Calif. pot dispensaries told by feds to shut down

Stepping up an aggressive policy toward medical marijuana dispensaries in California, U.S. attorneys are warning landlords that they may seize properties of anyone leasing space to marijuana stores.

Letters sent this week to targeted dispensaries in San Diego, San Francisco, Marin and elsewhere warn that California's medical marijuana law is no protection against property seizure or prosecution under federal law.

The letters demand that landlords or operators "discontinue the sale and/or distribution of marijuana ... within 45 days."

The specter of new federal intervention against California dispensaries follows the disclosure this week that the Internal Revenue Service is seeking a $2.4 million tax penalty against California's largest medical marijuana provider, the Harborside Health Center in Oakland.

The letters also come as top federal prosecutors from California's four federal judicial districts are due to appear in Sacramento on Friday to announce a U.S. Justice Department policy towards medical marijuana sales and cultivation.

In recent weeks, federal authorities in Sacramento have seized accounts of two dispensaries in a probe of irregular banking practices.

They filed criminal charges against operators of another dispensary accused of conspiracy and illegal marijuana sales for alleged profiteering, despite California law mandating that dispensaries operate as non-profits.

Lauren Horwood, spokeswoman for Sacramento U.S. Attorney Benjamin Wagner, said Thursday that warning letters have also been sent out to dispensary landlords and people leasing land for marijuana cultivation in Wagner's 34-county Eastern District.

In Oct. 4 letters obtained by the Bee, Laura E. Duffy, the U.S. attorney in the state's Southern District warned two San Diego dispensaries that "operations involving sales and distribution of marijuana are illegal and subject criminal prosecution."

In threatening seizure of "real and personal property," she warned San Diego's Ocean Beach Wellness Centers and Oasis Herbal Center marijuana stores that federal law trumps state law and "it is not a defense...that the dispensary is providing marijuana."

The federal actions could have significant consequences in California where medical marijuana transactions are estimated at $1.5 billion or more. The state of California receives an estimated $100 million in sales taxes on dispensaries. Several cities, including Sacramento, have sought to infuse depleted coffers by taxing medical marijuana at local dispensaries.

For more, see tomorrow's Bee.

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Cities can't give permits to pot clubs, court says

Bob Egelko, Chronicle Staff Writer
Thursday, October 6, 2011

Federal law prohibits California cities from issuing permits to collectives authorizing them to supply marijuana to medical patients, a state appeals court has ruled, raising questions about the scope of local regulation of pot dispensaries.

In overturning a Long Beach ordinance, the court said the city went a step beyond California's action in 1996, when state voters eliminated criminal penalties for patients who used marijuana with a doctor's approval.

Deciding not to prosecute someone for drug use doesn't conflict with the federal ban on marijuana possession and distribution, the court said. It also said a city's restrictions on marijuana dispensaries, such as limiting their locations and operating hours, wouldn't violate either federal or state law.

But by issuing permits that let a certain number of pot collectives operate within city limits, the court said, Long Beach has put a stamp of approval on an activity that federal law forbids and is interfering with nationwide drug enforcement.

"The city's ordinance ... goes beyond decriminalization into authorization," the Second District Court of Appeal in Los Angeles said in a 3-0 ruling Tuesday.

Long Beach could appeal to the state Supreme Court or could try to revise its ordinance, either by following the appellate panel's guidelines on regulations or by banning dispensaries altogether. The city attorney's office did not respond to a request for comment Wednesday.

Medical marijuana advocates said the ruling, if it stands, will set new criteria for the diverse rules on pot suppliers adopted by many cities and counties since California voters approved the law in 1996.

"It makes it more difficult for cities (to regulate), but I don't think it eliminates their authority," said attorney Michael Risher of the American Civil Liberties Union in San Francisco. He said cities could apply health, safety and zoning laws to marijuana collectives.

Although the ruling appears to prohibit local governments from limiting the number of suppliers by issuing permits, a city could largely reach that goal by requiring dispensaries to locate in certain zones and at certain distances from each other, said attorney Ruthann Ziegler, who has represented cities in other marijuana cases.

The Long Beach ordinance limits dispensary locations and operating hours, sets safety standards including laboratory testing of the drugs, and requires dispensaries to pay a nonrefundable application fee of more than $14,000 and an annual renewal fee of at least $10,000 if they win a lottery for a permit.

But Matthew Pappas, lawyer for two patients who challenged the ordinance after their collectives did not qualify for permits, said Long Beach is actually trying to ban medical marijuana collectives. He said one client's dispensary was the target of a raid in May by more than 25 officers who used a battering ram to break down the door.

"Patients don't have any problems with reasonable restrictions," Pappas said. But he contended a local ban on dispensaries would violate federal disability law, a position he argued in another Southern California case now pending before a federal appeals court.

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The move comes a little more than two months after the Obama administration toughened its stand on medical marijuana following a two-year period during which federal officials had indicated they would not move aggressively against dispensaries in compliance with laws in the 16 states where pot is legal for people with doctors' recommendations.

