Medical marijuana backers sue feds

California medical marijuana patients, storefront dispensaries and their landlords are marshaling forces to stave off a massive federal crackdown against them.

On Thursday, the cause’s largest advocacy organization sued the U.S. attorney general and the top federal prosecutor in Northern California. Another major challenge is being prepared.

Meanwhile, there’s a growing move by California Attorney General Kamala Harris and others to develop defensible statewide regulations for collectives, which are trapped between state and federal law.

This week, several supporters of 2010’s unsuccessful Proposition 19 to legalize marijuana for recreational use said they were drafting a 2012 ballot initiative that would impose controls on California’s loose-knit medical cannabis industry.

The moves come after California’s four U.S. attorneys on Oct. 7 announced a campaign to shutter commercial marijuana dispensaries, accusing producers and distributors of using the state’s 1996 medical marijuana law as a cover for reaping huge profits.

Of particular concern are collectives alleged to be operating too close to where children gather or those serving as fronts for drug dealing.

In San Diego, U.S. Attorney Laura Duffy mailed hundreds of letters warning dispensary operators and their landlords to shut down within 45 days or risk criminal prosecution and property seizures. Her counterparts mailed letters to several municipalities targeting their medical marijuana regulations.

In the federal lawsuit filed Thursday in San Francisco, Americans for Safe Access claims the Obama administration is attempting to subvert state and local medical marijuana laws. The advocacy group, which has 20,000 members in California, argues that the administration has “instituted a policy to dismantle the medical marijuana laws of the state of California and to coerce its municipalities to pass bans on medical marijuana dispensaries.”

While the Department of Justice is entitled to enforce federal marijuana laws, the 10th Amendment bars it from using coercive tactics to commandeer the lawmaking functions of the state, said Joe Elford, the group’s attorney.

The case is aimed at restoring the sovereign and Constitutional right of the state to establish its own public health laws based on the country’s federalist principles, Elford said.

“The short of it is, the feds can’t tell California what to do,” he said.

The 17-page lawsuit, which names Attorney General Eric Holder and U.S. Attorney Melinda Haag, seeks an injunction barring the Department of Justice from interfering with collectives that meet state and local regulations along with the return of 99 cannabis plants seized during the Oct. 13 raid of a licensed collective in Mendocino County.

Also on Thursday, the spokesman for lawyers representing dozens of collectives and their landlords across the state said the group is preparing to file a separate lawsuit in federal court. P.J. Johnston described pending action by the still-unnamed group as a “multipronged, organized effort to get into court and to send a message to the federal government that we need to stop the aggression and sit down and talk reasonably about these issues.”

In announcing the crackdown, Duffy referred to the state’s marijuana trade as a pervasive, for-profit industry that violates federal law and has little to do with providing medical relief to the sick. The effort was sparked in part because of the proliferation of marijuana cultivation and retail storefronts across the state, Duffy said in a recent interview.

Federal prosecutors said local governments are prevented from allowing the use of marijuana, including enacting local zoning regulations, and this month a state appellate court concluded the same. Other appellate court decisions in California have ruled that state medical marijuana laws are not trumped by federal law.

In San Diego, City Attorney Jan Goldsmith has pledged to close every dispensary in the city because zoning laws do not permit them. About 20 to 25 collectives have closed and another 20 to 25 are preparing to, said Eugene Davidovich, local chapter coordinator for Americans for Safe Access. Meanwhile, 12 more dispensaries have opened, he said.

Many, including Higher Healing Patient Association on Mission Gorge Road, closed after receiving federal letters, city notices of violation, or both. John Murphy, the attorney for Higher Healing, said his clients operate as nonprofits, obeying all state laws and guidelines.

Greg Shultz, the owner of GSC Wellness on Palm Avenue, said he received a notice of violation from the city with a “huge laundry list of code compliance violations that were completely asinine.” His landlord also received a federal letter. Still, they plan to stick it out.

