PORTLAND — When John Anderson opened his medical marijuana dispensary, Herbalist Farmer, a little more than one year ago, he gave little thought to the history of its neighborhood, on the eastern edge of Oregon’s largest city.

Decades earlier, it had been part of an unincorporated stretch of land between Portland and Gresham. As both communities grew, the land between was divvied up and annexed into the two cities.

Anderson’s store had a Portland zip code. But it was technically within Gresham.

“To say that the gentleman who owned this particular dispensary was surprised to learn he was in Gresham was an understatement,” said David Ris, Gresham city attorney.

Anderson’s business was caught between two cities with wildly different rules governing dispensaries. Gresham has banned all dispensaries.

Portland leaves the regulation of marijuana dispensaries up to the state. Eventually, Anderson moved his shop from 162nd Avenue to 122nd Avenue, which is inside Portland.

Oregon has allowed the possession of marijuana for medical purposes since 1998. But the drug couldn’t be sold legally until the state Legislature passed a bill last year, allowing — and regulating — dispensaries. Since then, some cities and counties throughout the state have scrambled to pass their own marijuana-related regulations.

“Oregon is a ‘home rule’ state, and one of the strongest ‘home rule’ states in the nation,” Sean O’Day, general counsel for the League of Oregon Cities, said at a recent conference in Portland.

That means local governments have the power to enact regulations unless a state law specifically claims otherwise.

According to O’Day, state law regarding marijuana dispensaries does not pre-empt local control.

But that legal opinion has not been fully vetted in court.

For now, plenty of cities — and some counties — are plowing ahead with their own marijuana laws. Already, 159 of the state’s 242 cities have passed temporary moratoriums on marijuana dispensaries, including all Central Oregon cities except Bend. The moratoriums had to be in place by May 1 of this year, and are set to expire in May 2015.

Many cities are also working to enact permanent rules that will prohibit dispensaries beyond that date.

Cave Junction, a small city in Southern Oregon, voted against a moratorium, because doing so would have meant forfeiting its right to sue over the law. The city recently filed a lawsuit in Josephine County Circuit Court, arguing that the state law permitting dispensaries should be struck down because it violates federal law. The lawsuit names the State of Oregon and the Oregon Health Authority as defendants.

And a recent court ruling has cast new doubt over the legality of the Oregon Medical Marijuana Program. The City of Medford revoked the business license of a dispensary called Mary Jane’s Basement, citing the sale of marijuana as a violation of federal law. The company sued the city but, last week, a Jackson County Circuit Court judge ruled in favor of the city, even going on to call the state marijuana program “unenforceable.” An appeal is expected.

O’Day said there are several reasons that cities have their own interest in regulating marijuana dispensaries — zoning, stormwater treatment related to fertilizer use and public nuisances such as smoke and grow lights, among others.

There are other ways that cities could step in to regulate dispensaries, too. While state law requires background checks for dispensary owners, for example, it doesn’t include any such requirements for dispensary employees.

Gresham banned dispensaries by adding a clause to its business license regulations: “No business license shall be issued to any … business that does not comply with federal, state or city law.”

Federal law still prohibits the possession or sale of any amount of marijuana. At a conference hosted by the League of Oregon Cities earlier this month, Assistant U.S. Attorney Scott Kerin, who runs a Portland-based drug prosecution unit, said: “I repeatedly get asked, ‘If we allow these dispensaries to get set up, are we aiding and abetting a federal crime?’ Well, yeah, technically.”

Kerin added that federal prosecutors usually prioritize extreme cases involving violence, drug trafficking, gang activity or other extenuating circumstances.

David Ris, Gresham’s city attorney, said the change to licensing regulations was made in 2010, before dispensaries were even legal under state law. But city officials noticed which way public opinion was drifting, and figured dispensaries would be allowed eventually, so the city added the requirement during a regular enforcement and code review process.

The city of Tualatin, on the other hand, is taking a “wait and see” approach to regulating dispensaries, said City Manager Sherilyn Lombos. Tualatin’s city council has passed a temporary moratorium and is looking into amending its zoning laws to prohibit dispensaries beyond next year, Lombos said.

Earlier this year, the council considered adopting a business license requirement similar to Gresham’s, mandating compliance with state and federal laws.

“It caused some angst from the business community,” Lombos said.

Business leaders worried that the clause could empower the city to shut down businesses for all sorts of reasons, such as Department of Environmental Quality violations or hiring practices that go against federal immigration laws.

The council voted against the requirement, 4 to 3. Lombos said she expects the council to watch how the lawsuits in Medford and Cave Junction play out before taking up the issue again in the fall.

— Reporter: 541-410-9207, lraff@bendbulletin.com