California Marijuana Dispensaries

March 16, 2011

No Reason Given for West Hollywood raids on Medical Marijuana Dispensaries

The Mercury News reports that federal officials from the Drug Enforcement Administration raided two West Hollywood medical marijuana dispensaries and took one person into custody.

Our medical marijuana defense lawyers in San Jose and Los Angeles continue to move aggressively to protect the rights of growers, dispensaries and patients. We encourage all dispensary owners in San Jose, Los Angeles or the surrounding area to make a confidential appointment with an experienced law firm. Those that are standing up and fighting for their rights in a proactive manner have enjoyed several court victories and we believe they will have the best chance of long-term survival.

As we reported on our Marijuana Lawyer Blog the Obama Administration has ordered federal authorities not to concentrate on marijuana enforcement efforts in states where medical marijuana is legal. However, the IRS has become more active in singling out dispensaries for audits and some state and federal authorities continue to hassle even the most reputable establishments, the vast majority of which are doing everything possible to operate legally under state law.

The Los Angeles Police Department and the Los Angeles Sheriff’s Office participated in the raid. A spokeswoman with the DEA would not say what led to the raid or what was seized. Presumably they had a warrant, which would have required them to outline their case to a judge. The secrecy is needless and just another example of the pointless and heavy-handed tactics of law enforcement.

The targeted dispensaries are among four that the city of West Hollywood permits to operated. The city was one of the first in California to regulate marijuana sales.
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March 15, 2011

Measure M — Los Angeles Medical Marijuana Tax — Passed by Voters

By Cannabis Law Group

Los Angeles voters overwhelmingly supported the passage of Measure M, which levied a 5 percent tax on the sale of medical marijuana, according to the San Fernando Valley Sun.

Our Los Angeles medical marijuana dispensary lawyers understand voter sentiment. In fact, many within the medical marijuana community agree that medicinal pot could provide much-needed tax dollars to struggling local governments.

We are just concerned that city council will waste far more tax dollars making rash decisions, passing unconstitutional laws and otherwise ignoring its own legal advice as it squanders tens of millions of dollars on the medical marijuana issue.

The city is trying to tax these establishments even as it forces the vast majority of them out of business. This we’ve-identified-a-revenue-stream-let’s-kill-it approach is completely senseless. It is spending millions attempting to defend its medical marijuana ordinance. And now, against sound legal advice, it is pushing this tax.

As we reported recently on our Marijuana Lawyer Blog there are a number of issues with taxing marijuana sales. First and foremost, medical marijuana dispensaries are required to operate as non-profits and non-profits are tax exempt by definition.

The city estimates the tax could generate $10 million a year as the city fights to close its $350 million budget deficit.

The measure was opposed by the Los Angeles County Sheriff’s Office, the Los Angeles Police Department and the District Attorney’s Office. That didn’t stop city council, though.

An opinion from the principal tax compliance officer last year noted dispensaries are non-profits and therefore cannot be taxed. That didn’t stop city council, though.

A number of other cities have passed similar taxes. San Jose and LaPuente have a 10 percent tax. The tax is 5 percent in Oakland and Richmond, 4 percent in Sacramento and 2.5 percent in Berkeley.
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March 14, 2011

Venice Medical Marijuana Dispensary Shut for Good — Judge cites Violations of State Law

By Cannabis Law Group

While the City of Los Angeles will no doubt toot its victory horn over the recent court decision that permanently closes a busy Venice medical marijuana dispensary, it’s important to note that the judge cited violation of the state’s medical marijuana laws in ruling on behalf of the city.

Our medical marijuana dispensary lawyers in Venice and Los Angeles continue to fight the city’s ordinance, which has suffered several court defeats. In this case, it was violations of state law that forced the pot shop’s permanent closure.

As we reported recently on our Marijuana Lawyer Blog, a judge ordered the city kicking and screaming into a settlement conference with the attorneys representing local dispensaries. The lawyers for dispensaries and collectives have enjoyed several recent court victories as the city scrambles to patch what has been a botched attempt from the start.

The dispensary on Washington Boulevard straddled Los Angeles and Culver City. It had drawn intense scrutiny for its high-volume business and allegations it had distributed fliers near Culver City High School. The city has used costly, slow moving civil litigation in an attempt to close the dispensary and keep it closed. Owners were ordered to pay $326,000 in fees and penalties. The Times reports the dispensary had more than $5 million in sales in a 13-month period.

A preliminary injunction shut down the dispensary 11 months ago. Last summer, the property owner agreed to evict the dispensary. The judge ordered the closure permanent after finding the business did not adhere to state laws and violated state prohibitions against selling controlled substances.
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March 12, 2011

San Jose “leaders” scramble to regulate medical marijuana dispensaries

By Cannabis Law Group

Call them late to this ill-conceived party at taxpayer’s expense, but don’t call them absent: San Jose city officials are seeking to crack down on pot clubs.

Our San Jose medical marijuana collective attorneys urge marijuana businesses and patients to stand up for their rights. The CANNABIS LAW GROUP is representing more than a dozen medical marijuana businesses against the overzealous “leadership” of city officials in Los Angeles and the surrounding area. We believe there is strength in numbers and that the collectives that stand up and fight for their rights are the most likely to survive.

