Federal Crackdown on Medical Marijuana: Oakland Fights Back, Mendocino County Still Deciding
Last week on ABC News’ 20/20, Barbara Walters asked President Obama if he thought marijuana should be legalized.
“I wouldn’t go that far,” Obama said. “But what I think is that at this point, Washington and Colorado, you’ve seen the voters speak on this issue. And as it is, the federal goverment has a lot to do when it comes to criminal prosecutions. It does not make sense from a prioritization point of view for us to focus on recreational drug users in a state that has already said under state law that’s legal.”
Those comments, however, may come as a surprise to those who follow the medical marijuana issue in California. In October 2011, the four U.S. attorneys for the state announced it was going to be no more Mr. Nice Guy when it comes to federal enforcement of the burgeoning medical marijuana industry. In that press conference, Melinda Haag, the U.S. attorney for the Northern District of California, provided a number of reasons for cracking down on medical marijuana, including environmental harm by growers and the proliferation of retail stores “motivated not by compassion but by money.”
“What we are finding is that people are using the cover of medical marijuana to make extraordinary amounts of money,” Haag said. “In short, to engage in drug trafficking.”
When it came to taking action against purveyors of pot in the state, the U.S. attorneys were true to their word. In Northern California alone dozens of dispensaries have been shut down, including some high-profile businesses that not only enjoyed solid reputations as responsible industry players, but which were operating with the express approval of local governments.
That hasn’t mattered. While passage of Proposition 215 in 1996 legalized medical marijuana in the state, its sale is still a felony under federal law.
Oakland Comes to Defense of Harborside
One successful strategy in shuttering marijuana retail operations has been to threaten landlords of dispensaries with forfeiture of their property.
What we are finding is that people are using the cover of medical marijuana to make extraordinary amounts of money. In short, to engage in drug trafficking.
– U.S. Attorney Melinda Haag
This is the tack U.S. Attorney Haag took in taking on Oakland’s Harborside, which operates under a city permit. To some, the action against Harborside represents an expansion of the federal crackdown, which had previously used proximity to schools as its main criteria for targeting. But in threatening action against Harborside’s landlord, the U.S. Attorney’s office cited the size of the business, which may be the biggest in the world with over 100,000 patients served. Steve DeAngelo, Harborside’s cofounder and executive director, told Oakland North in October that Harborside earned $22 million in sales in 2011, paying the city $1.2 million in taxes.
“The Justice Department issued a statement that said we’d been targeted because of an abstract principle that larger dispensaries tend to result in more people inappropriately receiving cannabis,” Harborside owner Steve DeAngelo told us in July. “I don’t think that’s a valid principle, but even if it were, to target an organization like Harborside that has an exemplary record of legal compliance simply because of a general principle that may or not apply to other people in the industry is really an egregious abuse of prosecutorial discretion.
“I think the Justice Dept has grievously overreached; I think the amount of support both from public and elected officials demonstrates that.”
And indeed, the city of Oakland has stepped up to support Harborside, becoming the first city to file suit against the federal government in relation to the targeting of marijuana facilities. Oakland says the federal government can’t seize the property that Harborside leases because the federal statue of limitations has run out. The city also claims the federal government misled it into thinking it could license dispensaries without legal consequences.
“We’re concerned that the government, through its action and inaction, caused the city to rely on the fact that we could proceed to dedicate the resources that we did to set up this dispensary system,” Oakland City Attorney Barbara Parker told KQED in October.
To target an organization like Harborside that has an exemplary record of legal compliance simply because of a general principle that may or not apply to other people in the industry is really an egregious abuse of prosecutorial discretion.
–Harborside cofounder Steve DeAngelo
In the meantime, Harborside has refused to shut down. “We are open and we have no intention of closing our doors voluntarily,” DeAngelo said. “We made a commitment to our patients six years ago to provide them with a safe place to get cannabis medicines and we’re going to do that unless it becomes impossible.”
Harborside’s landlords in both Oakland and San Jose, where it also runs a dispensary subject to forfeiture proceedings, have gone to court attempting to force an eviction. But an Alameda County judge said on Nov. 30 that state courts did not have the power to enforce federal law. As the Oakland Tribune reported, the ruling held that “under state law, Harborside was running a legal business and had not violated its lease.”
The case is scheduled to be heard in federal district court by Chief Magistrate Judge Maria-Elena James on Thursday. On the table are motions by Harborside’s landlords asking the court to enjoin the dispensary from selling medical marijuana while the issue of the forfeiture is adjudicated.
Oakland has filed a motion to stay the landlords’ requests.
Mendocino County: ‘Model’ Program Now Ended, Still Under Attack
From the point of view of medical pot advocates, Mendocino County, a longtime hub of illegal marijuana distribution, has been one of the most forward-looking local governments in terms of bringing order to the vague legalization mandate of Prop 215.
The county’s 9.31 ordinance set up a unique first-in-the-nation permitting program under which marijuana growers were allowed to cultivate up to 99 plants, provided they complied with regulations like restrictions on the locations in which they operated. The program also brought much-needed revenue to the county.