“I am not going to be pushed around. I come from a large family of law enforcement and I am not a cartel person,” Shultz said. “We have many, many, many cancer patients that come here and they get their medication for free. It’s really kind of a travesty.”

Approved as a ballot measure in 1996, Proposition 215 allows people with a doctor’s approval to use marijuana and receive it from their caregivers. However, it did not expressly allow or regulate dispensaries. State legislation in 2003 and guidelines from then-Attorney General Jerry Brown in 2009 authorized distribution by nonprofit collectives, but much of it was not delineated in law.

“While there are definite ambiguities in state law that must be resolved either by the state legislature or the courts,” Harris said last week in a highly anticipated statement, “an overly broad federal enforcement campaign will make it more difficult for legitimate patients to access physician-recommended medicine in California.”

Assemblyman Tom Ammiano, D-San Francisco, said he was willing to explore legislation that defines legal distribution, but warned that forging ahead would be difficult given the lack of direction from the federal government.

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Czechs to allow medical marijuana to be grown ....

PRAGUE — A government advisory body in the Czech Republic is working on a new law to legalize growing and consuming medical marijuana.

The experts have proposed that marijuana would be imported or grown locally by registered firms licensed for such activity, which is currently illegal.

The group also proposed Monday that all patients using marijuana would be registered.

The draft of the new marijuana bill will be completed in December. If approved by the government and parliament, the law could become effective by the middle of next year.

Some 8,000 Czechs have signed an Internet petition supporting the move, arguing that such marijuana use is legal in a number of European countries and the United States.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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IRS Say's No Deductions for MMJ Collectives...

In a potentially crushing blow to the burgeoning medical marijuana industry, the IRS has ruled that MMJ dispensaries cannot deduct standard business expenses such as payroll, security or rent.

Harborside Health Center, one of the nation's largest medical marijuana dispensaries and considered a model for the industry, is on the hook for $2.5 million in taxes from 2007 and 2008. That is $2 million more than the Oakland, Calif.-based company paid for those tax years.

“I see only two outcomes here,” said Steve DeAngelo, director and chief executive of Harborside. “Either this IRS assessment has to change or we go out of business. There really isn’t a middle ground for us.”

DeAngelo says the ruling will likely be appealed. He has 90 days to respond to the ruling.

The IRS ruling is based on an obscure portion of the tax code -- section 280E -- passed into law by Congress in 1982, at the height of Reagan administration’s “war on drugs.” The law, originally targeted at drug kingpins and cartels, bans any tax deductions related to "trafficking in controlled substances."

Although 16 states and the District of Columbia have passed laws allowing medical use of marijuana, the federal government still considers it a Schedule I drug, the most restrictive category with the harshest penalties.

The Internal Revenue Service refused to comment on the specific case, but letters sent from Andrew Keyso, IRS deputy associate chief counsel, to some members of Congress spell out the official position:

“Section 280E of the Code disallows deductions incurred in the trade or business of trafficking in controlled substances that federal law or the law of any state in which the taxpayer conducts the business prohibits. For this purpose, the term “controlled substances” has the meaning provided in the Controlled Substances Act. Marijuana falls within the Controlled Substances Act.”

The news has spread rapidly through the cannabis community and is likely to have a chilling effect on businesses.

“We are all a bit nervous and frustrated,” said Ken Estes, owner of Patient To Patient Group Collective in San Jose, Calif. “We have tried to comply with every city, state and federal law. We ask for input from all the agencies. But we are still being punished for operating a legitimate business.”

Harborside, which celebrated its fifth anniversary Monday, serves 94,000 patients with 84 full-time employees and brings in about $22 million in annual revenue. According to DeAngelo, the center, set up as a not-for-profit business, pays about $1.1 million in taxes to the city of Oakland, $2 million to the state of California and $500,000 to the federal government.

“We have no complaint about the taxes we pay," DeAngelo said. "We are doing our part. All we ask is that we be treated like any other business enterprise. To treat us like criminals makes is simply wrong. Drug kingpins and cartels don’t file taxes. We do. But no business, including ours, can survive if it is taxed on its gross revenue. The IRS is trying to tax us out of existence.”

