Medical Marijuana Dispensaries In Legal Limbo
Federal prosecution of local medical marijuana dispensaries
continues, despite pledges from the Obama administration to stop.
By Charlie Mintz
September 08, 2010
For Brian Everett and brothers Winslow and Abraham Norton, former
operators of a medical marijuana dispensary called the Compassionate
Collective of Alameda County, the "Ogden" memo offered hope. Released
October 19, 2009, the memo, written by Deputy Attorney General David
W. Ogden, issued new guidelines for enforcing the Controlled
Substances Act, the federal law under which marijuana including
medical marijuana is illegal. The memo, which echoed statements
made by President Barack Obama during his 2008 campaign, seemed to
signal a change in priorities for the feds: The Department of Justice
would no longer focus its resources on prosecuting "individuals whose
actions are in clear and unambiguous compliance with existing state
laws." Under California law, as currently interpreted in Alameda
County, and within the Attorney General's office, distribution of
medical marijuana is legal. So why did the federal government take
Brian Everett and the Nortons to court last week?
The answer has to do with the complex and unpredictable relationship
between state and federal law when it comes to medical marijuana.
Federal and state laws are in conflict, but that doesn't mean it's
obvious when a dispensary will be busted.
In 1996, Californian voters passed Proposition 215, the Compassionate
Use Act, which allowed patients with a doctor's recommendation to
grow and cultivate marijuana for personal use. Prop 215 made
California the first state to legalize medical marijuana. Senate Bill
420, passed in 2004, expanded the scope of the law, and allowed for
the creation of cooperatives, or collectives, to facilitate the
distribution of marijuana to patients. That same year, the
Compassionate Collective of Alameda County opened for business in
Hayward, and by 2005, the Alameda County Board of Supervisors had
passed an ordinance allowing the collective and two other
dispensaries to operate, with the Alameda County Sheriff's Department
in charge of licensing. The CCAC was the largest of the three
dispensaries, and when California began taxing dispensary revenues in
2006, the collective paid roughly $1.2 million in sales tax on $21.5
million in revenue. In 2007, it paid roughly $4 million on $26.3
million in revenue in a business year cut short by a federal raid.
The Supreme Court has twice affirmed the right of the federal
government to supersede a state's law, meaning that the government
can raid a medical dispensary any time it wants. On October 31, 2007,
the Drug Enforcement Agency raided the Compassionate Collective of
Alameda County, seizing several hundreds pounds of marijuana, in
addition to $385,000 that had been put into a bank account to pay
sales tax, according to the collective's manager, Brian Everett. The
two other dispensaries permitted in the area were also raided, but no
indictments were brought against them. The owners of CCAC, Winslow
and Abraham Norton, were indicted on 21 felony counts, including
intent to distribute more than 100 kilograms of marijuana,
maintaining a drug-involved premises, money laundering, and a firearm
charge stemming from the armed security guard they were mandated to
keep on the premises. Their father, Michael Norton, and Everett were
subsequently indicted as well. Each faces a minimum sentence of
fifteen to twenty years in prison, with a maximum of lifetime incarceration.
The raid came during the waning days of the Bush administration, as
signals from Obama of a soon-to-come change in federal marijuana
policy made the future of enforcement uncertain. During Bush's
presidency, DEA agents conducted more than 200 raids in California
alone. But even with a new administration in place, the federal
government's approach to medical marijuana has remained inconsistent.
Since 2008, federal raids have occurred in Los Angeles, San Diego,
Bakersfield, and other cities that license medical dispensaries. As
with the previous administration, the selective enforcement of
federal laws is something of a mystery.
width="300" height="250" border="0" alt="" /></a>
James Clark, a California attorney specializing in cannabis defense,
said that the decision to raid a dispensary contains a political
element as much as a legal one. "They will investigate virtually
anybody who opens up and makes themselves obvious," he said. "And if
they think they can gain political press by executing a bust, if they
can say it's tied to organized crime, if they can say, 'This isn't
compassion, this is profit,' then they go ahead with it. Cases where
people have a proven track record of helping the sick, they tend to stay away."
