Feds crack down

Dispensaries around the state draw heat, from tax scares to seizure threats

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steve@sfbg.com

HERBWISE Reversing its previous pledge to abide people's rights to legally obtain medical marijuana in California and the 14 other states that have legalized it, the Obama Administration has launched a crackdown on the industry using several different federal agencies.

During an Oct. 7 press conference in Sacramento, California's four U.S. attorneys announced their intention to go after the industry with raids on large-scale growing operations and big dispensaries and civil lawsuits targeting the assets of people involved in the cannabis business.

"We want to put to rest the notion that large marijuana businesses can shelter themselves under state law," Melinda Haag, the U.S. attorney for Northern California, based here in San Francisco, said at the press conference.

That pronouncement is just the latest in a series of federal actions against those involved with the production and distribution of California's top cash crop, an industry that the California Board of Equalization estimates to be worth about $1.3 billion in tax revenue annually. Sources in the medical marijuana business say the crackdown began quietly this summer.

Hundreds of dispensaries and other medical marijuana operations had their bank accounts shut down after the Treasury Department contacted their banks and warned them of sanctions for doing business with an industry that remains illegal under federal law. The Internal Revenue Service last month also notified many large dispensaries — including Harborside Health Center in Oakland, the largest in Northern California — that they cannot write off normal business expenses and must pay a 35 percent levy on those claims going back for three years.

Harborside's Steve DeAngelo told us that would put Harborside — or any company with high overhead costs — out of business. "This is not an effort to tax us, it's an effort to tax us out of existence," he said, noting that Harborside paid the city of Oakland $1.1 million in taxes this year. In addition, the Department of Justice recently began sending 45-day cease-and-desist letters to hundreds of dispensaries around the state, including at least two in San Francisco, warning the clubs and their landlords that the operations violate federal law and could be subject to federal laws on the seizure of assets from the drug trade.

"It's a multi-agency federal attack on patients' access to this medication," DeAngelo said. "It's going to drive sick and dying patients back out onto the street to get their medicine."

Haag claimed the state's medical marijuana laws, which California voters approved back in 1996, have been "hijacked by profiteers." Yet both local officials and people in the industry say that characterization is ridiculous, and that the federal government's new stance will destroy an important industry — one that is very professional and well-regulated in San Francisco — and send legitimate patients back into the black market.

"I think it's a step in the wrong direction and counter-intuitive to the Obama Administration's contention that he would respect state's rights," said Sup. Ross Mirkarimi, who authored groundbreaking legislation regulating San Francisco's two dozen dispensaries, a system that he said "is working well...But now the federal government is pulling the rug out from under us."

Shortly after taking office in 2009, the Obama Administration released the "Ogden memo," written by Deputy Attorney General David Ogden, stating the federal government would respect the rights of states to legalize and regulate medical marijuana. It was seen by cannabis activists as a sign that Obama was de-escalating the war on drugs, at least as it applied to marijuana.

Comments

Sorry to leave this comment here as it is not actually directed at this article per se (same subject). Is there a general 'letter to the editor' section of this website? If so, I didn't see it anywhere... Wouldn't you like there to be one?

Anyway! About that huge one page appeal to the Feds to BACK OFF in their effort to shut down the quasi-legal marijuana drug trade, well, first, thanks for that. We need as many people as possible telling them that in the face of everything horrible happening right now, this crackdown is beyond offensive - it's patently absurd.

Second, one gripe: I don't think it does the 'movement' (a term I use loosely) any favors to pretend that legalized marijuana is all about "therapeutic use" and "people who need medicine." That claim lies somewhere between 'not totally correct' and 'outright lie,' the Feds know that, and they're using it against us.

Let's face it: We'll do much better deflating their attacks by admitting that, yeah, it's just another form of recreation, only far less deadly than certain other forms of recreation that are not only legal, but aggressively pushed down our throats.

There is no shame in the recreational use of marijuana, and we shouldn't imply that there is by defending only its 'medical' benefits.