Keith Stroup, legal counsel and founder of NORML, the nation’s largest marijuana advocacy group, says the IRS ruling is likely to stifle the quasi-legal industry and force people back onto the black market.

“You know, Al Capone was taken down by the IRS, not by the FBI or the police. And I can assure you that Steve DeAngelo is no Al Capone,” Stroup said.

Stroup believes the move also could make it more difficult for the medical marijuana industry to capture significant capital investment. Medical marijuana is now a $1.7 billion market, according to a report released this year by See Change Strategy, an independent financial analysis firm that specializes in new and unique markets. The figure represents estimated sales of marijuana through dispensaries in states with medical marijuana laws.

Although the IRS declined comment, Stoup says NORML has received e-mails from other dispensaries that are currently being audited and will likely receive similar rulings. “Harborside is one of the biggest, so that is why the IRS targeted them first,” Stroup said. “But there are other dispensaries that will suffer the same fate unless Congress acts.”

Some members of Congress have taken up the cause.
Reps. Pete Stark, D-Calif., Barney Frank, D-Mass., and Jared Polis, D-Colo., have introduced legislation to ensure the medical marijuana industry is treated like any other business.

Two Republican presidential candidates — Ron Paul and Gary Johnson — also support the legislation.

Stark’s bill, the Small Business Tax Equity Act, authorizes medical marijuana dispensaries to take the full range of business expense deductions.

“You’d think that a time of record budget deficits that the IRS would be happy that a legal business is doing the right thing and paying its taxes," Polis said. "Instead, the IRS seems intent on destroying a successful and legal business that creates jobs and strengthens our economy."

The confused legal situation is “an un-American loop of nonsense,” says Jerome Handley, a tax attorney in Oakland who has more than 100 clients in the medical marijuana industry. “My advice to my clients is simple: Document everything … and stay out of the spotlight.”

William Panzer, an Oakland tax attorney who helped author California’s medical marijuana law, Proposition 215, also successfully fought the IRS in a similar case in 2007.

In that case, U.S. Tax Court Judge David Laro declared that Californians Helping to Alleviate Medical Problems (CHAMP), a medical marijuana provider, could deduct the majority of employee costs as caregiving expenses. The IRS sought $426,000 in back taxes and penalties, but CHAMP ended up paying a tax assessment of less than $5,000.

“This law is not about protecting citizens from criminals. It is a concerted effort by the federal government to crack down on a legitimate business,” Panzer said.

DeAngelo points out the apparent craziness of the law. “The IRS allows me to deduct my cost of purchasing cannabis, which is the controlled substance they say is illegal. But I can’t deduct my payroll or my rent? That, clearly, defies logic and common sense.

"Besides," DeAngelo added, "have you ever heard of a drug trafficker that actually files a tax return? Me neither."

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Medical Marijuana Legalization: Statistics and Facts

First law that legalized medical marijuana

In 1978, the federal government was forced to allow some patients access to medical marijuana after a “medical necessity” defense was recognized in court, creating the Investigational New Drug (IND) compassionate access program.

Medical marijuana by states

Thirteen states have medical marijuana research laws, and only fifteen states have never had a positive medical marijuana law.

Since 1996, fifteen states have enacted laws that allow the cultivation of medical marijuana and protect patients who possess medical marijuana (with their doctors’ recommendations or certifications) from criminal penalties: Alaska, Arizona, California, Colorado, Hawaii, Maine, Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington. Ten of the thirteen did so through the initiative process. Hawaii’s law was enacted by the legislature and signed by the governor in 2000; Vermont’s was enacted by the legislature and passed into law without the governor’s signature in 2004; Rhode Island’s was passed into law over the governor’s veto in 2006; New Mexico’s legislation was signed into law by Governor Bill Richardson in 2007; and on January 18, 2010, Governor Jon Corzine signed New Jersey’s bill into law. In mid-December 2009, the United States Senate passed an omnibus appropriations bill that removed restrictions on the implementation of a marijuana initiative passed by District of Columbia voters in 1998; President Obama subsequently signed this bill into law on December 13, 2009.
Article about states have medical marijuana legalized.

