The High Cost

By Ygal Kaufman

300IMG_0113Any person who has ever tried to start a business in a small town knows the realities of red tape. With limited space and co-mingling interests at every turn, zoning laws and other requirements are a necessary fact of life in making sure everyone in town can run their businesses freely. Ryan Smith and Jake Lewis seem to be perfectly aware of this reality, and insist they followed every pedantic requirement asked of them in opening their Medical Marijuana dispensary, The Healing Center (THC), in the spring of 2014. So why has their location been sitting empty for nearly a year with no end in sight?

Opening a Non Traditional Business

The story starts back in September of 2013, when Lewis and Smith formally began their journey to open a dispensary. They took the time to find the perfect location, and believed they had found it when they leased the store located at the corner of Jefferson and 2nd Street here in downtown Corvallis, right across the street from the post office.  After gathering investors and creating the capital needed to launch a business, Lewis and Smith consulted the Oregon Health Authority (OHA) website, which contained a map of schools in the area. This is one of the big hurdles to opening a dispensary, as OAR 333-008-1100 the statute governing the permissible location of a dispensary, prohibits the establishment of a dispensary “Within 1,000 feet of the real property comprising a public or private elementary, secondary or career school attended primarily by minors;”

The OHA map showed nothing within 1000 feet of their proposed location, at that time.  And though the OHA made clear that the list was not exhaustive, the pair of entrepreneurs felt confident that they had found the perfect location, and could not find a reason that would prevent them from opening it there.

But this is where things get sticky; though the site showed no school at the time, the rules are written in a way as to put the burden of investigation and proof on the applicant.  Which means that even if a location is approved, a school could “pop up” which can result in the closure of the dispensary.   

This is precisely what happened to Smith and Lewis.

Taken to School 

March 3rd, 2014 was the date OHA began accepting applications. The pair of budding entrepreneurs were ready to go, planning to be the first to get their applications in.  They say they had been diligently checking the OHA map, and were relatively certain there was no school within 1000 feet of their location. Then, disaster.

“We found out about two weeks before, that this school had popped up on the OHA school locator map,” says Smith.  They went forward with their application nonetheless, on assurances from many, including their lawyer, that the school wouldn’t be a problem. They were stunned to receive their denial from OHA shortly thereafter.

The school in question is the Youth House run by Community Services Consortium (CSC), also known as the Benton County Learning Opportunities Center (BCLOC). CSC Executive Director Martha Lyon described the school in an email; “When Benton County kids are trying to obtain a diploma or a GED but need alternate methods of teaching to achieve that goal—they can come to CSC’s Learning Center in Corvallis. We typically serve youth between 16 and 21, but we can serve kids as young as 14.”

That the Youth House is located within 1000 feet of the proposed dispensary is uncontested; It’s 954 feet away.

It’s unclear why the school was not known about until so close to the filing deadline, but the even murkier question of whether or not it even qualifies as a school, at least for OHA’s purposes, is what is proving to be the hottest point of contention.

ORS 475.314(3)(c) states that a dispensary “Must not be located within 1,000 feet of the real property comprising a public or private elementary, secondary or career school attended primarily by minors[.]”

Clearly from the stated intent and language of the statute, the idea is to prevent a dispensary from opening up close to a place where minors will be playing and learning.

But the Youth House is not “attended primarily by minors.”  Data obtained by the Advocate on Youth House’s enrollment for the most recent year shows that 12 students were enrolled in the program. Of those, 7 were over 18 when they started, and 5 were under 18, but an additional 2 of the under-18 group turned 18 during the school year. In fact, going back through the enrollment figures shows there hasn’t been a majority of minors enrolled in the program since 2010.

When Smith & Lewis appealed the OHA ruling on these grounds, they were again denied, with OHA citing “the last antecedent rule,” basically saying that the “primarily by minors” portion only referred to career schools, and had no bearing on the primary or secondary schools.

In a ruling on an appeal of their denial from July 31, Judge Rick Barber upheld OHA’s decision, though he noted in his ruling, that OHA is incorrect in their application of the last antecedent rule.  The last antecedent in this case would be “school,” not “career school,” and thus the “primarily by minors” portion applies to the whole sentence.  He instead upheld OHA’s ruling on the grounds that BCLOC’s accreditation documents, from a company called AdvacED, describes the Youth House as serving those enrolled in high schools, and must thus mean they serve minors.  His judgment doesn’t address the word “primarily” anywhere.

It’s unclear if there’s any specific reason why OHA might so strongly believe that the Youth House is a school, despite the wording of their own rules. A January email from Peter Edlund, Operations and Rules Coordinator with OHA, to Sean Larsen, Operations Manager at Youth House, actually shows Edlund simply asking for Larsen’s opinion on their status as a school. Edlund’s definition of a secondary school merely includes grades 9-12, and has nothing about minors in attendance.  A fact that might very well have caused Larsen to respond differently than confirming they are a secondary school.

“Right now we were given a final order by the Oregon Health Authority that this is a private secondary school,” says Smith. Though it should be noted here that BCLOC’s other location, in Lebanon, is still not considered a school by the OHA map, even though its operations are indistinguishable from the Corvallis location, which was confirmed by Executive Director Lyon in a voicemail obtained by the Advocate.

Zoning Out

At this point, having exhausted their options in fighting the idea that this was a school, they turned their attentions to Corvallis zoning rules. As THC is located downtown, in the heart of Corvallis’ business district, they wondered if a school could even technically be located there. 

According to the Corvallis zoning map, both BCLOC and THC are located within the Central Business District.  We asked Kevin Russell, a project manager with Community Development for Corvallis, if it was possible to zone a school in this district. “Not under current code,” said Russell, referring to the 2006 Land Development Code. The BCLOC Youth House moved in to its location in 2007, and they’re zoned as a community garden.

Further bolstering Smith and Lewis’ case, is that according to other zoning requirements, a secondary or senior high school, serving grades 9-12 would be required to provide eight parking spots per classroom, which the Youth House does not.

Russell confirmed that while a “school” might not be allowed there, a “social service facility” would be okay, and this is what it appears the CSC Youth House is.

Executive Director Lyon confirmed in a phone interview that CSC “has no dog in this fight,” and that they never pushed the OHA to define them as a school.  She further stated that they had no opinion on the opening of a dispensary within 1000 feet of their location, and did not see it as a danger or a threat to their students. “We regret that we pose a problem for any new business,” said Lyon.

For their part, Smith and Lewis say the same, “we’re not trying to close a school or anything like that,” said Smith. But if the designation stands in the way of their business, they’ll do whatever it takes.  They recently filed a zoning complaint with the city, challenging that a “school” cannot be in the Central Business District.

OHA responded to questions about their definition of the rule, and the possibility that their ruling could potentially lead to the school being forced to leave, by referring back to their written decision.   

THC has been paying for an empty space for nearly a year at this point, and their investors are bankrolling the endeavor as they slog through a bureaucratic morass with no end in sight.  They’ve currently exhausted their appeals and now count on the zoning strategy to move their business forward.

“It was literally one sentence that ruined our whole entire year,” says Lewis of the ordeal. “This is not our fault.  We were diligent in our study to make sure we didn’t cross any lines. It’s civil injustice.”