DEA Launches Statewide Offensive Against Medical Cannabis Dispensaries

(Cal NORML Newsletter - Dec 2007)

The DEA has escalated its offensive against California’s medical marijuana clubs with a wave of new raids and threatening letters to dispensary landlords warning them that their property is liable to forfeiture under federal law. The landlord letters originally appeared in Los Angeles last July, but have since spread to the rest of the state. The letters have had a chilling effect, forcing many dispensaries to close, move, suspend operations, or change to delivery services or private clubs. The result has been to disrupt or endanger access in a growing number of communities, including Long Beach, Santa Barbara, Sacramento, Orange County, and the East Bay. Most recently, the DEA has begun sending landlord letters to the San Francisco Bay Area. The DEA letters have sparked an angry reaction from local officials, including S.F. Sup. Tom Ammiano, Sup. Ross Mirkarimi, Sup. Chris Daly, Assemblyman Mark Leno, and State Sen. Carole Migden.

In a significant development, the DEA also drew fire from U.S. House Judiciary Committee Chairman Rep. John Conyers, who promised to hold oversight hearings on the landlord letters. Conyers, a long time critic of forfeiture, expressed “deep concern” over the DEA’s threats to dispensary landlords and promised to “sharply question” the agency. Hearings are expected early next year.

To date, no landlords have actually been hit with forfeiture suits after receiving the DEA letters, nor are there any indications that the Department of Justice is planning such action. Skeptics see the letters as an inexpensive bluff by the DEA aimed at rolling back the tidal wave of dispensaries, whose numbers soared to 300 or 400 this year. However, defense attorneys warn that federal law offers no good defense against property forfeiture. The federal government had no trouble forfeiting the headquarters building of the Los Angeles Cannabis Resource Center from its landlord, the city of West Hollywood, after raiding it in 2001. Still, a minority of landlords are holding firm and ignore the letters.

A coalition of Los Angeles dispensaries led by the Arts District Healing Center has organized a lawsuit to fight the DEA. The Arts District Healing Center was raided last October immediately after winning a lawsuit in state court declaring that its landlord had no right to evict them under state law despite the DEA letter. On December 6, the center’s attorney, Steve Schectman, filed a lawsuit against the DEA in federal court, claiming that the DEA violated their civil rights by retaliating for having won the state lawsuit.

The DEA didn’t respond to press inquiries about the lawsuit, but told the Los Angeles Daily Journal that the letters weren’t meant as a threat but as “an education process” for the public.

Meanwhile, the DEA has stepped up its campaign of dispensary raids, targeting an increasing number of popular facilities that have tried scrupulously to follow state law, pay taxes, and cooperate with local officials.

On Sept 27th, the DEA raided the River City Patients’ Center in Sacramento, highly regarded by local patients as a model dispensary. Its owner, Bill Pearce, had helped organize local dispensaries to follow good business practices and maintain good relations with Sacramento police. In a disturbing departure from usual practice, the DEA conducted the raid without support or knowledge of local police, who had been on good terms with River City. River City had been providing payroll and health benefits to its employees, and had just sent a check for over $32,000 in sales taxes to the state. The government has moved to seize Pearce’s business and personal property, including his home, but has not filed criminal charges. Other Sacramento area dispensaries have received landlord letters from the San Francisco DEA office and are fearful of a crackdown.

Advocates fear a similar offensive in Long Beach, where some 11 dispensaries have been operating. On November 24th, the DEA raided and closed the Long Beach Compassionate Caregivers at 324 East 4th St. “We’ll follow up on every location served (with notice),” warned DEA Special Agent Jose Martinez in the Long Beach Press-Telegram. “It’s a very tedious process,” he added, saying the agency has only a few agents in L.A. county. Long Beach had been quietly tolerating the dispensaries, but the city attorney recently declared that they were operating illegally, either because they lacked a business license or had licenses for some other use.

In the Bay Area, the DEA raided the Compassionate Collective of Alameda County on October 31st. CCAC was the largest of three licensed dispensaries in the county. CCAC’s owners, Abraham and Winslow Norton, were indicted on 23 counts. Among them were multiple counts of supposed money laundering, based on the dubious premise that all money spent by the Nortons was laundered because it was illegally obtained in the first place. The Nortons took care to operate like other legal businesses, employing 50 workers and providing them with health insurance, unemployment and disability benefits.