Public Support for Medical Marijuana Legalization
Medical marijuana is one of the most widely supported issues in drug policy reform.
According to a 1999 Gallup poll, 73% of Americans are in favor of “making marijuana legally available for doctors to prescribe in order to reduce pain and suffering.”
Assuming that those who use cannabis daily are medical users, the application of these percentages to comparable 2010 U.S. Census categories for those age 18 to 55 would calculate estimated 5 million medical marijuana patients in the U.S.

Medical Marijuana and Doctors

“According to a survey of 400 physicians, both general practitioners and specialists in the Netherlands, which was performed just before the legal introduction of medicinal cannabis, only 6% said that they were under no condition willing to prescribe medicinal cannabis, while 60% to 70% regarded medicinal cannabis sufficiently socially accepted and would prescribe it if asked for by a patient.”

Medical Marijuana and health

According to the recent experiment on influence of cannabis, marijuana proved to be effective as a therapy for nausea (93%) and vomiting (75%), and as an appetite stimulant (95%).
These results were also shown by many other medical researches, such as The Institute of Medicine’s 1999 report that stated “The accumulated data indicate a potential therapeutic value for cannabinoid drugs, particularly for symptoms such as pain relief, control of nausea and vomiting, and appetite stimulation.”
Cannabinoids likely have a natural role in pain modulation, control of movement, and memory.

Arguments about marijuana being the gateway drug

The Institute of Medicine’s 1999 report explained that marijuana has been mistaken for a gateway drug in the past because “Patterns in progression of drug use from adolescence to adulthood are strikingly regular. Because it is the most widely used illicit drug, marijuana is predictably the first illicit drug most people encounter. Not surprisingly, most users of other illicit drugs have used marijuana first. In fact, most drug users begin with alcohol and nicotine before marijuana, usually before they are of legal age.”

Rhode Island Say's No to Medical Marijuana Patients!

State-run medical marijuana dispensaries will not be coming to Rhode Island after Governor Lincoln Chafee scrapped the plan for fear it was illegal under federal law.

Chafee, who had earlier vowed support for the measure, said he decided the state's planned dispensaries could violate superseding federal law and become a target of federal law enforcement efforts.

"Federal injunctions, seizures, forfeitures, arrests and prosecutions will only hurt the patients and caregivers that our law was designed to protect," the governor said in the statement late Thursday.

Before his reversal, Chafee had hoped to implement a 2009 law passed by Rhode Island's General Assembly allowing marijuana distribution through three state-run, so-called "compassion centers."

The measure authorized growing and selling [medical] marijuana to patients with debilitating illnesses, such as cancer, AIDS, and glaucoma.

Currently, 16 states and the District of Columbia allow for medical marijuana use.

One of them is Montana, where in March federal agents raided state-sanctioned medical marijuana greenhouses and dispensaries in several cities, prompting an outcry from legalized pot suppliers. The busts, the first since Montana legalized marijuana for medical purposes in 2004, appeared to mark a reversal of federal policy set in 2009 that tolerated state-approved dispensaries.

Threatening a similar crackdown in Rhode Island, both the U.S. Department of Justice and Rhode Island's U.S. Attorney, Peter Neronha, this year said commercial operations such as the state-run dispensaries would be potential targets of "vigorous" criminal and civil enforcement efforts by the federal government.

Dropping the dispensary plan means that patients in Rhode Island will have to continue to grow their own marijuana, buy the drug illegally from "street" dealers, or acquire it from over 2,500 licensed caregivers in the state. Many have said they would prefer to use dispensaries for a convenient, safe, regulated option for quality marijuana.

Medical marijuana advocates decried Chafee's decision.

