive housing and then make it so no developer actually follows through. Just you watch, any project approved with the affordable housing allotment will be not complied with. The developer will simply ignore the deal and the city council WILL NOT enforce it.

THIS IS WHY THE CITY COUNCIL MUST NOT HAVE THIS KIND OF POWER IT IS TIME TO REMOVE IT.

Case closed.


Please understand
Another Mountain View Neighborhood
on Jun 11, 2020 at 3:48 pm
Please understand, Another Mountain View Neighborhood
on Jun 11, 2020 at 3:48 pm
73 people like this

@TBM
It's called selective enforcement, completely legal. That's why the city/MVPD doesn't enforce 72 hour parking violations, although the city/MVPD will still enforce abandoned (not occupied RV's) vehicles. That's why it's okay to protest in groups of a hundred (masks and social distancing recommended but not required, eat drink, hold hands, etc.) but now SCCounty requires you must order food and beverage in a single transaction and be with a member of your own family to share a table to enjoy our new dine out privileges.


Re: Common Sense
Old Mountain View
on Jun 11, 2020 at 4:33 pm
Re: Common Sense, Old Mountain View
on Jun 11, 2020 at 4:33 pm
94 people like this

Totally agree. The city council strung along several companies, at great expense to the companies, and change the rules along the way. It was completely inappropriate behavior. That's aside from any issue of marijuana sales.

But to speak to marijuana sales: C'mon, let's just allow this. Castro Street has plenty of places to buy alcohol, which is a MUCH more dangerous drug. Please allow recreational and medical sales of a much safer substance.


new rule
Another Mountain View Neighborhood
on Jun 11, 2020 at 4:58 pm
new rule, Another Mountain View Neighborhood
on Jun 11, 2020 at 4:58 pm
9 people like this

If you buy cannabis and or alcohol, you must also purchase a substantial meal with a family member to eat on the street. Fair is fair under county guidelines per dine out guidelines, I think.


MV Neighbor
Another Mountain View Neighborhood
on Jun 11, 2020 at 5:39 pm
MV Neighbor, Another Mountain View Neighborhood
on Jun 11, 2020 at 5:39 pm
138 people like this

Has anyone who has commented actually read the 49 page claim? Has anyone looked at the address for this business or the surrounding area? Hiring "security" personnel to walk the products from the business to the delivery vehicles does not seem very safe to me. After reading the claim I have several questions as to why the business continued pursuing this location without obtaining written documentation from the city. Perhaps the surrounding cities had the better idea in not allowing pot sales within their city limits.


The Business Man
Castro City
on Jun 11, 2020 at 6:35 pm
The Business Man, Castro City
on Jun 11, 2020 at 6:35 pm
Like this comment

In response to Please understand you said:

“It's called selective enforcement, completely legal.”

Actually it is unconstitutioinal because of the 14th amendment equal enforcement of the laws. You ent on to say:

“ That's why the city/MVPD doesn't enforce 72 hour parking violations, although the city/MVPD will still enforce abandoned (not occupied RV's) vehicles.”

I thought that the City Council changed that rule and the City is now REQUIRED to act on it. Otherwise, what is the point? Now there is a ballot question I think on the ballot, that might be holding enforcement because if the ballot measure passes, all citations and actions will be disqualified and it will require the City to refund costs. That is not selective enforcement, but a proper hold on action You said:

“That's why it's okay to protest in groups of a hundred (masks and social distancing recommended but not required, eat drink, hold hands, etc.) but now SCCounty requires you must order food and beverage in a single transaction and be with a member of your own family to share a table to enjoy our new dine out privileges.”

That means that the rules are being enforced correctly, your not dealing with the fact that the inconsistency of the City Council and the City of Mountain View does comprise Arbitrary and Capricious action.


Wow city officials should be held liable.
Martens-Carmelita
on Jun 11, 2020 at 10:25 pm
Wow city officials should be held liable., Martens-Carmelita
on Jun 11, 2020 at 10:25 pm
4 people like this

The cuty officials should be held financially reaponsable for the loss. The city needs to hold up to there responsibilities. They will take your money and then tell you no. I HOPE YOU WIN AND SHOW THESE CITYS THEY CANT STEAL PEOPLES MONEY.


PeaceLove
Shoreline West
on Jun 12, 2020 at 12:39 am
PeaceLove, Shoreline West
on Jun 12, 2020 at 12:39 am
117 people like this

The City Council(s) over the last 10+ years have all blocked any progress on cannabis rights, and have done so by dealing in bad faith and constantly betraying promises to activists. My colleague and I were told flat out by a number of City Council officials, including the Mayor at the time, that the city would allow physical locations. Those foolish enough to believe them got strung along for a year or more and betrayed. I have no doubt this claim against the city is legitimate because I know how dishonest this city has been for well over a decade.