The CCAC made a perfect bust for propaganda, according to Clark. It
was the largest of the three dispensaries in the area, and its
multimillion-dollar revenue made it easier to lodge accusations of
operating for profit.
But Everett denies such a claim. "We were one of the biggest
operations," he said. "We could have raised prices on our patients,
but we felt that would be the antithesis of who we were. Our mission
statement was to provide the highest quality medicine."
The press release put out by the DEA about the raid mentions
commercial properties purchased by the Nortons, as well as two
Mercedes Benzes. Special Agent Javier Peña is quoted as saying,
"Today's enforcement operation once again enlightens the public of
the true nature and motive behind marijuana distribution centers money."
Laura Sweeney, spokesperson for the Department of Justice, said that
the government was not selectively enforcing laws. "It's not about
any selective enforcement actions," she said. "It's about using our
resources wisely against activities involving marijuana on
large-scale drug traffickers whose conduct is often inconsistent with
both federal and state law."
Sweeney said that she was prohibited from discussing specific cases,
so it remains unclear as to what state law the dispensary broke.
Jack Gillund, spokesperson for the US Attorney General's Office,
Northern District, echoed Sweeney's comments, saying, "The DOJ, which
is committed to enforcing the Controlled Substances Act, is focusing
its resources on significant drug traffickers whose conduct is often
inconsistent with state and federal law."
Profiting from marijuana sales is one way that the CCAC could have
violated state law. Guidelines issued in 2008 by Attorney General
Jerry Brown said that dispensaries were permitted to charge money, so
long as they didn't charge more than what they needed to cover costs.
And the bigger a dispensary gets, according to Sara Zalkin, a San
Francisco attorney specializing in marijuana cases, the more likely
the federal government is going to find it out of compliance with state law.
"There is no legal so-called dispensary in California state law," she
said, referring to the fact that neither Prop 215 nor SB420 makes
explicit mention of cash transactions. "Patients may collectively
associate. But then, the more people comply with that, you get an
errant US attorney who says they're hiding under medical marijuana
and they're not complying with state law, and they raid you."
Bob Swanson, who worked for Alameda County Supervisor Nate Miley
during the time the medical marijuana ordinance allowing the CCAC to
operate was passed, believes the dispensary operated legally. "As far
as our office knows, they have broken no state laws," he said. "And I
would dare them to show me one that they have. The fact that the
sheriff didn't arrest them shows that they weren't breaking state law."
Brian Everett and the Nortons are hoping that fact can keep them out
of prison. "What we were doing was not wrong, and it was not
illegal," said Everett. "We're young, 27 to 30. We're too young to be
Go East, Man: California Cannabis Seeks Fresh Markets
Meanwhile, LA author Mark Haskell Smith chronicles million-dollar
marijuana strains in new book Baked.
By David Downs
September 08, 2010
Call it a reverse gold rush, but a "go east, young man" fever is
gripping California marijuana growers, dispensary owners,
consultants, and assorted industry members. The fever is rapidly
transplanting the Golden State's best practices as well as its more
dubious ones to Rhode Island, Michigan, Maine, and Colorado. But no
state is really off limits.
"I think it's a natural development, because California has had
fourteen years of experience developing medical cannabis," said
leading Oakland dispensary owner Stephen DeAngelo. "The industry is
more well developed here than anywhere else. If you want to get in on
the ground floor, California is not the place to do it."
DeAngelo has been helping to open a dispensary in Rhode Island
through his consultancy firm CannBe, comprised of an A-team of
lawyers, marketers, managers, growers, and security. CannBe is also
looking closely at work in Washington, DC and Oregon.
