SAN FRANCISCO — Kevin Reed launched his medical marijuana business two years ago, armed with big dreams and an Excel spreadsheet.

Happy customers at his Green Cross cannabis club were greeted by so-called "bud tenders" and glass jars brimming with high-quality weed at red-tag prices. They hailed the slender, gentle Southerner as a "ganja" good Samaritan. Although Reed set out to run it like a Walgreens drugstore, his tiny storefront shop ended up buzzing with jazzy "joie de vivre." Turnover was Starbucks-style: On a good day, $30,000 in business would walk through the black, steel-gated front door.

Today, the 32-year-old cannabis capitalist is looking for a job, his business undone by its own success and unexpected opposition in one of America's most proudly tolerant places. Critics in nearby Victorian homes called Reed a neighborhood nuisance. Although four of five San Francisco voters support medical marijuana, the realities of dispensing the contentious medicine have proved far more controversial.

It has been 10 years since California approved Proposition 215 — the Compassionate Use Act — becoming the first state to define marijuana as a medicine. The 389-word act aimed to ensure seriously ill Californians the right to use marijuana. But it said nothing about how they might get the drug — and left ample regulatory ambiguity.

Today, about 200,000 Californians have a doctor's permission to use cannabis, which they can obtain through more than 250 dispensaries, delivery services and patient collectives. Medical marijuana, activists say, has become a $1 billion business.

There has been plenty of blowback. Local governments have been grappling with how to regulate storefront sales, still prohibited under federal law despite California's tolerance.

Although two dozen cities and seven counties have approved regulations allowing dispensaries, more than 90 others have passed moratoriums on new suppliers or banned them outright.

Few in the medical marijuana business have seen as steep a commercial rise and fall as Reed, who says he launched Green Cross to make his medicine affordable.

Flanked by a hair stylist and an Irish bar, his 300-square-foot club opened in July 2004 in a neighborhood called Fair Oaks. The outside was marked by a neon-green cross. At the door, security checked each patient for medicinal bona fides: a doctor's written permission or the city's formal medical cannabis ID card. The blush-red interior rocked with music videos on a plasma TV. Reed's prices — $40 for one-eighth of an ounce — were two-thirds what other clubs charged.

He offered 55 varieties of raw weed. An information sheet listed taste, ailments assuaged, type of high (including "muscle relaxer," "great mind drift" and "couch lock"). A pastry chef concocted marijuana-laced peanut brittle, cannabis cookies with Ghirardelli chocolate chips, pot peanut butter.

Reed dutifully kept his records on QuickBooks, paid employee health insurance and nearly $200,000 a year in taxes.

He wasn't getting rich, Reed insists — just medicated.

"I would rather just go buy it at a regular drugstore," he says. But for now, he says, "Places like mine have to exist, or you're literally forcing people to go to crack dealers on the street."

Reed developed a devoted following, from AIDS patients to folks with chronic aches.

Robert Mars, balding and middle-aged, made the drive from Foster City nearby to buy cannabis for his persistent back spasms. He liked the knowledgeable staff, but more than anything felt "safe in going there," Mars said. "And I can't say that about every dispensary in the city."

Fair Oaks locals, most of them believers in medical marijuana, at first were laid back about the little pot shop. But feelings hardened as customers flocked in.

Pot patients arrived from around the Bay Area, many bereft after a dispensary crackdown in Oakland.

Residents grumbled about customers double-parking, blocking driveways, flipping off homeowners. Aromatic smoke wafted. When Green Cross hired security guards to referee parking conflicts, problems simply moved up the block. One patient was robbed at gunpoint. Crime worries grew.

The courts and state lawmakers have come to tacitly support the role of the dispensaries, however. A 2003 legislative measure added a bit of clarity to the Compassionate Use Act, underscoring that a patient's primary caregiver could be paid to supply pot. In 2005, a state appeals court decreed that a dispensary could use the expanded rules in a criminal defense.

Activists have interpreted the ruling to mean a dispensary can serve as a de facto primary caregiver. "You simply can't expect a patient who is undergoing chemotherapy to go find a seed and grow their own medicine," said Steph Sherer of Americans for Safe Access.

Before Green Cross celebrated its first anniversary, the neighborhood hubbub began attracting attention at City Hall. San Francisco regulators suspended the dispensary's permit, ruling it a neighborhood nuisance, but let Green Cross stay open while Reed appealed. The board gave Green Cross six months to find a new home.

Under growing pressure, supervisors approved new regulations. Operators would undergo background checks. Dispensaries would be prohibited within 1,000 feet of schools and parks. Reed's Green Cross — the first to run the gantlet of new rules — became "the acid test," Supervisor Ross Mirkarimi said.

The search for a new home proved daunting. Then, only a day before he was to shut down in Fair Oaks, Reed got a call from a patient about a willing landlord a couple of blocks from Fisherman's Wharf.

But neighborhood opposition there was swift and nearly unanimous.

Reed's final stand came one night in late October, before the same Board of Appeals he had addressed a year earlier.

Green Cross attorney Joe Elford pleaded his case. Reed had slaved to meet all of the requirements, the attorney declared. The outcome for Green Cross, he said, would set the tone for the future of dispensaries in San Francisco.

Once again, residents and business people talked of trampled community character, threats to schoolkids, proximity to government housing. Many wore red tags that read "Families First."

After a break, the board expressed its condolences to Reed before burying his career as a dispensary entrepreneur.

Commissioner Michael Garcia concluded that if progressive San Francisco couldn't figure out a way to distribute medical marijuana without opposition, "This might not happen anywhere." Then he voted against Green Cross.

But it seems City Hall can't keep a medical marijuana entrepreneur down. A few weeks ago, Reed wrote Mayor Gavin Newsom, asking for the return of $10,000 in permit fees paid during the course of his long fight to save Green Cross.

It would, he said, be seed money for his next venture. This time, Reed is skipping the storefront. He wants to go whole hog into the medical marijuana delivery business.