All these rules and regulations, here and in other cities, are onerous hurdles not required of any other business. They are unfair burdens designed to make it all but impossible for anyone but a large corporation to be able to participate. They are having the effect of destroying much of existing cannabis infrastructure, much of which is made up largely of people who love and revere the plant, and replace it with corporations that are driven by profit and loss.


SRB
St. Francis Acres
on Jun 12, 2020 at 7:30 am
SRB, St. Francis Acres
on Jun 12, 2020 at 7:30 am
125 people like this

These ever changing hurdles were quite predictable when the City council delegated so much control to MVPD. (which seems still stuck in a "War on Drugs" mind set).

Cannabis is certainly not the only valuable product handled by businesses in Mountain View; Does the City require an enclosed loading area for jewelry stores, for banks, for liquor stores, for restaurants, for bars .....?

Where will the City stop? Will cannabis customers need an enclosed delivery area in their home to receive their orders?


Pat
Cuernavaca
on Jun 12, 2020 at 8:41 am
Pat, Cuernavaca
on Jun 12, 2020 at 8:41 am
13 people like this

You would think Mountain View would be leading the way for a more progressive future, but apparently, it’s the same old “Lust for power and greed”.

The people of Mountain View already voted in favor of legalization, so who are the City Council speaking for?

I imagine soon, they’ll be making it more difficult for the community to vote them out of office as well.


Jenny
Monta Loma
on Jun 12, 2020 at 1:19 pm
Jenny, Monta Loma
on Jun 12, 2020 at 1:19 pm
12 people like this

Yep, the City Council should have expected this type of result after changing requirements on those businesses midstream. I'm mad that the city may have to spend some of its budget / our tax dollars in this claim, but I applaud the business owner for requesting compensation.

Remember which city council members voted to change the cannabis rule because some of them are up for reelection in November.
Abe-Koga
Hicks
Matichak

The others also voted to change the rules, but they are either termed out or are just halfway through their terms.


Proud Taxpayer
Willowgate
on Jun 12, 2020 at 3:51 pm
Proud Taxpayer, Willowgate
on Jun 12, 2020 at 3:51 pm
40 people like this

The citizens of Mountain View should be filing a class action lawsuit against the city and the members of the city council. We voted years ago to allow cannabis shops to operate here and the city council has worked against that democratic decision.


Common sense
Old Mountain View
on Jun 12, 2020 at 5:04 pm
Common sense, Old Mountain View
on Jun 12, 2020 at 5:04 pm
11 people like this

Pat, resident of Cuernavaca, wrote: "The people of Mountain View already voted in favor of legalization, so who are the City Council speaking for?"

Yes: by early 2019 at least three different referenda had all indicated, to any dispassionate observer, that most MV residents supported legal, well-regulated cannabis retailing. (In the City's poll specifically on the subject, two-thirds supported it.)

But at the decisive City Council meeting last year, which enacted the changed-in-mid-stream requirements this article described, Lisa Matichak, chairing as mayor, declared explicitly that she wouldn't be swayed by evidence (that is, polls): she knew better.

I believe true public service demands subordinating your personal opinion on a subject to the evident views of everyone you were elected to serve. Not just those who agree with you, or who make noise. Not to find excuses to ignore those views, or to second-guess or impugn the evidence. Yet that's what happens way too often.


Concerned cannabis user
another community
on Jun 12, 2020 at 8:21 pm
Concerned cannabis user, another community
on Jun 12, 2020 at 8:21 pm
11 people like this

@proud taxpayer

I would gladly sign up for this class action lawsuits. It is annoying the city council railroaded businesses trying to comply with their whims when they ultimately acted in bad faith.

I'll be voting out our current city council and will be advising all my friends living here to do the same.


Stanley
Whisman Station
on Jun 13, 2020 at 10:53 am
Stanley, Whisman Station
on Jun 13, 2020 at 10:53 am
13 people like this

I hope they win this case. Years ago when I heard cannabis businesses were allowed to open in Mountain View, I was proud to be a homeowner here. After reading what has been done to prevent these businesses, I am ashamed at my town. Where is the representation for the majority?


Bill
Another Mountain View Neighborhood
on Jun 16, 2020 at 7:14 pm
Bill , Another Mountain View Neighborhood
on Jun 16, 2020 at 7:14 pm
5 people like this

I hadn't paid attention to the issue in a while, so I hadn't realized that the reason the dispensaries that the city had agreed to allow a few years ago had never shown up was the city changing the rules.
I'd certainly rather purchase the small amount of edibles I go through locally, rather than driving down to San Jose or up to Redwood City for them. Keep the money and the business here, and fill some of the empty storefronts (there's at least one liquor store that's closed; this is no worse.)

And there are businesses several places in town that sell cigarettes, which are far more dangerous.


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