Legal-Federal Crackdown

Within the past four weeks, the medical marijuana industry has come under severe attack by the federal government. It’s clear that we got the wind knocked out of us with this extreme escalation of the War on Drugs; many of us have yet to catch our breath. Regardless of one’s view of medical marijuana or party affiliation, Americans who believe in state rights are shocked and alarmed that the federal government is intensifying their efforts to suffocate California’s medical marijuana industry by targeting not only medical marijuana dispensaries and growers, but anyone who dares to do business with them as well.

Last Friday, October 7, 2011, California’s four U.S. attorneys announced their new federal strategy against the medical marijuana industry. The prosecutors describe it as a “sea-change” and have sent out a series of letters threatening landlords with property forfeitures for renting to dispensaries. In the most coordinated statewide marijuana enforcement strategy, the government has started the process of shutting down businesses, threatening with criminal charges, and confiscating the property of small businesses and property owners who are operating according to state law. Not dissimilar to cities that send Cease and Desist Letters and Notices of Violation to dispensaries operators and their landlords, the strategy of targeting the landlord is effective because it puts the landlord in an impossible situation: either evict your tenant within 45 days or risk losing your property and possibly being charged criminally.  The end result often comes down to the landlord breaching a valid lease agreement or simply not renewing a lease in order to protect their assets and limit their own risk.  As any medical marijuana operator will tell you, it is extremely difficult to find a sympathetic landlord, and the few remaining are unlikely to want to embroil themselves in the ever-growing conflict between state and federal law. Tragically, it is the patients who will suffer the most as their safe access is being threatened. If there are no retail outlets in safe areas, patients will be forced back to the streets or to unmarked shops under the veil of secrecy where regulation and medicine quality control will be a thing of yesteryear.

Over the past weeks, many medical marijuana growers, landlords, dispensaries operators, and service providers are asking: “Should I shut down my business? Who is the most at risk? How can federal governments possibly shut us all down at once? What will all the patients do?”  Only time can tell how all of this will unfold, but the strategy laid out by the U.S. attorneys in California does offer some guidance as to who will be at risk. Investigations most likely to be prosecuted include distributors caught with at least 200 kilograms of marijuana, including distribution near schools, playgrounds and colleges; cultivators with gardens of at least 1000 plants that are not on federal land and at least 500 plants on federal or tribal land, or where there is significant damage; and dispensaries that sell more than 200 kilograms or 1,000 plants annually. Additionally, many dispensary landlords throughout the state have received threatening federal letters for operating too close to schools (less than 1000 feet), even though under state law, dispensaries are not permitted within 600 feet of schools. However, a federal law, Title 21 USC 860, imposes additional penalties for the sale or distribution of controlled substances within 1,000 feet of schools, colleges, playgrounds, and a host of other areas. This law was originally intended to prevent drug dealings at schools, but it is now being used by U.S. attorneys to harass, otherwise, state compliant collectives. The strategy also outlines guidelines for civil forfeitures for those who indirectly participate, such as landlords or property owners.

As if this most recent attack was not enough, this is only one development in a series of actions taken by federal authorities to decapitate state-recognized medical marijuana distributors. Banks are cutting business ties with dispensaries, presumably after extreme pressure from the Department of Treasury. The Internal Revenue Service is auditing numerous dispensaries and seeking millions of dollars in back taxes by denying standard business deductions. The Bureau of Alcohol, Tobacco and Firearms has warned firearm dealers to treat medical marijuana patients as if they are drug addicts and forbid them from buying guns. And last, but certainly not least, U.S. Attorney Laura E. Duffy, whose districts include San Diego County, announced plans to target newspaper and radio outlets advertising medical marijuana. It seems like the First, Second and Tenth Amendments are of little concern to federal officials these days.

These latest actions only add to the confusion, frustration and legal problems for patients, providers, state elected public officials, and law enforcement alike. These most recent attacks also threaten to have a terrible economic impact on jobs and tax revenues. California NORML estimates that the state’s medical marijuana industry now accounts for  $1.5 – $4.5 billion in sales, tens of thousands of jobs, and over $100 million in taxes. In these tough economic times, this hard-line approach to medical marijuana baffles democrats and republicans alike.

It is also worth noting that these enforcement efforts come almost simultaneously with the City of San Diego finally making good on its threats to file civil lawsuits against storefront dispensaries for violating San Diego’s Land Use and Zoning laws. Is this just a coincidence? It is most likely not. Many of the stores who were ready and willing to go before the judge and finally have their issues and concerns litigated can no longer do so, because U.S. Attorney Laura Duffy sent letters to their landlords. If there is no storefront left, what is the point of fighting for your right to operate in that location?

So where do we go from here?  Many people opine that this is the beginning of the end. Others choose to see this latest crackdown as the true beginning of the war against the medical marijuana industry, and they believe that, ultimately, we will be victorious.  Regardless, the medical marijuana community must remain cohesive and stand as a united front. Finger pointing and the whispers of who is to blame for all of this has no place here; because at the end of the day, we’re all in this together, whether you’re an advocate for full legalization or for safe access to medical marijuana only.

The message we must send right now is two-fold and must be loud and clear.  First, the federal government needs to get out of our backyard and take a closer look at the Tenth Amendment. The Tenth Amendment states the Constitution’s principle of federalism by providing the powers not granted to the federal government nor prohibited to the states by the Constitution are reserved, respectively, to the states or the people; and the people of California have spoken loud and clear since the passage of the Compassionate Use Act in 1996. And second, our State Legislatures and elected officials need to step up and denounce this federal invasion and work with the medical marijuana industry to come into an era of regulation and compliance for everyone’s sake.

By: Kimberly R. Simms, Esq.  – Law Office of Kimberly R. Simms and instructor at Legal Cannabis Institute – If you are a concerned patient, landlord, grower, dispensary operator, or ancillary service provider in this industry, please do not hesitate to contact our office to answer any additional questions or concerns you have about the recent events and their impact on your particular business or situation. The best and most appropriate course of action will not be the same for everyone, and we are here to guide you through these challenging times.

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