"We are shocked, outraged and really hurt all at the same time," JoAnne Leppanen, executive director of Providence-based Rhode Island Patient Advocacy Coalition, told Reuters.

Keith Stroup, legal counsel with the National Organization for the Reform of Marijuana Laws, or NORML, a Washington, D.C.-based marijuana smoker's lobby, said his group was disappointed with Chafee's action.

"He's using the threat of federal enforcement somehow coming into the state as a justification to refuse to implement the medical marijuana dispensary provisions that previously have been approved," he said.

But long-time opponents including state Representative Doreen Costa cheered the plan's demise.

"I am very happy that he did that," said Costa, a Republican, who said some of her constituents did not want a dispensary in their district.

"Mainly the concern was, in the state of Rhode Island, marijuana is illegal, period. So if he wanted to open up the compassion centers, people would go buy the marijuana and I know they would be selling it on the street," Costa said.

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Certified Med's Vs."Fire" of unknown origin?

Fifteen years after medical marijuana was legalized in California, there are still few regulations governing safety standards. It has fallen to concerned people within the industry to take charge of their own health and safety certification. Santa Cruz Mountain Naturals, a medical cannabis collective in Aptos, CA, has chosen to undergo evaluation by the Clean Green Certified third-party medical marijuana inspection program for safety and legal compliance.

The Clean Green Certification Program, created by California medical cannabis compliance lawyer Chris Van Hook, is setting a new standard for medical cannabis quality control. The independent third-party verification program assures medical cannabis bearing its label is grown without harmful chemicals and fertilizers, and is compliant with strict quality control and legal practice standards from seed to final patient.

In order for collectives including Santa Cruz Mountain Naturals to get Clean Green Certified status, they must also be inspected for safety and cleanliness. They must assure their legal compliance with medical marijuana standards in California by having demonstrable policies in place for non-diversion of product into the illegal market. They must have a documented "closed loop" arrangement showing that their product is grown by members and distributed to members, and everyone involved has a current doctor's recommendation. Further, they are required to have a method of controlling access to the facility.

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Prez Mumbles, Fumbles and Punts Medical Cannabis Q:?

For all his Kennedy-esque "uhs" and "ahs," President Barack Obama... stuttering, not stentorian, when an audience member dished him a question on medical marijuana.


And it wasn't even particularly stressing. "If you can't legalize marijuana, why can't you just legalize medical marijuana?" asked a woman in Cannon Falls, Minnesota. That was the stumper after which Obama was literally left stammering.

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C.A.M.P. thugs pat themselves on their back…

If you are a Medical Marijuana patient on the Central Coast its been hard to watch, but it’s been a busy week for the Santa Cruz and Monterey county C.A.M.P. folks let’s take a t look at their work. “ A drug cartel marijuana grow worth on Hecker Pass about $5 million got the axe Wednesday when Santa Cruz County sheriff's deputies and state drug agents raided it, authorities reported.

The grow, on the 1000 block of Hecker Pass Road, was terraced across an acre and fenced off with mesh and netting, according to the Sheriff's Office.

Deputies found more than 5,000 cannabis plants in the garden. There also was a camp with shotgun rounds, rat poison, pesticides and other debris, the Sheriff's Office reported.”

Also on Wednesday morning, an armed group of 16 state thugs wearing military camouflage took part in the annihilation of four illegal cannabis agricultural sites in the foothills above Watsonville. Of the four two were inside Mt. Madonna County Park, while the other two grows were on private property that borders the park.

Authorities collected approximately 20,000 cannabis plants on Wednesday. Still green and attached to their root balls.... dirt and all, and pegged it with an estimated street value between $25 and $30 million. This is just a sad attempt to justify next year’s budget with bad data, if they trimmed all of that plant matter down, to just the smoke able flower after drying it, as all do... it would have been a fraction of that weight.

The goon squad was part of an entity known as "Campaign Against Marijuana Planting" or CAMP, a program that has been destroying both “illegal” marijuana camps and medical marijuana grows throughout California since 1983.

