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  Fed Threat Gets Results as Calif. Pot Shops Close
Posted by CN Staff on October 21, 2011 at 10:15:15 PT
By Greg Risling, The Associated Press 
Source: Associated Press  

medical Lake Forest, Calif. -- A letter from federal prosecutors accomplished what nearly $600,000 in legal fees couldn't do in this Orange County suburb: it shut down medical marijuana shops.

Two weeks after California's four U.S. attorneys announced they were cracking down on dozens of operations across the state growing and selling medical pot illegally, all eight collectives that occupied the second floor of a Lake Forest mini-mall have closed.

Across the Central District of California, which stretches from Santa Barbara to San Bernardino counties, many of the 38 clinics have closed because landlords, threatened with criminal charges or seizure of their assets, were given just 14 days to evict their clients, a period that expires Friday. Other districts in California gave pot dispensaries more time to comply.

Some smaller California communities like Lake Forest have struggled in recent years to regulate the clinics, while others have banned pot shops altogether. Cities such as Los Angeles and San Jose have sought to rein in a large number of collectives that have cropped up. The fight has cost local municipalities millions of dollars in legal fees as it has shifted between city halls and courtrooms.

Frustrated and fed-up with pot collectives flouting their laws, cities asked the federal government for help.

The recent action has drawn a backlash from medical marijuana advocates who argue the collectives are protected by California law, which allows the drug to be cultivated and supplied to ill people on a nonprofit basis. Federal officials counter the clinics are lucrative ventures that operate under the guise they are helping the sick. Pot remains illegal under federal law.

To buttress their claim that shops were fronts for illegal drug dealing, federal authorities offered a list of examples, including longtime farmers raising a marijuana crop to a Los Angeles clinic that was shipping up to 700 pounds of pot out of state each month.

Most of those who received letters from prosecutors were smaller dispensaries. The Lake Forest group stood out because eight clinics were lined up in a building across the street from a kindergarten and preschool.

The little strip mall also houses a small market, a massage parlor and at least two dental offices.

Dentist Pankaj Narkhede said he was losing a few new patients every week after they found his office beneath the row of dispensaries upstairs.

The parking lot is usually full, fights have broken out and Narkhede said he's seen teens smoking in front of a head shop that opened after the clinics arrived. Moving isn't an option, Narkhede says, because it's too costly so he has to watch the steady flow of foot traffic, hoping something will change.

"If you are looking to improve this area, having what is upstairs is not going to help," he said. "It's the wrong place for the wrong thing."

In Lake Forest, a town of roughly 75,000 people, dispensaries began to crop up two years ago, about the same time when federal officials indicated they would not take aggressive action against those who complied with laws in 16 states where medical marijuana is legal. Pot clinics are not permitted in Lake Forest per the municipal code, which prohibits businesses that violate state or federal law.

In May, city attorney Scott Smith sent a letter to U.S. Attorney Andre Birotte asking for assistance because many of the dozen or so dispensaries weren't complying with zoning enforcement actions that sought to close them down and had cost the city nearly $600,000 in legal fees.

"In these cases we've just gotten nothing but contempt," from the dispensaries, Smith said. "They've been on notice for a long time. They've been pretty blatant in their disregard for compliance."

A forfeiture complaint filed by federal prosecutors against the owner of the building that has the eight dispensaries as tenants said that two of the collective operators had been arrested on drug-related charges; one was convicted.

Attorney Vincent Howard, who represents two of the Lake Forest pot collectives, said his two clients have closed their doors in the wake of the federal government's action. He said cities like Lake Forest need to have better regulations in order not to have problems with proliferation.

"Their position is they don't want them there," Howard said of Lake Forest officials. "I don't think they can ban a business that the state of California says is legal."

But an about-face by the U.S. Department of Justice put dispensaries on watch with a policy memo issued this summer noting they could face prosecution for violating federal drug and money-laundering laws.

