License Denied for Marijuana Lounge

Lounge thursMEDFORD, Ore. – The Medford City Council upheld its denial of a business license to a medical marijuana smoking lounge, after being presented with evidence the facility had tried to use legal loopholes to sell and dispense marijuana.

The council voted unanimously Thursday against “The Lounge,” a medical marijuana smoking club located on East Main Street. The facility had originally opened in January as a place for medical marijuana card holders to gather and smoke. But an investigation by the Medford Area Drug and Gang Enforcement Team revealed that The Lounge had been essentially selling marijuana to card holders for $10 per gram. The Oregon Health Authority has not issued a license to The Lounge to operate a Medical Marijuana Dispensary.

Deputy City Attorney Kevin McConnell said The Lounge had tried to justify it by claiming the $10 payment was only a “cover charge” into the building, and said the medical marijuana was a free donation under state law.

“That action constitutes the distribution of marijuana,” McConnell said. “That is illegal.”

Councilor John Michaels compared it to a ticket scalper.

“The same as a scalper would say, ‘the tickets are free but the envelope’s 50 dollars,’” he said.

Phil Studenberg, attorney for The Lounge and owner Phil Carvahlo, said the facility has ended the so-called cover charge.

“I’ve advised him not to do that until we get this resolved,” he said.

Carvahlo has also planned to open a dispensary called “Patients Helping Patients” inside the same building. That planned facility also does not have a Medford business license or an Oregon medical marijuana dispensary license. Medford Police said it has been cited 21 times for continuing to operate without a business license.

A sign on the side of the building calls it an “OMMP dispensary,” as does its Facebook page. The Facebook page linked to another web site that lists the prices of marijuana strains available at the dispensary, and told readers “hurry, they will go fast.” When NewsWatch 12 began asking Studenberg last week about whether the facility was operating as a dispensary, the web sites were quickly changed, and now say the price listings are “informational only.”

Studenberg said he did not think Patients Helping Patients had ever dispensed marijuana, he has advised Carvahlo to avoid doing so until they have a chance to argue their case in court.

Medford Police said there is no active criminal investigation against either The Lounge or Patients Helping Patients.