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OrganicOzarks said:

I just got this email. This will be good in the end. Everything that has happened in the past couple of months will serve as fuel to the fire. I honestly think this is how Obama pushes for legalization without having his name attached to it. Send out IRS bills, seize accounts, and try to shut everyone down. All that will do is motivate the "average Joe" to get a full legalization initiative passed. They are not doing this in Colorado. (because of clear rules)I really do believe this is a slight of hand trick to push things along faster. It makes sense.

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vta said:

Hey Obama

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vta said:

Your kidding right ?

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Grendelkhan said:

Organic just because they haven't gotten to CO yet doesn't mean that they are going too. They will start in the biggest state known for MMJ and work their way from there. Plus the Fed's don't have to do all the work. All it takes is a local politician with a hard on and the backing of the local PD and presto, clubs getting closed the feds coming in to charge you.

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OrganicOzarks said:

I just got this email. This will be good in the end. Everything that has happened in the past couple of months will serve as fuel to the fire. I honestly think this is how Obama pushes for legalization without having his name attached to it. Send out IRS bills, seize accounts, and try to shut everyone down. All that will do is motivate the "average Joe" to get a full legalization initiative passed. They are not doing this in Colorado. (because of clear rules)I really do believe this is a slight of hand trick to push things along faster. It makes sense.

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krunchbubble said:

dont mind him.....

he's a bit to stoned right now.......

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OrganicOzarks said:

Not at all. This is the fire that Cali needs to actually pass a legalization initiative. Without this shit storm not enough people would have voted yes. Let's wait, and see how it unfolds. I would put a large ass wager on this one.

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SAN FRANCISCO — Federal prosecutors have launched a crackdown on pot dispensaries in California, warning the stores that they must shut down in 45 days or face criminal charges and confiscation of their property even if they are operating legally under the state's 15-year-old medical marijuana law.

In an escalation of the ongoing conflict between the U.S. government and the nation's burgeoning medical marijuana industry, at least 16 pot shops or their landlords received letters this week notifying them that they are violating federal drug laws, even though medical marijuana is legal in California. The state's four U.S. attorneys are scheduled to announce a broader crackdown at a Friday news conference.

Their offices refused to confirm the closure orders. The Associated Press obtained copies of the letters that a prosecutor sent to 12 San Diego dispensaries. They state that federal law "takes precedence over state law and applies regardless of the particular uses for which a dispensary is selling and distributing marijuana."

"Under United States law, a dispensary's operations involving sales and distribution of marijuana are illegal and subject to criminal prosecution and civil enforcement actions," letters signed by U.S. Attorney Laura Duffy in San Diego read. "Real and personal property involved in such operations are subject to seizure by and forfeiture to the United States ... regardless of the purported purpose of the dispensary."

The move comes a little more than two months after the Obama administration toughened its stand on medical marijuana following a two-year period during which federal officials had indicated they would not move aggressively against dispensaries in compliance with laws in the 16 states where pot is legal for people with doctors' recommendations.

The Department of Justice issued a policy memo to federal prosecutors in late June stating that marijuana dispensaries and licensed growers in states with medical marijuana laws could face prosecution for violating federal drug and money-laundering laws. The effort to shutter California dispensaries appears to be the most far-reaching effort so far to put that guidance into action.

"This really shouldn't come as a surprise to anyone. The administration is simply making good on multiple threats issued since President Obama took office," Kevin Sabet, a former adviser to the president's drug czar who is a fellow at the University of Pennsylvania's Center for Substance Abuse Solutions. "The challenge is to balance the scarcity of law enforcement resources and the sanctity of this country's medication approval process. It seems like the administration is simply making good on multiple statements made previously to appropriately strike that balance."

IRS ruling strikes fear in medical marijuana industry
AGreg Anton, a lawyer who represents the Marin Alliance for Medical Marijuana, said the 14-year-old dispensary's landlord received an "extremely threatening" letter Wednesday invoking a federal law that imposes additional penalties for selling drugs within 1,000 feet of schools, parks and playgrounds.

The landlord was ordered to evict the pot club or risk imprisonment, plus forfeiture of the property and all the rent he has collected while the dispensary has been in business, Anton said.

The Marin Alliance's founder "has been paying state and federal taxes for 14 years, and they have cashed all the checks," he said. "All I hear from Obama is whining about his budget, but he has money to do this which will actually reduce revenues."

Kris Hermes, a spokesman for the medical marijuana advocacy group Americans for Safe Access, said the warnings are part of what appears to be an attempt by the Obama administration to curb medical marijuana on multiple fronts and through multiple agencies. A series of dispensary raids in Montana, for example, involved agents from not only the FBI and U.S. Drug Enforcement Agency, but the Internal Revenue Service and Environmental Protection Agency.

Going after property owners is not a new tactic, though, Hermes said. Five years ago, the Department of Justice under President George Bush made similar threats to about 300 Los Angeles-area landlords who were renting space to medical marijuana outlets, some of whom were eventually evicted or closed their doors voluntarily, he said.

"It did have an impact. However, the federal government never acted on its threats, never prosecuted anybody, never even went to court to begin prosecutions," Hermes said. "By and large they were empty threats, but they relied on them and the cost of postage to shut down as many facilities as they could without having to engage in criminal enforcement activity."

http://www.msnbc.msn.com/id/4480672...t-dispensaries-told-feds-shut-down/&gt1=43001

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