"What we are seeing is a wholesale violation of both federal and state law by some people involved in the industry," said Thom Mrozek, a spokesman with the U.S. attorney's office in Los Angeles. "There are huge amounts of money going into this industry. It's our position that this goes way beyond simply paying rent and cultivating marijuana."

Six people were indicted this month on federal charges accusing them of trafficking as much as 700 pounds of pot every month from a now-defunct collective in North Hollywood that allegedly netted nearly $15 million in profits. A clinic that now occupies the same storefront was raided two weeks ago where federal agents said they found two 16-year-old boys smoking pot inside the shop.

In Dana Point, a coastal hamlet in south Orange County, city attorney Patrick Munoz said dispensaries there were "giant money-making machines," bringing in as much as $12,000 every day.

Through a series of legal actions, Dana Point was able to shutter seven clinics and a judge has awarded $7 million in civil penalties against some of the outlets, citing noncompliance with state law that says dispensaries can't sell marijuana for a profit.

"There was no effort to make sure only ill people were getting access to medical marijuana," Munoz said. "The law was being treated as a big joke by these guys."

In Murrieta, a city in southwestern Riverside County, Police Chief Mike Baray also asked for Birotte's help after a collective opened in July despite a local ordinance prohibiting such businesses. Police said the collective was burglarized the first week it opened and some customers have been robbed. The collective, which received a letter from federal prosecutors, has since closed.

Attorney David Welch, who represents three of the Lake Forest dispensaries that have closed since the letter went out, said every collective in the city received a warning letter that makes it unclear who they are really targeting.

"It doesn't seem there is any narrowing of who is a large operation and who is profiting," Welch said. "I think the main purpose of this tactic is to convince or scare landlords not to rent to medical marijuana collectives."

Source: Associated Press (Wire)
Author: Greg Risling, The Associated Press
Published: October 21, 2011
Copyright: 2011 The Associated Press

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Comment #13 posted by Hope on October 25, 2011 at 15:19:09 PT
The President
I read the other day where, in his frustration with Congress, he says that he's going to start whooping some executive orders out on them. (He didn't say it exactly like that. I'm paraphrasing.)

That should be interesting.

[ Post Comment ]

 
Comment #12 posted by gloovins on October 24, 2011 at 15:31:45 PT
Futile.
$600k in legal fee's? What a joke. And the lawyers laugh all the way to the bank....Prohibition is so entrenched in today's society I don't know if we can ever escape it....:/

[ Post Comment ]
 
Comment #11 posted by FoM on October 22, 2011 at 20:37:42 PT
The GCW
I know what you mean.

[ Post Comment ]
 
Comment #10 posted by The GCW on October 22, 2011 at 20:14:28 PT
FoM,
Haven't seen debates but from reading, republicans are insane. It's a rare day that I even consider a repub, though.

[ Post Comment ]
 
Comment #9 posted by paul armentano on October 22, 2011 at 14:03:40 PT
Miami New Times story [excerpt]
Obama's war on weed

In a strange about-face, the president tries to hack medical marijuana off at the knees.

By Ray Stern

published: October 20, 2011

http://www.miaminewtimes.com/2011-10-20/news/obama-s-war-on-marijuana/

[excerpt, much more by clicking the link]

The new federal crackdown on medical marijuana announced on October 7 by the four California U.S. Attorneys sent chills throughout the industry. It was a stunning reversal by the Obama administration.

Only two years ago, Deputy U.S. Attorney General David Ogden wrote his infamous "Ogden Memo," announcing the feds wouldn't bother businesses in compliance with their own state laws. It proved a dose of Miracle-Gro to California, where pot-selling stores multiplied since voters approved the state's 1996 medical marijuana law. By late last year, California reportedly had more dispensaries than Starbucks outlets.

Colorado also made it legal in 2000, seeing a similar explosion of new storefronts. The same thing was happening to varying degrees in 16 states, from Arizona to Washington, New Jersey to Delaware.

