Dispensary Wars: After winning an administrative battle, Downtown Dispensary can expand its operations

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The latest chapter of a long-simmering feud between two local cannabis heavyweights in Tucson played out in Tucson’s Board of Adjustments last week, as a previous zoning decision was successfully appealed by Downtown Dispensary owner Moe Asnani.

Now that the board has decided that the dispensary falls within its recently updated Unified Development Code, Downtown Dispensary is set to take advantage of the 10,000 square feet of allowable space for marijuana retail businesses and will expand its footprint at 221 E. Sixth Street.

On May 25, the Board of Adjustments voted 4-2 in deciding that Santa Theresa Tile Works, across the street from the dispensary, is not in fact a K-12 school despite holding art classes for Imago Dei Middle School, a “small, independent, tuition-free private school” founded in 2006 that offers Episcopalian education for low-income kids in grades 5-8.

With that hurdle out of the way, and with a caveat of ongoing litigation between Asnani and Prime Leaf co-owner and former Tucson councilmember Michael Crawford, Downtown Dispensary can move forward with an expansion plan in the works since the advent of the COVID pandemic.

“I’m pleased,” Asnani said in the days following the decision. “We have been paying rent on that whole space since late 2019. This has been a very, very expensive and time-consuming situation.”

Asnani said Downtown Dispensary has only been able to use about 3,400 square feet of the nearly 14,000-square-feet interior of the building as a licensed cannabis business.

The appeal was the result of a denial of the expansion application Asnani filed last year.

After submitting and resubmitting the application twice between July and October, the application was initially denied on Dec. 6, 2021.

On March 18, Zoning Administrator Elisa Hamblin released her final determination that Santa Theresa Tile Works “does meet the definition of a private school; and that the expansion of the marijuana dispensary does not comply with” the city’s updated UDC.

On April 15, Downtown Dispensary attorney Jesse Callahan, of Phoenix-based May, Potenza, Baran & Gillespie, filed a request for appeal, claiming that Santa Theresa Tile Works is not a school and the zoning determination was “arbitrary, capricious, and an abuse of discretion.”

During the course of DT’s application process, Crawford was in contact with Hamblin, letting her know that in his opinion, the application should be denied. Two of his emails ended with the phrase “Karma is alive and well.”

“Imago Dei Middle School operates and teaches classes 100ft from the Downtown Dispensary,” he wrote in more than one email to Hamblin. “They have been doing so for years and continue to do so.”

In December, Crawford purchased the building that houses Santa Theresa Tile Works.

In February, Asnani filed a lawsuit in Pima County Superior Court against Crawford, The Prime Leaf and Santa Theresa Tile Works, according to a timeline Asnani shared with the mayor and city council in a May 22 email.

Last week’s appeal was heard in a virtual meeting attended by dozens of Downtown Dispensary employees. Crawford was the only member of the public in attendance supporting the denial of the application.

After an executive session of the board, Callahan gave a nearly hour-long presentation with a PowerPoint slideshow with photos of the outside of the Tile Works building and the Royal Room, a bar that shares the building, as well as photos of classes featuring people enjoying what’s presumed to be alcoholic beverages as they practiced art.

From insurance to sprinkler systems to a lack of school crossing signs, Callahan and members of the public shredded the concept that Tile Works qualifies as a school.

Callahan questioned how Hamblin came to her decision, suggesting she was overly influenced by Crawford, who he misidentified as Prime Leaf’s CEO.

“How did Ms. Hamblin suddenly become the first person at the City of Tucson to start thinking of Tile Works art studio as a school?” Callahan asked. “Her conclusion certainly seems strange and unsupportable to us.”

He went on to say she “did not reach (her) conclusion of her own research,” but was “told to take that position” by Crawford and called her thought processes “mental gymnastics.”

A Freedom of Information Act request to the City by Callahan contained the emails, and through them, he determined that “the Downtown Dispensary discovered that its competitor instigated this entire charade to delay my client’s operations and harm its business.”

For her part, Hamblin denied being influenced by Crawford.

“If you choose to review those emails yourself, you will see that I have been very courteous to Mr. Crawford as he emailed me a few times,” she said. “I proceeded to do my review for the case in question outside of any influence of Mr. Crawford.”

Members of the board were quick to come to her defense.

Ward 3 board member Lee Pagni said he did not appreciate what he perceived to be Callahan’s “assertion that this is something in the zoning administrators character.”

“I would appreciate if you would just leave conspiracy theories about why this happened out of the conversation, and just deal with the facts,” he said. “The idea that an administrator or someone would do this maliciously, I think, is really unjust.”

When it came time for Crawford to speak, he took issue with the “disparaging remarks” regarding his motives and the work of Hamblin, but then said one of his main motivations was a response to a similar incident that happened with Asnani in the year leading to the opening of Prime Leaf’s second location on Park Avenue.

Karma on Park Avenue

“Right when we were getting our Certificate of Occupancy, Mr. Asnani had his employee, through the same law firm representing him here today, file a complaint with zoning, saying we improperly did that,” Crawford said.

In April 2019, Callahan filed a request for a Zoning Administrator Determination on behalf of Rashad J. Stocker to overturn the city’s approval of the dispensary, claiming the location was too close to a Buddhist church and a residential treatment facility, violating Tucson’s previous UDC regarding marijuana dispensaries.

As it turns out, the “Buddhist Center” was the Drikung Dzogchen Center of Arizona, a private residence adorned with Buddhist decorations that hosts weekly meditations and is sometimes an AirBnB.

The Board of Adjustments determined it was not a church and several council members as well as former mayor Jonathan Rothschild took issue with a flier that was circulating claiming that “Buddhism is not a religion in the city of Tucson.”

The board also determined that COPE, the alleged rehabilitation facility, did not meet the qualifications of a licensed “residential substance abuse diagnostic and treatment facility,” and gave Prime Leaf 2 the go-ahead.

Once the City gave its okay, Crawford says Asnani then filed a complaint with the state claiming there was a school within the 500-foot setback, but the state also okayed the location.

In all, Crawford says it cost Prime Leaf a year of time and $1 million over the delay. The dispensary eventually opened during the pandemic shutdown in August 2020.

Litigation is still underway between Asnani and Crawford, so it does not look like things are going to calm down between the two in the near future.

Board approves appeal

Ultimately, Downtown Dispensary won the appeal and Asnani hopes that soon he will be able to throw open the doors of a bigger facility with more product available for both medical patients and recreational customers.

“I just think (Crawford’s) misdirecting his energy,” he said. “They denied us on technicalities, but at this point, let’s just get it over with.”

Crawford was not happy with the decision and said the board acted unilaterally when it overrode Hamblin’s decision by not considering the facts of the case.

“I think this sets a bad example,” the former council member said in a subsequent interview. “The board of adjustment vote was completely improper. Their job was to determine whether or not the examiner acted arbitrarily and she followed the letter of the law.”

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