2011-10-08 "U.S. targets pot suppliers who profit in state" by Bob Egelko from "San Francisco Chronicle"
California's federal prosecutors announced a campaign Friday to shut down scores of marijuana dispensaries, which they described as profit-making criminal enterprises masquerading as suppliers of medicine.
The announcement at a Sacramento news conference angered medical marijuana advocates, who said President Obama had reneged on his promise to let states set their own policies on therapeutic use of the drug. But prosecutors insisted they weren't going after patients and their caregivers.
"People are using the cover of medical marijuana to make extraordinary amounts of money," said San Francisco's U.S. attorney, Melinda Haag, speaking alongside her counterparts from Sacramento, Los Angeles and San Diego.
The prosecutors said dispensaries are violating California law - which allows medical marijuana distribution only by nonprofit organizations - as well as federal law that bans all use of the drug.
Targeted stores -
Haag, whose district runs from Monterey County to the North Coast, said she is initially targeting a limited number of marijuana stores located near schools, playgrounds or Little League fields. A Sept. 28 letter, released by medical marijuana advocacy groups, advises the owner of an unidentified Mission District dispensary to shut down within 45 days or face possible criminal charges and loss of the property.
Haag declined to say how many outlets received the letters, but added, "We will almost certainly be taking action against others. None are immune from action by the federal government."
The other three prosecutors said they had each sent letters to dozens of marijuana retailers in their districts notifying them that they were violating federal law and subject to property forfeiture and possible prosecution.
"This is not an idle threat," said San Diego's U.S. attorney, Laura Duffy. "This is our commitment to the concerned citizens and parents of our community. ... So-called medical marijuana has become a law enforcement nightmare."
Advocates for medical marijuana - first legalized by California voters in 1996, and later by 15 other states and Washington, D.C. - cited Obama's campaign promise that he would let states chart their own course on the issue. His Justice Department issued guidelines in October 2009 discouraging federal prosecutors from going after people who were complying with state laws.
"Barack Obama is betraying promises made when he ran for president and turning his back on the sensible policies announced during his first year in office," said Ethan Nadelmann, executive director of the Drug Policy Alliance.
With Friday's announcement, said Assemblyman Tom Ammiano, D-San Francisco, "Obama's medical marijuana policies are worse than Bush and Clinton."
But the Justice Department denied it was changing course.
"The department has maintained that we will not focus our investigative and prosecutorial resources on individual patients with serious illnesses like cancer or their immediate caregivers," Deputy Attorney General James Cole said in a statement. "However, U.S. attorneys continue to have the authority to prosecute significant violations" of federal narcotics laws.
In one criminal case unsealed this week, said U.S. Attorney Andre Birotte of Los Angeles, a purported medical marijuana supplier in the San Fernando Valley is alleged to have distributed 600 to 700 pounds of marijuana per month and made nearly $15 million in profits in eight months.
"We have yet to find a single instance in which a marijuana store was able to prove that it was a not-for-profit organization," Birotte said.
Other federal agencies have also joined the crackdown.
Last month the Bureau of Alcohol, Tobacco, Firearms and Explosives notified all federally licensed gun dealers that the ban on selling guns and ammunition to users of illegal drugs applied to anyone who consumed marijuana, even with a doctor's approval.
Meanwhile, the Internal Revenue Service, in an apparent turnabout, has told some medical marijuana providers it will not allow them to deduct employee payroll and operating costs from their taxable income.
Threatened closure -
Harborside Health Center in Oakland, one of the largest marijuana dispensaries in the world, said it got a $2.5 million tax bill from the IRS this week and may have to close if its appeal is unsuccessful.
The Fairfax-based Marin Alliance for Medical Marijuana, which describes itself as the nation's oldest licensed marijuana dispensary, has received two potentially lethal messages from federal authorities - a $1 million IRS bill in March, and a letter to its landlord from Haag on Sept. 29 demanding a shutdown because the office is within 1,000 feet of Bolinas Park.
Federal laws against illegal drugs contain additional punishment for transactions within 1,000 feet of places where children regularly gather.
"This is ridiculous - after 14 years of paying taxes and doing everything else we were supposed to do," said the dispensary's founder and owner, Lynette Shaw. "I think that Obama has turned his back on the medical marijuana movement, the people who worked hard to put him into office."
Shaw said her nonprofit dispensary has always worked closely with the IRS and gotten approval for all of its business deductions until this year. Any suggestion of danger to children at the nearby park is unfounded, she said, because they've learned from their parents that marijuana is medicine and "they don't steal pot from someone who's sick."