But the feds' tolerance wasn't quite what it seemed. While legal weed grew to an estimated $10 to $100 billion industry — no one's quite sure of the exact figure — activists noticed an alarming undercurrent to the rhetoric: Raids on growers and dispensaries actually increased under Obama

As hundreds of thousands of state-approved, doctor-recommended patients happily bought their medicine in well-lit stores from knowledgeable "budtenders," the ire of cops and prohibitionists rose.

The first sign of Obama's subterfuge came in late 2010, as California prepared to vote on a ballot proposition that would have legalized growing and possessing small amounts of marijuana for anyone over the age of 21. Under pressure from teetotalers — nine former Drug Enforcement Agency chiefs begged Obama to oppose the measure — Attorney General Eric Holder said that it didn't matter what Californians thought. The feds would continue to bust people regardless of the election.

The measure got 46 percent of the vote, but not enough to pass. Yet the medical side of things kept going strong – too strong for Obama.

When the Oakland City Council prepared to authorize large-scale cultivation centers, Melinda Haag, the U.S. Attorney for California's Northern District, issued the first in what would become a series of letters from her fellow attorneys general. She reminded residents — in no uncertain terms — that marijuana was still criminalized under federal law, considered equal to heroin or meth, irrespective of its medicinal value.

Nor did she care what California law said. Her "core priority" would be to prosecute "business enterprises that unlawfully market and sell marijuana" under federal law.

Over the next few months, attorneys general from Maine to Washington wrote their own increasingly menacing letters. In Washington, the feds even threatened to arrest state workers who helped facilitate the industry.

Then the Obama administration released a new letter to "clarify" Ogden's memo. Deputy U.S. Attorney General James Cole verified the about-face: The only people safe from arrest were the "seriously ill" patients and their caregivers.

Everyone else? Be forewarned.

The letter didn't just target those directly involved in the trade. Cole was also threatening supporting industries — read: banks — with money laundering charges for dealing in the proceeds from marijuana. Obama had launched a full-on attack on the industries essential to any functioning enterprise.

Banks responded by canceling their weed-related accounts. "Perhaps there may be a few financial institutions here or there that are still accepting accounts," says Caroline Joy, a spokeswoman for the Colorado Bankers Association. "Those facilities don't want to reveal who they are."

The president's push grew louder last month. The U.S. Alcohol, Tobacco and Firearms bureau warned medical-marijuana patients that they couldn't legally use pot and own or buy guns.

Then came a one-two punch

On October 5, the IRS ruled that one of the largest California dispensaries, Harborside Health Center, owed $2.5 million in taxes because federal law precluded standard deductions for businesses engaging in illegal activity.

In other words, Obama was not only blowing off state laws. He was declaring that legal businesses were now nothing more than criminal rackets. And he was carving away every tool they needed to function.

Harborside's owner said he'd go out of business if the IRS didn't reverse course. Dispensaries nationwide saw it as a crippling decision.

Then came another blow two days later: The bombshell dropped by California's four U.S. Attorneys.

They were now going after people who leased stores and land to the pot industry. Violators were given 45 days to close doors, uproot plants, and kick out renters. The penalty for not acting: Seizure of property and arrest.

Laura Duffy, the U.S attorney from California's Southern District, went so far as to threaten media with prosecution for taking pot advertising. (Disclosure:  This newspaper accepts such ads.)

There was no doubt about it: Obama was intent on killing an entire industry – in the middle of a depression, no less. Left unexplained was why, especially since he was giving the finger to voters in 16 states just a year before he would face them in his own election.

Democratic strategists were perplexed. Roger Salazar, a California party consultant, believes the president may be trying to reach out to a broader base. But that doesn't explain the attack on his own base; Democrats support medical marijuana at high percentages. It doesn't even make sense in luring conservatives. With the country in economic tatters, no one has weed high on their radar.

Except one group, says Salazar: "It's a mystery, I think, it really is, where the pressure is coming from. My sense is it's coming from law enforcement."

