Why Oakland's beloved cannabis dispensary, Rose Mary Jane, closed

(BCN)–It was a Tuesday afternoon in early August and there was seemingly never a free moment at the counter of Rose Mary Jane, a cannabis dispensary and lounge in Oakland.

Budtenders shuffled behind the counter, grabbing products off sparsely populated shelves, fielding questions from customers (no, they do not have any purple left, yes, Sweet Cherry Pie is good for keeping your mind clear), and stopping occasionally to fawn over a customer’s dog. Everything in the store was up to 75% off. It was their last day in business.

On Aug. 9, after around a year and a half in business, Rose Mary Jane officially closed its doors to the public, leveling a palpable blow to Oakland’s cannabis community. The store on their Instagram cited an unaffordable lease and burglaries.

“The three burglaries in the last six months, the increased violence, loss and damage from the burglaries, and the unwillingness of our property manager, Erik Murray, with Oak Investment Funds, to negotiate a sustainable rental rate (our predatory lease terms were nearly $60K per month), have made operating Rose Mary Jane untenable for the time being,” the post said.

However, with internal conflicts over ownership and pending lawsuits between stakeholders, with allegations ranging from fraud to blackmail to misaligned ethics, accounts of why the store closed differ vastly among those involved.

Over the past three years, what started as an old tire shop near Lake Merritt turned into one of the first cannabis bar and lounge of its kind in the Bay Area. Rose Mary Jane invited customers to both buy cannabis and try it out in store, their space stretching past a cannabis beverage bar and lounge area to an outdoor back patio adorned with string lights and brightly colored murals.

The dispensary, which was featured on Visit Oakland’s Cannabis Trail — the Oakland tourism site’s curated trip recommendation that includes cannabis dispensaries and other local attractions — had established itself as a community gathering space, hosting three to four weekly events from local artist showcases to karaoke nights to partnerships with nonprofits to service medical cannabis patients in need.

Most notably, the store was part of Oakland’s Cannabis Equity Program, a program meant to remedy disparities in the cannabis industry by prioritizing the city’s cannabis licenses to those victimized by the war on drugs — eligible equity applicants have either been convicted of a cannabis crime in the city or live in qualifying areas of the city.

As part of their licensing agreement, Rose Mary Jane committed to certain equity-promoting guidelines such as reserving shelf space for other equity-owned brands and hiring employees from equity beats, such as formerly incarcerated people.

A point of pride for the store was its designation as a Black-owned, woman-owned business led by Oakland activist Cynthia Carey-Grant and managed by a diverse team of women.

For Sway Macaluso, the bubbly general manager of the store, Rose Mary Jane was a space that particularly embraced women, especially women of color. It was a place where you could bring your mom, grandmother and sister and they could all feel safe shopping, she said.

“The process of closing down has been heartbreaking, crushed, like some of our customers said yesterday or they’re texting me or DMing me and saying I feel like I’m at a funeral, like my body feels like I lost a part of me and I think we could all relate to that,” Macaluso said.

As explained in the Instagram post, Sean Miller, CEO of the store’s parent company Origins Tech and one of three owners of the store — it is co-owned by Carey-Grant and fellow Origins co-owner Seth Bailey — ascribes the store’s closure to an unaffordable lease and rising security issues. Miller and Bailey, who are from Washington and Utah respectively, first became involved with the brand in 2021, when Origins Tech acquired a controlling interest of Rose Mary Jane — while the store had only been open for a year a half, the founders had been developing the brand since being selected by the city for a permit in 2020. The acquisition provided the financial support needed to keep the store afloat, especially amid the high taxes, regulations and security costs inherent to the cannabis industry.

In the past year, Miller says the store experienced eight break-in attempts, with the damage from lost products and broken doors costing the store $200,000. While the structure of the store’s lease and its rent have never changed, he alleges that its landlord misrepresented the revenue it was going to generate. This estimated revenue, he says, never materialized, rendering the lease unaffordable.

“The way it was structured, they didn’t give us any flexibility to have any conversations with any point of leverage and so, at the end of the day, we were stuck with a lease that was about double what market would typically say the lease should be at, while we are experiencing break-ins and high crime,” Miller explained. “It didn’t make sense and the company just couldn’t afford to lose money every month.”

Erik Murray — founder of Rose Mary Jane and CEO of the company that owns and manages Rose Mary Jane’s property, Oak Investment Funds — refutes this explanation, denying that the rent had become unaffordable and alleging that crime at the store only occurred after Miller and Bailey reduced security guards’ hours and stopped paying them.

This store’s closure is not the first conflict Miller, Bailey and Origins Tech have had with Murray.

In May, Origins Tech sued Murray and Oak Equity Holdings — a holding company Murray created to band himself and four social equity partners, businesses and licenses with the Rose Mary Jane brand — alleging that the defendants took out a $900,000 loan from Origins but failed to make any interest payments.

The lawsuit also alleges that Murray has spread false statements to Rose Mary Jane’s social equity partners about Origins Tech’s intention to cut the partners out of the business, and blackmailed the plaintiffs for $2 million, threatening to make false claims to the city about their business to get their cannabis licenses revoked.