Similar to a counterinsurgency, the firm takes a low-profile
approach, partnering with local forces to train them. For a fee,
CannBe provides the advice and expertise to help craft laws, get them
passed, and win dispensary permits. But other California groups are
Orange County-based Medical Marijuana Inc. made headlines last month
when it rented out the Silverdome in Pontiac, Michigan for what it's
calling the second-largest marijuana convention in the country.
Advertising depicted a huge bud leaf erupting out of the stadium and
a jack-o'-lantern with a joint in its mouth. Local newspapers called
it a "pot party," and the local mayor and police chief went ballistic.
width="300" height="250" border="0" alt="" /></a>
"They were really offended by that in a large way," said Medical
Marijuana Inc. Vice President David Tobias. The company explained its
intent to abide by all state laws, prevent smoking on-site, and tone
down advertising. "We agreed to take the joint out of the pumpkin's
mouth and take the marijuana bud off the Silverdome," said Tobias.
While California is hosting at least fifteen cannabis-related trade
shows this year, Michigan has just three, and Tobias said the company
continues to look east. "The ground floor is not in the saturated
states like California or Colorado, it's the emerging states that
have just passed their laws. Just as the hippies started in
California and spread across the country, everything starts here.
We'll be bringing the experts and the pioneers of that movement to
help people go through the process."
Tobias shrugs off the local backlash, and says it helps publicity.
CNN and USA Today covered the Silverdome brouhaha. "There is that
kind of 'This is our territory' mentality," he said. "One club said,
'We don't want you from California coming here telling us what to
do.' That's some dumbass idiot trying to protect their turf."
However, even a low-profile technique can generate complaints.
California dispensary Berkeley Patients Group spun off into the
Northeast Patients Group and partnered with locals to win four of the
state's eight dispensary permits this summer. One Maine city just
okayed Northeast Patients Group's first location. Meanwhile, several
key activists see a conspiracy, and penned an open letter to the
governor bashing the California influence.
"Our citizens should be concerned when interests from outside our
local economy take the trouble to become self-appointed policy
advisors to the government of Maine," stated the letter from the
Maine Wellness Center signed by various groups, coalitions, and
lobbyists. "The early journeys of a reverse gold rush have already occurred."
Berkeley Patients Group spokesperson Brad Senesac dismisses such
provincialism. "It doesn't matter if it's cannabis or mayonnaise,
people are going to have some sort of opinion," he said. "One
location had two people picketing, that was it. Everybody should
voice their opinion."
Still, Senesac says the California brand has legs: "KFC is from
Kentucky. LA Fitness is all over the country, because people see
people in LA as being fit. Does California have the best cannabis in
the country? I would say yes, because I've traveled the country."
Easily one the most brazen attempts to capitalize on the California
brand comes from Oakland hydroponic supply company iGrow, which has
rebranded itself WeGrow and switched from a retail megastore to a
franchise company. WeGrow officials say they have sixty deposits of
$25,000 each granting exclusive territory to WeGrow store developers.
All of Colorado is sold, says WeGrow co-founder Derek Peterson.
WeGrow plans on converting its retail location near the Oakland
Airport into a franchise template, with a no-bud version for stores
in states where medical marijuana is still illegal. Peterson says the
market is indeed going east. "I think that's exactly true," he said.
"At the end of the day, when medical marijuana is legal in even more
states, California is always going to be the gold standard from a
product standpoint, and a pioneering standpoint. The founding
businesses will always have that cachet from being the original ones
in the market."
Seeds & Stems
Funny, naughty, and hyper-contemporary, hard-boiled summer read Baked
follows Miro, breeder of hit marijuana strain Elephant Crush, as he
wins the High Times Cannabis Cup and ends up shot in a gangland
dispensary dispute. Los Angeles novelist Mark Haskell Smith reads
from his fourth book at Booksmith (1644 Haight St., SF) on Wednesday,
September 15, at 7:30 p.m. Read our interview with Smith as he talks
strains, gangs, and Prop 19 on the Legalization Nation blog.