Certainly Obama's threats are real. He may be loath to jail landlords, bankers or even dispensary owners. Arresting non-violent, state-sanctioned businesspeople wouldn't be popular. But his quieter war of chopping merchants off at the knees through credit and leasing would ravage the trade.

[ Post Comment ]

 
Comment #8 posted by afterburner on October 22, 2011 at 10:52:42 PT
Looks Like
Lake Forest must be awash in tax revenues to turn their backs on a possible source of increased tax revenues by regulating and taxing dispensaries in this harsh economy.

Just hand the profits back to the black market. Don't mind the maggots, the turf wars, the financial exploitation of and increased risk to medical cannabis patients, and the lost opportunity for tax relief.

I wonder if any of the dentists are poisoning patients with toxic mercury amalgam right across the street from a charter high school. Why can't we just get along? 2012 is coming soon.

[ Post Comment ]

 
Comment #7 posted by runruff on October 22, 2011 at 09:51:38 PT
The harder they push, the harder we push back!
"For every action there is an opposite and equal reaction".

2012 will be very interesting and progressive I believe.

[ Post Comment ]

 
Comment #6 posted by paul armentano on October 22, 2011 at 09:18:05 PT
Feds target Richard Lee
Feds Target Leader of Marijuana Legalization Movement

Pot Advocates: Feds' move against Richard Lee's dispensary "smacks of politics"

   By Zusha Elinson on October 21, 2011 - 6:24 p.m. PDT

http://www.baycitizen.org/marijuana/story/feds-target-oakland-dispensary-richard/

As the federal government's crackdown on the state's medical marijuana industry expands, the Department of Justice has targeted Richard Lee, the leader of the movement to legalize pot in California, The Bay Citizen has learned.

U.S. Attorney Melinda Haag sent a letter to the landlord of Lee’s medical marijuana dispensary, Coffeeshop Blue Sky, ordering its eviction, according to people familiar with the situation.

Lee, a soft-spoken libertarian who uses a wheelchair, is the founder of Oaksterdam University, which offers cultivation classes and business training for the cannabis industry. Last year, he poured $1.5 million into Proposition 19, the marijuana legalization measure that voters rejected.

The four U.S. attorneys from California announced a crackdown on the state’s billion-dollar medical marijuana industry Oct. 7, charging that many dispensaries are simply fronts for the sale and distribution of illegal drugs. Since the announcement, federal agents have raided pot clubs and arrested growers.

The actions highlight the conflict between federal and state authorities over medical marijuana, which is legal under state law but illegal under federal law.

Medical marijuana advocates said Friday that targeting Lee seemed politically motivated because of his leading role in legalization efforts and the medical marijuana industry.

“It smacks of politics,” said Dale Gieringer of the marijuana advocacy organization California NORML.

Haag declined to comment on the letter, but at the Oct. 7 press conference, she said, “People are using the cover of medical marijuana to make extraordinary amounts of money — in short, to engage in drug trafficking.”

At the time, Haag said her office had sent out “dozens” of letters to landlords and dispensaries in California’s Northern District, ordering them shut down or face criminal prosecution and seizure of their property and profits. Three dispensaries in San Francisco and one in Marin received letters.

She said that the letters had been sent to “stores that sell marijuana and allow people to smoke marijuana near schools, parks and other places where children learn and play.” Coffeeshop Blue Sky, located near Lee’s Oaksterdam University, is also a block away from Envision Academy of Arts & Technology, a charter high school.

Lee declined to comment directly about the letter; his landlord could not be reached for comment.

But Lee said the federal crackdown in general could change the face of the marijuana industry in Oakland and lead to the proliferation of so-called "Measure Z" clubs, private clubs where pot is sold and consumed. In 2004, Oakland voters passed Measure Z, which makes the sale of marijuana between adults the lowest law enforcement priority.

“If the federal government shuts down the medical marijuana system in Oakland, we will be forced to operate under Measure Z,” said Lee.