Miller argues Murray compromised the store to the point of its closure.

Murray denies these allegations, suggesting that Origins Tech agreed to fund the opening costs of all Rose Mary Jane stores — according to Murray, Origins agreed to fund the opening of four cannabis stores — and thus the company was responsible for paying the costs they say he owes them. He says any statements he made to social equity owners were truthful. He denies the blackmailing allegations, saying that unbeknownst to him, Bailey used a company he owned to set the valuation of Origins Tech stock, inflating its value.

In lieu of litigation, Murray says his counsel was willing to accept $2 million — $1 million less than the alleged value of Murray’s Origins Tech stock — to walk away from the business dispute. Origins Tech, he noted, rejected this agreement.

Following the Origins Tech lawsuit, in August, Murray sued Miller and Bailey, accusing them of falsely representing their company’s value. The lawsuit argues that Miller and Bailey used Origins’ assets to fund personal, illicit private ventures without informing shareholders, characterizing their actions as “willful, malicious, wanton, oppressive, in bad faith and in conscious disregard of Origins’ rights.”

The lawsuit says Miller and Bailey owe him at least $166,749. Miller denies Murray’s allegations, arguing that his lawsuit is purely retaliatory.

Murray, on the other hand, feels that he entered into the business agreement with Origins largely based on lies.

“They came in saying how much they supported our vision for RMJ and would provide all the capital to fund the vision, open the stores, and support social equity,” Murray explained. “But less than a year later, it became apparent that they had essentially lied to us about everything — and never fully intended to comply with the many contracts around opening, funding, and operating the stores in accordance with the social equity program and in accordance with the law.”

Miller maintains that Rose Mary Jane took their equity commitments incredibly seriously, going above and beyond to reach them.

Evelyn LaChapelle, former community engagement consultant for Rose Mary Jane, feels that Origins Tech was primarily driven by profit and not the store’s equity-centered vision.

LaChapelle became involved with Rose Mary Jane before its inception, meeting Murray at the old tire shop where he explained his vision for a space for women like her who had been formerly incarcerated for cannabis.

At the company, she was responsible for creating opportunities for Black and brown-owned businesses and finding formerly incarcerated employees.

Shortly after acquiring Rose Mary Jane, Origins’ owners decided to turn the dispensary they were ready to open in Maine into a Rose Mary Jane store, LaChapelle explained. The company flew her out to Maine to help create the brand story and mission.

But then, in August 2022, a week after she was asked to host an event selling her own cannabis products, attracting her wide network to the store, she was dismissed. She was told her work was no longer needed there, LaChapelle says. Miller confirmed the reasoning for LaChapelle’s dismissal.

“In the very beginning my story was used and shared sort of as the pillar of distinguishing Rose Mary Jane from all of the other dispensaries,” LaChapelle said. “What it felt like to me was once that story had been drained and sort of set the tone of a Black-owned, woman-owned dispensary then I was dismissed.”

Murray alleges that during their involvement in Rose Mary Jane, Bailey and Miller have been hiding behind the brand of a Black-owned, woman-owned business while edging out the company’s Black woman owner.

On Aug. 14 of this year, following the closure of the dispensary, Gregory Minor, the deputy director of Oakland’s Economic and Workforce Development Department who manages the permitting of cannabis businesses, addressed these concerns in a letter to Rose Mary Jane ownership.

In the letter, Minor mentioned unilateral attempts to sell the business, close the dispensary and relocate it without the approval of Carey-Grant. He reminded Rose Mary Jane ownership of the consequences of these actions, which violate initial commitments made to the city.

“It’s more than disappointing for her not to be a part of important business decisions such as closing a business or trying to relocate or sell a business, things of that nature and that’s what we tried to address in the letter,” Minor said, speaking of Carey-Grant.

Minor noted that the city hoped to avoid this sort of conflict when they first created the program by defining equity ownership as having at least 50% control of an equity business.

“When we created the equity program, part of it was defining what is an equity-owned business, and the goal was not to have someone that’s listed on an application but didn’t have any meaningful control of the business.” Minor said.

Miller does not believe he and Bailey have marginalized Carey-Grant. He says they tried to engage her on the decision to close the store but that she opted out and, in the end, they could not wait for her to become involved. Carey-Grant declined an interview about the closure of the business. As far as Rose Mary Jane’s future, Miller says the plan is to wait and see if Oakland reduces crime levels sufficiently and if they can find a new location that makes more financial sense.

Regardless of ongoing internal disputes and differing narratives, the closure of Rose Mary Jane has certainly taken its toll on Oakland’s community.

Local vendor Mehret Sultan was one of many customers paying a visit to the store on its last day.

When Sultan found out the store was closing, from Instagram, she cried.

“Literally, tears were coming out of my eyes,” she said.

She appreciated the hospitality with which employees would welcome her to the store, their interactions moving far beyond transactional.

To Sultan, Rose Mary Jane “felt like home.”