Mendocino County officials like Sheriff Tom Allman and Supervisor John McCowen argued that the program encouraged illegal actors in the marijuana trade to go legit, reducing crime and the need for law enforcement resources to address it.
But last year, the DEA raided Northstone Organics, owned and operated by Matt Cohen, a vocal proponent of legitimizing the medical marijuana trade through regulation. Cohen has been described by Michael Montgomery, who covers drug issues for KQED, as the “poster child” for compliance with Mendocino County’s regulatory regime. He has also been an advocate for using the Mendocino model as the way forward for expanded legalization of medical marijuana.
They better take payments, because we’re broke.
–Mendocino County Sheriff Tom Allman on possiblity that feds are going after pot program’s assets
But the DEA’s action was just the beginning. Earlier this year, Melinda Haag’s office told the county it had to end the program or face possible litigation. After some debate, supervisors decided to “effectively gut the program,” says Michael Montgomery. “After that, most people in Mendocino thought the matter was over, that they had complied with the federal government.”
But in early December news emerged that a grand jury had been convened, and had issued subpoenas to Sheriff Allman, his captain who oversaw the permitting program, the financial manager for the sheriff’s office, and the county Auditor-Controller. Montgomery says Mendocino officials have reacted with “shock and anger and concern” to the order, which calls for the officials to hand over all records related to the program.
After an extension, the county now has until Jan 8 to comply, and its hired a San Francisco attorney to help represent it. Some involved in the Mendocino marijuana industry have pleaded with the county not to cooperate with the federal government.
“Please don’t give this information to the federal government because patients’ information and entire coops’ information is accessible,” said Matt Cohen at a recent supervisors’ meeting. “This would not be the right thing to do.”
No one really knows what the feds are after — whether it’s criminal prosecutions or something else. But Mendocino County Supervisor Dan Hamburg, a former Democratic congressman, said he thinks the money that the county made from the program is a likely target. The Ukiah Daily Journal recently reported that “proceeds from the popular permitting program … had mounted to more than $1 million by January of this year.”
“You’ve probably heard the term smash and grab, when the DEA comes into a dispensary and takes their money, takes their marijuana out the door and that’s the end of that,” Hamburg told Michael Montgomery recently. “I sort of see this as a form of that. They weren’t satisfied with us shutting down the objectionable part of the program. And now they want to come back for the money that came into the program … It seems that’s the information they want and the only thing I can draw from that is it’s some kind of a forfeiture proceeding.”
If that’s the case, Sheriff Tom Allman told Montgomery, “We’re not going to be able to write them a check, I’ll tell you that. They better take payments, because we’re broke.”
Hamburg, who expressed reservations about the program when it was operational, doesn’t want to see the federal government go after county assets. He says, “I just don’t see the good sense of Mendocino County having to forfeit money from a program done in good faith and done with really trying to get a hand on regulating this practice in Mendocino County, which by the way has been going on for four decades. So if Melinda Haag and the federal government think ‘oh we’re going to put marijuana out of business in Mendocino County’…that’s just not going to happen. You can’t put the toothpaste back in the tube.”
Colorado and Washington, the two states that have legalized recreational marijuana, are now deciding how to build regulatory systems for growers and distributors, says Michael Montgomery.
“The big question is what are the feds going to do in these states. What they’ve done in places like Mendocino that have tried to regulate could be a clue.”
On the other hand, Montgomery says, Colorado set up a fairly elaborate system to govern medical marijuana from the start, drawing little interference from the federal government.
“So is the message that if you set up tight regulatory system you’re going to be okay? I don’t know,” he says.
Another difference between California and other states that have legalized medical marijuana is that some Californians have flaunted their federally illegal activities in a very public way. Mendocino County’s Matt Cohen, for example, appeared in documentaries about the state’s marijuana business on both KQED TV and the PBS program Frontline. And Harborside’s Steve DeAngelo was the subject of his own reality TV series on The Discovery Channel — “Weed Wars.”
In a March interview with Michael Montgomery about the reasons for what some at the time considered to be a rather sudden focus federal focus on marijuana, Melinda Haag said, “Marijuana dispensaries are full of cash and they’re full of marijuana and everybody knows that. And many of them are very public about their operations. Some of them go on television, most of them have websites, and everybody knows where they are.”
DeAngelo, for his part, told us he doesn’t regret doing the show.
“Absolutely not. After it aired we had a flood of senior citizens coming in, veterans, people from states where they don’t have access to medical cannabis. We had dozens and dozens of parents of gravely ill children coming to us because of what they saw…and we were able to provide a positive example of cannabis distribution for the world.”
“I would say, however, that I think there’s a connection between my outspoken views and Harborside being targeted.”
For his part, Montgomery said it’s important to pay close attention to President Obama’s choice of words when it comes to speculating on how the federal government might handle the new world of marijuana legalization in the states.
“The president said it didn’t make sense for the federal government to use its resources targeting recreational users in states that have legalized pot. But that’s really embracing the status quo. The real question, which the president didn’t address, is how the feds will handle the emergence of major cultivation and distribution networks for a drug that is still classified under federal law as a Schedule 1 narcotic. Do the clues for future federal action lie in Colorado or in California?”