Chris Schaaf says he has no choice: If he wants to sell cannabis, he has to defy Portland City Hall.

That's because the city's marijuana licensing office has told Schaaf that his business—GreenBuds, a recreational weed shop in a white-painted house on Northeast Sandy Boulevard—must close or face a $5,000 fine each time inspectors walk in the door.

His crime? Not applying for a license Schaaf says he didn't know he needed. He began the application process for a Portland retail marijuana license in March, but didn't realize he also needed a city medical dispensary license.

Schaaf says the application instructions did not make it clear that he needed to apply for both. Now, the city says he must shut his doors until it grants him the permit.

"It's absolutely crazy," Schaaf says. "We've spent a lot of time trying to be legitimate and compliant with everything. It's a complete shock."

For much of the year, cannabis entrepreneurs, lawyers and advocates have complained that the city's Office of Neighborhood Involvement wraps marijuana businesses in too much red tape, often duplicating the state's rules. Portland elected officials have agreed, promising to reduce the demands on pot shops.

But Schaaf's case stands out. That's because the city is demanding he shutter a business that state regulators had previously approved.

And because he has refused to close the shop. Instead, he's racked up $10,000 in fines.

Schaaf says he has no choice: He moved from California to Portland to start GreenBuds, and says there's over $500,000 invested in the shop's capital, including $200,000 to buy the dispensary that was in the building before GreenBuds.

"If I closed," he says, "I'd be back to square one."

City Commissioners Nick Fish, Steve Novick and Dan Saltzman, who have called for revisiting city marijuana regulations, declined to comment for this story. But the office of Commissioner Amanda Fritz, who oversees the city's cannabis rules, says GreenBuds' situation does not show a need for a larger policy shift.

"There are no indications that I am aware of in this situation that would call for 'scaling back' regulations of marijuana businesses," says Tim Crail, Fritz's chief of staff.

Schaaf hadn't expected any trouble when he began the application process with the city of Portland in March. He says he had passed the Oregon Health Authority's licensing process with flying colors months before, and that prior to a visit by city inspectors in June, he'd had no idea his store was breaking any rules.

Theresa Marchetti, livability programs manager for the Office of Neighborhood Involvement, says GreenBuds needs a $3,500 city medical dispensary license—and cannot sell weed until the city grants one. She says that's why a cease-and-desist letter was delivered to GreenBuds in June.

"We've been completely transparent," Marchetti says. "We sent the same letters to other dispensaries that temporarily shut down, submitted their application and made sure they were abiding by minimal codes, then reopened."

But Bear Wilner-Nugent, Schaaf's attorney, says his client's application is being singled out for enforcement because he was late in seeking city approval. "I strongly believe that many other dispensaries are not facing the same threats—to close while they await the processing of their application—and that the city is allowing them to stay open while their applications are in process," Wilner-Nugent says.

Schaaf is appealing the fines through the Office of Neighborhood Involvement's administrative review process. But he can't afford the penalties forever.

"We don't have unlimited resources," he says. "Eventually the well's going to dry out."