When Palo Alto's elected officials talk about "going green," they're usually discussing blue bins and bike lanes -- not selling marijuana.

On Monday night (Oct. 3), however, the City Council will be forced to confront an issue that other cities, including San Jose, Oakland, Berkeley and Vallejo, have been wrestling with for the past 15 years: Should marijuana dispensaries be allowed to set up shop in the city?

In Palo Alto, the issue is now in some ways out of the hands of the elected leaders. In July, a group of citizens led by Thomas and Cassandra Moore, submitted a ballot initiative with more than 6,300 signatures to the City Clerk's office. The initiative would allow up to three marijuana dispensaries to operate in Palo Alto and creates zoning restrictions and taxing mechanisms for these cooperatives.

Of the submitted signatures, 4,859 were found to be valid by the Santa Clara County Registrar's Office -- exceeding the threshold for a ballot initiative by about 500.

The citizen initiative means that the City Council now has no choice but to confront the issue that hasn't been in the spotlight since 1996, when state voters passed Proposition 215, legalizing medical marijuana dispensaries. Dozens of cities, including Palo Alto, responded by passing bans on dispensaries in their communities. Now, the council's only options are to adopt the ordinance in the initiative outright (an action that would run against both precedent and staff recommendation), craft a similar ordinance or place the issue on the ballot.

But pot-loving entrepreneurs shouldn't rush to the city just yet. According to a new report from City Clerk Donna Grider, the earliest ballot on which the issue could appear would be November 2012, the same election in which residents will be voting for a U.S. president and four City Council members. That's because state law limits cities to one special election per year and Palo Alto already has an election scheduled for this November.

Staff recommends putting the issue on the ballot rather than adopting it outright.

The citizen initiative would enable up to three marijuana dispensaries to set up shop in Palo Alto and impose a 4 percent tax on the gross receipts of these businesses. Each dispensary would also have to pay a $10,000 permit fee. The proposed ordinance also limits the hours of operation for these businesses to between 9 a.m. and 10 p.m. and specifies that they cannot operate in residential zones or near schools, libraries or daycare facilities.

The petition touts legalized marijuana as both a humane palliative for terminally ill patients and as a potential revenue source for the city. It notes that San Jose generated $290,000 in revenues from its dispensaries in the first month of the city's ordinance.

In Palo Alto, the figure would likely be more modest. San Jose revenues came from 74 medical marijuana collectives. Four other collectives submitted their taxes for the following months early, giving the city another $20,000. The revenue figures could change significantly next year, given the city's push to limit the number of dispensaries to 10. This week, the city put out a memo calling for the marijuana collectives to stop operating on Oct. 27 and to apply for permits, 10 of which would be selected by the city.

In Oakland, where voters last year raised its tax rate for dispensaries from 1.8 percent to 5 percent, the figures are expected to soar. According to the ballot analysis for Measure V, the city expects annual revenues from the new tax rate to reach $1.4 million (up from $500,518 before the rate change).

Vallejo, which was rocked by bankruptcy in 2008 and continues to struggle financially, also hopes new dispensaries will provide some relief for its chronic budget woes. Voters will have a chance in November to pass an ordinance that would establish a $500 fee and a 10 percent tax on gross receipts for dispensaries.

Most cities, however, have been reluctant to embrace marijuana cooperatives. According to the marijuana-advocacy organization Americans for Safe Access, 48 California cities -- including San Francisco, Oakland, San Jose and Berkeley -- currently have ordinances regulating marijuana sales. Another 81, Redwood City and Mountain View among them, have moratoriums on dispensaries. Meanwhile, 168 had passed ordinances banning these facilities. These include East Palo Alto and Sunnyvale.

In Palo Alto, the council has traditionally proceeded with caution on the subject. In 1996, the council responded to a request for a dispensary by swiftly passing an emergency ordinance banning such facilities. The 1996 ordinance states that "a number of regulatory issues should be carefully considered prior to allowing establishment of medical marijuana dispensaries in order to prevent crime and ensure compatibility with other uses, including residential uses and schools.

"In light of the expressed interest in establishing a medical marijuana dispensary in Palo Alto, and the time required to study and develop appropriate regulations, an urgency ordinance is necessary to provide a clear statement of existing law and to protect the public peace, health and safety," the ordinance reads.

The current council has been reluctant to take a strong stance on the issue, one way or another. In September 2010, as the council was considering the city's position on various propositions, Councilwoman Gail Price was the only member who recommended supporting Proposition 19, which would have legalized and regulated marijuana sales. Councilwoman Karen Holman said the issue warrants more vetting, but Councilman Larry Klein said the council has nothing to add to the discussion.

The council then voted to not discuss the issue any further.

"I think this is a personal choice and I don't think the City Council should be taking this issue on," Councilman Greg Schmid said at that meeting.