Posted by Guest on Oct. 12, 2011 @ 7:54 am

Please sign the online White House petition to END MARIJUANA PROHIBITION
http://wh.gov/gP1

Posted by Guest USMJP on Oct. 12, 2011 @ 8:21 am

The drug war is flawed public policy. Nothing productive has been achieved in the past forty years, further evidence that prohibition doesn’t deter drug use. Rather, it creates black markets where disputes are settled with guns instead of courts, militarizes the police, and criminalizes citizens who engage in nonviolent, consensual transactions. It is time to end the epic failure known as the war on drugs. More commentary and coverage at http://spatialorientation.com/tag/drug-war

Posted by SpatialOrientation on Oct. 12, 2011 @ 8:24 am

The drug war is flawed public policy. Nothing productive has been achieved in the past forty years, further evidence that prohibition doesn’t deter drug use. Rather, it creates black markets where disputes are settled with guns instead of courts, militarizes the police, and criminalizes citizens who engage in nonviolent, consensual transactions. It is time to end the epic failure known as the war on drugs.

Posted by SpatialOrientation on Oct. 12, 2011 @ 8:30 am

I am a patient and agree with the judges this time. While I do believe marijuana should be legalized they judges are correct. EVERY SINGLE club charges MORE for what they sell than they charge on the streets. I have seen clubs go from a shoestring budget to buying flatscreen tvs with all the belles and whistles in a matter of weeks. These people ar making so much money that they voted not to legalize pot in the last election and won. I am all for the patients rights but really would like to see all clubs go away. THEY ARE RUN by profitters. I know this for sure 100%. NONE of these clubs will give up anything but schwag if you have no money yet they are supposed to be non profit. All this crap about buying it on the black market is a joke, you are already buying it on the black market only from clowns. You see I remember these clubs when they did not even know how to tell if a plant is ripe. Didn't know how to make hash. Didn't know how to make oil. Didn't REALLY know the difference between indica and sativa or ruderalis. NOW they are experts???? Most of the shiny fuzzy new stuff they show you is total BS. WE the patients DO need prop 215 but WE can do without the clubs.

Posted by Guest tj on Oct. 12, 2011 @ 10:30 am

Jesus said to do unto others as we would have them to do unto us. None of us would want our child thrown in jail with the sexual predators over marijuana. None of us would want to see an older family member’s home confiscated and sold by the police for growing a couple of marijuana plants for their aches and pains. It’s time to stop putting our own family members in jail over marijuana.
If ordinary Americans could grow a little marijuana in their own back yards, it would be about as valuable as home-grown tomatoes. Let's put the criminals out of business and get them out of our neighborhoods. Let's let ordinary Americans grow a little marijuana in their own back yards.
Here's one way that IT IS REALLY WORKING: Arresting the criminals and collecting a fee from registered growers (and bringing in thousands of dollars to support the county budget); what a great plan! This is the way to build a better America! http://www.pbs.org/wgbh/pages/frontline/2011/07/the-pot-republic-one-she...
The current proposal before Congress, bill HR 2306, will allow states to decide how they will regulate marijuana. You can email your Congressperson and Senators at http://www.usa.gov/Contact/Elected.shtml to discuss HR 2306.
And a big THANK YOU to the courageous, freedom loving legislators, governors, and countless others who are working so hard to bring this through! You’re doing a great patriotic service for all of America!

Posted by Guest on Oct. 12, 2011 @ 2:32 pm

The big LIE ; there is a difference between the corrupt democrats and corrupt republicans!

Legalize pot, tax it, use the funds to give free treatment to folks on hard drugs!!!

Posted by GuestSf T Party on Oct. 19, 2011 @ 10:20 am

headline should read ;

"Feds action bolsters the profits of the Mexican drag gangs/terrorists"

Legalize POT!

Posted by GuestSf T Party on Oct. 19, 2011 @ 10:21 am

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