The grow sites were located with old-fashioned reconnaissance patrols that take place between January and June.
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Kern County Board of Cowards Bow To Ignorance!

Well the Kern County Board of Supervisors voted its conscience on Tuesday, passing an ordinance that will ban storefront medical marijuana collectives in unincorporated Kern County and outlaw the sale of edible marijuana products.

Now medical cannabis advocates will have their turn.

Attorneys for cooperatives have promised a two-pronged attack on the supervisors' ordinance.

They plan to file a lawsuit blocking its enactment. And they say they will also launch a referendum drive that could stop the ordinance in its tracks.

Kern County Elections Division Chief Karen Rhea said opponents of the ordinance to ban medical marijuana collectives would need to collect 17,350 signatures from registered Kern County voters before the ordinance goes into effect Sept. 8 to block enactment of the law.

If medical marijuana advocates succeed in collecting the signatures, Rhea said, the ordinance would be sent back to supervisors and -- if supervisors did not repeal it -- the question would proceed to an election at which voters could approve the ban or overturn it.

Deputy County Counsel Devin Brown said the medical marijuana ban law would remain off the books until the election is decided.

That is exactly what happened in Butte County.

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AZ. A.G. and the "Good Ol Boy's"... Do the Two step on your rights

Arizona Attorney General Tom Horne asked a court today to shut down medical cannabis clubs, claiming they're "blatantly illegal" under Arizona's medical marijuana law.

The motion, filed in Maricopa County Superior Court, names four clubs and an individual: "The 2811 Club, The Arizona Compassion Association, Yoki A Ma' Club, the Arizona Compassion Club and Michael R. Miller." Horne wants a judge's ruling that the clubs aren't legal and an injunction to stop them from the "selling, producing, transporting, transferring or possession of medical marijuana."

Horne was asked to look into the legality of clubs last month by Will Humble, director of the state Department of Health Services, who reportedly became concerned about the clubs after reading a New Times article.

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The “Letter of the law” Vs The state spirit of the laws:

The DEA's interpretation that cannabis has no presently acknowledged medical use and has a “high“ potential for misuse will probably be appealed through the courts. In the interim, mr. obama administration's position is not to obstruct medical marijuana growth and use that abide by the letter and spirit of state and local laws.

The problematic issues arise when the “letter” of the law is inconsistent with the essence. Various – certainly not all of the 16 state MMJ statutes (plus D.C.) make it easy for recreational users to obtain medical cannabis recommendations.

Whether those ambiguities came from good-faith, yet incompetent efforts to implement a responsible system, or whether they are deliberately exploitative of medical marijuana to achieve effective legalization, is up for us to guess and can only truly be known by those who wrote the laws. One thing seems painfully obvious, though … such laws frequently permit far more than the public realizes or the DOJ will stomach.

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Boulder Boots 1/3 MMJ Collectives..."High Standards"?

Boulder Co city officials have rejected more than 1/3 of the applications from people seeking to run medical marijuana dispensaries or growing operations in the city, slowing the pace of what once was seen as a Wild West-style rush for riches.

Ten months after the initial 119 business-license applications were turned in by Boulder's November deadline -- set when the City Council last year approved sweeping new regulations for the budding industry -- 40 medical marijuana companies have licenses to operate.

So far, 41 of those 119 applications, from existing businesses that had opened prior to adoption of the new rules, have been rejected for reasons that include zoning problems, incomplete paperwork and -- in about half of the cases -- the sometimes extensive criminal records of owners, operators and investors.

City officials say the vast majority of the 38 applications that remain in their queue have passed their initial background checks and are well on their way to being awarded business licenses.

As for those medical marijuana business owners who have been denied licenses, some have closed shop or moved to cities with less stringent rules. Some fired or bought out employees and partners with problematic pasts.

And many others are appealing the city's decisions -- a tactic that allows them to stay open and keep their fingers in Boulder's multimillion-dollar marijuana industry while they plot their next steps.

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