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US: California pot crackdown targets large dispensaries

Federal prosecutors say a new crackdown focuses on California pot dispensaries that have large operations or are close to areas with children — a campaign that some activists said goes far beyond the Bush administration's policies.
/ Source: staff and news service reports

Marijuana dispensaries that have large operations or are close to areas with children will be the focus of a federal crackdown in California, U.S. prosecutors said Friday in explaining a campaign that some activists said goes far beyond the Bush administration's policies.

Not all of the thousands of storefront marijuana dispensaries operating in the state are being targeted, U.S. Attorney Benjamin Wagner said at a press conference.

Instead officials initially are going after shops close to schools and other places with lots of children, as well as what Wagner called "significant commercial operations." He said that includes farmland where marijuana is grown.

The prosecutors said California's medical marijuana law has given cover for large-scale commercial operations to engage in drug trafficking across state lines, with thousands of pounds of marijuana worth tens of millions of dollars flowing across the country from California.

"That is not what the California voters intended or authorized, and it is illegal under California law," said Andre Birotte, U.S. attorney for the Central District of California.

Letters sent to those dispensaries, as well as to landlords, ordered them to shut down or face criminal charges and confiscation of property — even if they are operating legally under California's 15-year-old medical marijuana law.

Group: Obama 'betraying promises'Advocates of the law legalizing pot for medical use were livid.

President "Barack Obama is betraying promises made when he ran for president and turning his back on the sensible policies announced during his first year in office," Ethan Nadelmann, executive director of the Drug Policy Alliance, said in a statement Friday.

The group called it a "full scale assault on medical marijuana patients' rights," citing other recent actions as well:

  • In Colorado, which also allowed medical marijuana, the Treasury Department is requiring that banks close accounts of legal medical marijuana businesses.
  • The IRS says dispensaries may not deduct standard business expenses such as payroll, security or rent. "The result will be closure of the most well regulated dispensaries and loss of millions of dollars in tax revenue for local governments," the group stated.  
  • The Bureau of Alcohol, Tobacco, Firearms and Explosives last month ruled that medical marijuana patients sanctioned by states cannot legally possess firearms.

Another group backing the law said users would still find ways to get medical pot.

"The only question is if we're going to force patients to buy their medicine from the violent black market or if we would rather them obtain labeled and tested product from a safe, state-regulated facility that pays taxes," said Neill Franklin, head of Law Enforcement Against Prohibition.

LOS ANGELES, CA - OCTOBER 19: (FILE PHOTO) The Seattle Hempfest takes place on August 19-21, 2011 in Seattle, Washington. The annual gathering founded in 1991 is the world's largest advocating the legalization of marijuana. To Look Back At Cannabis, Please refer to the following profile on Getty Images Archival for further imagery. Dave Warden, a bud tender at Private Organic Therapy (P.O.T.), a non-profit co-operative medical marijuana dispensary, displays various types of marijuana available to patients on October 19, 2009 in Los Angeles, California. Attorney General Eric Holder announced new guidelines today for federal prosecutors in states where the use of marijuana for medicinal purposes is allowed under state law. Federal prosecutors will no longer trump the state with raids on the southern California dispensaries as they had been doing, but Los Angeles County District Attorney Steve Cooley reDavid Mcnew / Getty Images North America

A former adviser to Obama's drug czar office challenged those views, saying many people misread a 2009 Justice Department memo that, while stating users would not be prosecuted, did not take large dispensaries off the hook.

"The memo wasn't read carefully," Kevin Sabet said, calling Friday's move "the actions that those words were based upon."

As for using marijuana as medicine, Sabet said the proper path should be one where components of marijuana are studied and possibly approved by the Food & Drug Administration for use in pharmaceuticals.

"You synthesize and deliver it in the way we deliver medicines in this country," he said, "through pharmacies — not dispensaries with 300-pound bouncers, bars on the windows and neon lights."

The federal campaign marks an escalation of the conflict between the U.S. government and the nation's burgeoning medical marijuana industry — pot is legal in 16 states for people with doctors' recommendations.

Moreover, said Sabet, "it does send a strong warning signal to states considering" similar legalization laws.

The letters sent out emphasize 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," according to the letters. "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 real power is with the federal government," said San Diego City Attorney Jan Goldsmith. "They have the asset forfeiture, and that means either the federal government will own a lot of property or these landlords will evict a lot of dispensaries."

The letters also invoke a federal law that imposes additional penalties for selling drugs within 1,000 feet of schools, parks and playgrounds.

'Tons of money ... drug trafficking' targeted
Melinda Haag, U.S. attorney for the Northern District of California, said Friday that the 2009 memo was "never intended to shield commercial operations or industrial-size growth," said

"People are using medical marijuana to make tons of money, and sometimes engage in drug trafficking," Haag said.

"The intention regarding medical marijuana under California state law was to allow marijuana to be supplied to seriously ill people on a nonprofit basis," she added. "What we are finding, however, is that California's laws have been hijacked by people who are in this to get rich and don't care at all about sick people."

The letters that went out this week follow a Department of Justice policy memo issued last June to federal prosecutors stating that marijuana dispensaries and licensed growers in states with medical marijuana laws could face prosecution for violating federal drug and money-laundering laws.

Greg Anton, a lawyer who represents the dispensary Marin Alliance for Medical Marijuana, said its landlord received an "extremely threatening" letter Wednesday ordering it to evict the 14-year-old pot club or risk imprisonment, plus forfeiture of the property and all the rent he has collected.

Marin Alliance "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."

Going after property owners is not a new tactic though, said Kris Hermes, a spokesman for the medical marijuana advocacy group Americans for Safe Access. Five years ago, the Department of Justice under President George W. 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."