The CCAC was the largest dispensary in the Bay Area, reporting a total of $21.5 million in sales in 2006 and $26.5 million in the first half of 2007. Like other dispensaries, the CCAC spent the lion’s share of its revenues in purchasing medicine and other expenses. In the process, CCAC paid an estimated $3 million in sales taxes to the state. Included was a $350,000 check intended for the Board of Equalization that was seized by the DEA following the raid. Overall, the DEA raids have deprived the state of millions of dollars in sales tax revenues, according to an analysis by Cal NORML.

CCAC’s sales surged following the DEA’s closure of its largest nearby competitor, the Local Patients Group in Hayward, last December. CCAC’s closure is expected to only increase the pressure on the dwindling number of dispensaries elsewhere in the East Bay, where most communities have either sharply limited the number of dispensaries or banned them completely. Alameda County’s new Sheriff, Greg Ahern, who has authority over licensing clubs in the county, claimed he had “no choice” but to cooperate with the DEA, though his predecessor had promised to protect county licensed clubs from the DEA.

In another big East Bay raid, the DEA shut down an Oakland-based medical cannabis edibles factory, Tainted, Inc. Tainted was renowned for its state-of the-art candy bars, cookies, ice cream, peanut butter, jelly and energy drinks. Arrested were Tainted’s director, Michael Martin, 33, plus three associates. The DEA spent two years investigating Tainted, spurred by complaints from law enforcement that its products were spilling beyond California into other medical marijuana states.

Prompted by the DEA crackdown, other local governments have moved to close down dispensaries. In San Mateo, local law enforcement called in the DEA to shut down three dispensaries that had opened up in the past year. The city of Visalia moved to close down its only dispensary, citing concerns that it was not fully abiding by a local ordinance. In Kern County, which recently had six county licensed dispensaries, all have closed following a DEA raid on Nature’s Medicinal in Bakersfield. Kern County Sheriff Danny Youngblood has opposed the re-opening of dispensaries due to conflicts with federal law. In Hayward, once a flourishing medical marijuana center, city officials forced the last remaining club to close after it failed to find a suitable site for relocation. Numerous other cities have enacted preventative dispensary bans.

California NORML estimates that the DEA raids have cost taxpayers tens of millions of dollars. This year has seen 53 DEA raids, up from 20 last year and 19 the year before, according to an ASA summary. Each raid requires dozens of agents. Witnesses say that they saw 20-30 DEA agents at each of five sites during the raid on CCAC. Over 100 defendants have faced federal charges for medical marijuana in California, according to a compilation by Cal NORML . Prosecution, court and imprisonment costs for these cases run into the tens of thousands of dollars each.

Most significantly, the DEA raids have deprived the state’s economy of millions of dollars in lost jobs and tax revenues,according to an analysis by Cal NORML.

Apologists for the DEA raids argue that dispensaries are not really legal under existing state law. NORML attorneys agree that Prop. 215 and SB 420 only protect sales in limited circumstances for duly designated “primary caregivers” and cultivation collectives.

State Sen. Carole Migden has announced that she will sponsor a bill that would remedy this problem by explicitly legalizing retail distribution by dispensaries that pay sales taxes and abide by local regulations. NORML strongly supports legislation to further legitimize dispensaries.

The DEA offensive is likely to cause substantial cutbacks in the number of dispensaries in California. In Los Angeles, where as many as 300 or 400 dispensaries were operating as of last June, only 130 have filed papers to become licensed under the city’s pending licensing ordinance, which is expected to be enacted after a current moratorium on new dispensaries expires next year. In Santa Barbara, which had 19 dispensaries before the letters arrived, only two or three remain in operation. Meanwhile, new dispensary openings have plunged dramatically in California. For the first half of this year, California NORML was receiving 7 –10 new dispensary listing requests per week. Requests have now dropped to a couple per month, although many new delivery services are opening up.

There are no immediate prospects for relief from the DEA offensive. Many view this as the last opportunity for Bush administration drug warriors to vent their wrath on marijuana. Advocates take heart in the fact that all of the leading Democratic candidates for President have pledged to halt the DEA raids.

Supporters are urged to write local officials and Congress in opposition to the DEA crackdown. Letters are especially encouraged to the following Californians on the House Judiciary Committe: Rep. Zoe Lofgren (San Jose), Rep. Brad Sherman (Sherman Oaks), Rep. Adam Schiff (Pasadena), Rep. Maxine Waters (LA), Rep. Linda Sanchez (Orange), and Rep. Mary Bono (Palm Springs).

CA NORML 2261 Market St. #278A San Francisco CA 94114