Crackdown on California pot dispensaries begins

Julie Small/ KPCC

Medical pot advocates protest outside the U.S. Attorney's office in Sacramento on Oct. 7, 2011 as officials inside held a press conference on their plans to crack down on medical marijuana dispensaries in California.

Fifteen years ago, California voters passed Proposition 215 and legalized limited sales of marijuana for medical use. A quartet of federal prosecutors say that since then the state has become the nation’s number one supplier of marijuana, medical or otherwise, and they plan to seize those profits and jail the growers and sellers.

U.S. Attorney Benjamin Wagner, who represents California's Central Valley, said not all of the thousands of storefront pot dispensaries operating in the state are being targeted. Instead, federal officials are initially going after pot shops located close to schools, parks, sports fields and other places where there are a lot of children, and what Wagner termed "significant commercial operations." He said that includes farmland where marijuana is being grown.

There is a simple explanation for the multiple retail marijuana stores that are located on a single block, the eight stores that are located in one building and across the street for a school and the huge billboards that advertise doctors who are willing to write recommendations for individuals," said Andre Birotte, who oversees California’s Central District, which includes Los Angeles, Orange and Riverside Counties. He says that federal judicial district has a thousand medical marijuana dispensaries, more than any other district in the state.

Birotte says the reason is money — and lots of it. He and the other U.S. attorneys say organized crime has hijacked the state’s medical marijuana law to make billions in illicit profits.

Laura Duffy, the U.S. Attorney for the Southern District of California told KPCC's Patt Morrison Friday that, overall, the effort aims to shut down retail pot dispensaries. "These are businesses that are, in large part, visited by healthy young people who have gone out and paid for doctor recommendations to obtain marijuana. These are a lot of youth and recreational drug users," she said.

Duffy said the crackdown isn't aimed at people who have a legitimate need for medical marijuana. Her sentiment has been echoed by Birotte. He says all for-profit, commercial marijuana operations are illegal, no matter where the dispensary is located. “While California law permits collective cultivation of marijuana in limited circumstances, it does not allow commercial distribution through the storefront model we see across California,” he said.

Duffy says the industry enables other crimes, including human trafficking: "The façade of so-called medical marijuana has become a local law enforcement nightmare," she said.

A marijuana store called the Green Camel Collective on Vanowen Street near Whitsett Avenue was padlocked and closed for business on Friday. FBI agents raided the small shop this week. They seized about 24 pounds of marijuana and nearly a pound of hashish. Federal prosecutors say the operators ran an enormously profitable illegal enterprise. A business owner near the shop, who didn’t want to give his name, said federal agents took away about 10 people in handcuffs, including a teenage boy and a middle-age man who ran the operation.

William Panzer — who co-authored California’s medical marijuana law — told Morrison the federal government is taking aim at more than commercial store fronts. A battle, he said, is being waged against marijuana as a whole: "This war against cannabis has been going on since 1937, driven by society reasons, driven by political reasons, and what’s horribly absent is science, is rationality, common sense."

The United State Attorney's Office released a press release detailing their enforcement plans for commercial marijuana operations in the Southland. Specific targets include a South Orange County building that the U.S. Attorney's Office says houses eight marijuana stores, as well as a trafficking ring that sold marijuana at a San Fernando Valley storefront and allegedly sent marijuana to customers as far away as New York.

The U.S. Attorney's Office announced warning letters are being sent to the operators and landlords of 38 marijuana stores, civil forfeiture lawsuits are being filed against three properties, and an indictment charging six people with marijuana trafficking that generated $15 million in profits over eight months.

The warning letters tell the stores that they are in violation of federal law and that they have two weeks to discontinue selling or distributing marijuana through their stores. The letters are being sent to stores in Orange County, Riverside County and the Inland Empire. According to the release, "The areas in which the initial warnings have been sent are all areas where local officials have taken steps to eliminate marijuana stores and have asked the federal government for assistance."

The six being indicted worked for a now-defunct North Hollywood marijuana store, NoHo Caregivers. They allegedly sold marijuana at their store, sold marijuana to other stores and sent marijuana to affiliates in New York and Pennsylvania. They distributed between 600 and 700 pounds of marijuana per month, according to the indictment.

The indictment says that the defendants used encrypted BlackBerry devices, but investigators intercepted email communications detailing the store's distribution and payments for the marijuana. One email exchange between the two lead defendants included them discussing "the amounts of marijuana they intended to distribute monthly over the coming year and estimated that they would each receive over $194,000 in profits per month."

The four U.S. attorneys in California, the first state to pass a law legalizing marijuana use for patients with doctors' recommendations, held a joint news conference Friday to "outline actions targeting the sale, distribution and cultivation of marijuana."

A joint conference by U.S. attorneys is highly unusual, according to reporter Michael Montgomery of the California Report, who spoke with KPCC's Madeleine Brand. The U.S. attorneys have not previously spoken with a single voice like this, Montgomery says.

Their offices refused to provide details in advance about what moves the officials are taking or how many of the state's hundreds of storefront pot shops would be affected. Montgomery said that there may be a flood of letters sent to property owners around the state next week. It remains to be seen whether only a few will be targeted, or if letters will be sent to dispensaries around the state. A potential threshold is dispensaries that sell more than 400 pounds per year, according to Montgomery, which would include a lot of dispensaries.

The U.S. attorneys sent a letter earlier this year to law enforcement saying that enforcing marijuana laws related to both growing plants and distribution had become a problem, according to Montgomery.

Particularly in the Central Valley, it's been difficult for officials to prosecute as it's been hard to prove whether those growing the plants are doing so legally or not. As many as a million plants are being grown in the open in California, Montgomery says. Law enforcement has to prove that it's not going to legitimate dispensaries; however, there's a much lower threshold of proof to seize property.

The Associated Press obtained copies of the letters that a prosecutor sent to at least 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."

Barack Obama initially promised a different tact than his predecessor when elected, as did Obama's Attorney General Eric Holder. The move comes a little more than two months after the Obama administration toughened its stand on medical marijuana. For two years before that, 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 appeared to be the most far-reaching effort so far to put that guidance into action.

Greg Anton, a lawyer who represents dispensary Marin Alliance for Medical Marijuana, said its 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 14-year-old 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.

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 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."

The idea of civil forfeiture is new for the U.S. attorneys, though, going after the property belonging to those leasing land to growers, according to Montgomery. He says that the U.S. Attorney's Office presents a more significant and serious challenge to medical marijuana in California than the DEA due to their enforcement powers.

While California's medical marijuana dispensaries face renewed opposition from the federal government, federal and local officials aren't planning on going after those who've been prescribed marijuana, Montgomery said.

The San Diego medical marijuana outlets put on notice were the same dozen that city officials sued last month for operating illegally, after activists there threatened to force an election on a zoning plan adopted to regulate the city's fast-growing medical marijuana industry, City Attorney Jan Goldsmith said. A judge on Wednesday ordered nine of the targeted shops to close, while the other three shut down voluntarily, Goldsmith said.

One question is whether the federal government will pursue more mainstream dispensaries, such as the Harborside dispensary in Oakland, while they've previously only gone after outlier dispensaries that would likely have also been in violation of state as well as federal law, Montgomery said. California's large marijuana economy includes large dispensaries that cater more to recreational users than to serious cancer patients, Montgomery said.

KPCC's Mike Roe and Madeleine Brand contributed to this story. This story incorporates information from the Associated Press.

Correction: An earlier version of this story incorrectly stated that Prop 215 passed 5 years ago. We thank our commenters for pointing out the error.

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