After three hours of public testimony and discussion, city leaders tabled a vote on how to better regulate medical marijuana collectives.

The City Council will revisit the matter next week. One proposal echoes an ordinance passed in 2011, which the local marijuana industry overturned a year later by referendum. Instead of putting a 10-club cap in place, however, the new rules seeks to impose zoning restrictions that would effectively ban collectives from all but a slim picking of parcels throughout the city.

“We need strong and effective medical marijuana regulations that keep marijuana out of the hands of children, protect our neighborhoods and businesses from drug cartels, gangs and other criminals using medical marijuana as a cover for their illegal activity and comply with the guidelines established by the federal government,” Mayor Chuck Reed said in advance of the meeting. “[We] also [need to ensure] that seriously ill patients have access to the medication they need.”

Under Reed’s guidelines, collectives would need a buffer of 1,000 feet from schools, daycares, libraries and community centers and 150 feet from homes and business parks. Minors would be barred from pot shops. Hours would be limited from 9am to 9pm. Convicted criminals wouldn’t be able to work for cannabis clubs. Clubs would need a “closed-loop” system, to make sure they cultivate and process the medication themselves to make sure it doesn’t come from illegal sources.

Proponents of the ordinance reportedly outnumbered the speakers against the measure at Tuesday’s council meeting. Neighbors spoke about loud, unruly dispensary patrons smoking in parking lots and scaring away customers of nearby businesses.

People against the proposal said those examples are the exception, not the rule. Most collectives are respectful, ask their clients to leave and maintain a good relationship with the landlord and neighbors, some speakers argued.

“We do need regulation—we want it,” says James Anthony, a cannabis lobbyist who attended Tuesday night’s hearing. “But what they’re trying to pass—it’s not workable. It’s an effective ban.”

The city proposal would also prohibit collectives from using cash, so all transactions can be better tracked. The problem with this idea is banks and credit card companies don’t work with most collectives because of federal regulation that outlaws medical marijuana.

“Again, it’s effectively tying their hands,” Anthony says.

It would also squeeze out all but a handful of collectives by narrowing down permitted zoning to just 150 parcels throughout the city. And only some of those parcels would be available.

Opponents of Reed’s plan also take issue with one point about how to grow. The city wants closed-loop cultivation, but to do so would require cannabis clubs to expand operations, lease commercial kitchens and grow the physical size of their business to the point that it’s a target for federal raids.

“You’d force people back into the black market,” Anthony says.

There’s a concern, however, that the proliferation of cannabis clubs has led to more teenagers using the drug. Santa Clara County's Public Defender's office reported that the rate of marijuana-related suspensions at local schools has doubled in the past few years.

“[W]ith the easy access to marijuana that the dispensaries are creating, these incidents require resources that these schools will have to deploy towards dealing with substances on campus, which would otherwise go towards educating the youth,” Patrick Vanier, supervisor of the District Attorney’s narcotics prosecution team, wrote in a report to the city.

Anthony says he understands the fear that more kids will have access to a controlled substance, but distance requirements will do nothing to solve the problem.

“It’s like saying, ‘We’re going to put the cookie jar on a higher shelf, so they won’t get it,’” he says. “How about we educate them about what happens if they eat too many cookies and what happens when they eat cookies when they shouldn’t.”

While the city figures out how to get a handle on the burgeoning marijuana market, Anthony and another colleague are gathering signatures for two separate regulatory initiatives. Anthony’s plan, called “Sensible San Jose,” would create buffers between clubs and “sensitive uses” based on distance considerations used by the U.S. Attorney General in prosecuting marijuana cases. Some of the initiative’s rules match the city’s.

Councilmembers Don Rocha, Ash Kalra and Madison Nguyen asked for the city to come back with a report about the initiative either next week or a meeting in June.

About 80 pot shops operate now in San Jose. Some pay the city's 10 percent marijuana tax to stay on the city's good side. Others don't, arguing that they don't have to pay an agency that considers them illegal because of an absence of municipal land-use regulation. Still, the city collected $5.6 million from collectives in the past year for the general fund.

"The constant turbulence has created a frustrating and uncertain business climate similar to the one in Los Angeles, which is one of the most chaotic markets in the country," writes Fred Dreier, a reporter for the Marijuana Business Daily. "San Jose City Council members and even the mayor have repeatedly threatened dispensaries, but law enforcement typically only cracks down on businesses that generate complaints. Still, many dispensary owners believe the ax could fall at any time and the city could seek to aggressively close all shops."

San Jose's repeated failure to regulate its cannabis clubs has turned it into a destination for marijuana customers, who flock to the city because of limited access to collectives elsewhere in the Bay Area, Dreier says.