The Drug Enforcement Administration also sent Lee a letter in 2007 informing him that his dispensary was illegal under federal law, but never took action.

Coffeeshop Blue Sky is one of four dispensaries permitted to operate in Oakland. Earlier this month, the Internal Revenue Service ruled that Oakland's Harborside Health Center, the largest dispensary in the Bay Area, could not deduct standard business expenses because it was involved in "the trafficking of controlled substances." (http://www.baycitizen.org/marijuana/story/irs-oaklands-largest-pot-dispensary-owes/) As a result of the ruling, Harborside owes millions of dollars in back taxes.

To some, the backlash against Oakland’s dispensaries seems like retribution for its lenient attitude towards marijuana dispensaries. Last year, the city backed off on a plan to permit four enormous pot farms only after Haag issued a stern warning. Lee's Oaksterdam was also the headquarters the Prop. 19 campaign.

"I warned everybody from the City Council on down who was pushing for those four huge farms that there would be consequences," said Steve DeAngelo, who runs Harborside. "And I warned people who were pushing Prop. 19 that losing elections would have consequences."

"In large part what we're seeing is the consequences of an overreach by our community," DeAngelo said.

Although DeAngelo and Lee have had their differences, DeAngelo denounced the attack on Lee's dispensary.

"Richard Lee is an absolute pillar of the medical cannabis movement — he paved the way for a lot of us," he said. "It's absolutely critical that the community stand up and support Coffeeshop Blue Sky."

[ Post Comment ]

 
Comment #5 posted by FoM on October 22, 2011 at 08:00:39 PT
The GCW
I have watched some of the Republican debates. I don't see any of the top tier Republican candidates supporting our cause so I know who I am voting for again.

[ Post Comment ]
 
Comment #4 posted by The GCW on October 22, 2011 at 07:51:38 PT
Results?
What will the results be at the voting booth?

[ Post Comment ]
 
Comment #3 posted by Paul Pot on October 21, 2011 at 21:47:47 PT:

bad joke
"The law was being treated as a big joke by these guys." Because it is. A big bad joke.

These officials are just afraid of losing their power because everyone is turning their backs on them. And with so many people openly smoking it's proving that there is no real danger in smoking pot except that of getting arrested.

[ Post Comment ]

 
Comment #2 posted by Oleg the tumor on October 21, 2011 at 12:55:57 PT:

And the Award goes to . . .?
"a judge has awarded $7 Mil in civil penalties against some of the outlets . . ." How does a judge "award" a civil penalty? To who? To all those good folks out there who need to be "protected" from the likes of us? Get over yourselves.

and what? A massage parlor right across the street from a kindergarten and preschool? Oh the horror!

[ Post Comment ]

 
Comment #1 posted by dongenero on October 21, 2011 at 12:06:51 PT
And to what end?
Is this policy to bolster business for organized crime gangs, who's livelihood depends on the black market status?

To make it difficult for legitimate patients to have access?

For all that have been forced closed, they cite ONE example they say was shipping out of state?

Beyond that it's all, "not in my backyard". Much like, I don't want a fast food restaurant next door, I don't want auto repair next door, I don't want any light manufacturing next door, I don't want liquor sales next door, I don't want that noisy business next door, I don't want a 24hr business next door. There's too much customer traffic? Well shame on having a robust business frequented by customers.

As for robbery, why do you think there is robbery at a dispensary. Do you think it could have anything to do with Prohibition? Of course everyone knows the high statistics for robberies are at banks. Then there are pharmacies.

Close them down?

And then there was the recent Rand study that pointed out how crime dropped in the presence of dispensaries and rose again when they were closed. That study was very oddly retracted after it had been published. They shot the messenger I guess.

Cannabis isn't going anywhere but, the nature of the market can be defined to some extent. This policy is a vote for the black market, true organized crime and drug cartels. And a vote against free choice, legitimate business, capitalism and free enterprise.

Figure it out.

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