The San Jose Mercury News is reporting that the mayor and three members of council have called for a meeting in April to determine how to restrict the number of dispensaries and where they can operate. Our medical marijuana defense lawyers in San Jose and elsewhere urge local businesses and patients to proactively seek legal representation and make a plan to defend themselves.

A number of city leaders have signed onto a proposal that would reduce the number of medical marijuana dispensaries in San Jose from 110 to just 10. A number of new marijuana businesses have opened since the Obama Administration announced it would defer to state law, a departure from the federal witch hunts of the Bush Administration.

The News contends San Jose city leaders did nothing to regulate the growing dispensary industry, and now wants to do so retroactively. San Jose now has roughly three times more dispensaries than San Francisco, which is only slightly smaller but has strict regulations on pot shops.

Now “leaders” hope to “speed development” of regulations in April, which otherwise were not slated to be ready until this summer.

San Jose already imposes a 7 percent marijuana business tax, which began this month after voters approved the measure in November. Under state law, pot shops must operate as non profits. Non profits are supposed to be exempt from taxation. Some dispensary owners have expressed hesitancy to pay, saying they weren’t sure if the city was going to use the measure to target crackdowns and other enforcement action.

Many in the medical marijuana community have indicated restricting medical marijuana dispensaries to just 10 would severely limit the access to patients in this city of more than 1 million residents.
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February 27, 2011

Medical marijuana: Domestic grown v. Mexican cartels in Los Angeles

By Cannabis Law Group

Medical marijuana being grown in the U.S. has done little to slow the appetite for Mexican marijuana, according to a report in the San Francisco Chronicle.

Our medical marijuana defense lawyers in San Bernardino and Orange counties continue to report on the struggles faced by the legitimate marijuana trade in Southern California.

In the 15 years since voters legalized medical marijuana in California, Mexican pot has become less popular. But the crop still earns drug cartels an estimated $2 billion a year. California’s estimated 1,700 dispensaries service 400,000 customers, putting it ahead of other states that have legalized marijuana for medical purposes. Still, Mexican cartels derive as much as one-fourth of their income from marijuana sales. And the amount seized along the Southwest Border has jumped nearly 50 percent in the last 5 years.

The Drug Enforcement Administration reports domestic marijuana sales have more than doubled in the last five years, while the sale of Mexican marijuana has increased about 60 percent. However, the agency acknowledged most of the marijuana sold in Los Angeles and the Bay Area is domestically produced.

That would seem to suggest that the crackdown on legal medical marijuana could result in further enriching the violent cartels in charge of the illegal trade.

Many states have followed in California’s footsteps when it comes to legalizing medical marijuana:

States with laws permitting medical marijuana and when they were adopted:

Alaska (1998)

Arizona (2010)

California (1996)

Colorado (2000)

Hawaii (2000)

Maine (1999)

Michigan (2008)

Montana (2004)

Nevada (2000)

New Jersey (2010)

New Mexico (2007)

Oregon (1998)

Rhode Island (2006)

Vermont (2004)

Washington (1998)

(Also permitted in District of Columbia in 2010)
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February 25, 2011

IRS auditing California medical marijuana dispensary

By Cannabis Law Group

The San Jose Mercury News reports that the Internal Revenue Service is auditing the 2008 and 2009 tax returns of a medical marijuana dispensary in Oakland.

Our Los Angeles medical marijuana defense lawyers frequently report on the conflict between state and federal law when it comes to medical marijuana, which remains illegal under federal law. Of increasing concern is the issue of non-profit and for-profit status. State law requires medical marijuana collectives to maintain non-profit status. However, cities are increasingly seeking to tax the industry, despite prohibitions against levying taxes on nonprofits.

Further complicating the issue is the fact the dispensaries must file for non-profit status, something many have been hesitant to do since it is an admission to selling illegal narcotics under federal law.

As we have reported on our Marijuana Lawyer Blog, some at the state level are calling for legislation to clarify a dispensary’s reporting requirements. While the Obama Administration has announced enforcement of federal drug laws is not a priority in states that have legalized medical marijuana, IRS prosecutions are often used by federal authorities as a punitive measure, including the prosecution of famed mobster Al Capone.

In this case, Harborside Health Center, which has locations in Oakland and San Jose, serves 70,000 medical marijuana users. The Oakland location handles $22 million in transactions each year.

The Bee reports that the outcome of the audit could determine whether federal authorities treat medical marijuana dispensaries as legitimate businesses or as drug traffickers.
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February 23, 2011

Proposed bill would call for state oversight of medical marijuana industry in Los Angeles, throughout California

By Cannabis Law Group

California medical marijuana advocates are calling for new laws to clarify the rights of patients, growers and dispensaries amid an increasing amount of police backlash and interference from amateur politicians at the local level.

Our Los Angeles medical marijuana collective attorneys continue to provide aggressive defense representation in L.A., San Bernardino, Riverside and the surrounding areas. In many cases, local politicians have repeatedly defied their own legal advice, and passed measures that will cost taxpayers millions in unnecessary legal fees. In other cases, law enforcement agencies, including the Los Angeles County Sheriff’s Office, continue to make statements and/or take enforcement actions that fly in the face of the state’s medical marijuana law, which was established by the will of the voters more than 15 years ago!

Some think the marijuana industry needs to be permitted to operate as a for-profit business. As it stands right now, the California Attorney General has issued an opinion requiring them to remain non-profit. However, a number of cities have passed taxation measures against the legal advice of their own counsel; cities are not permitted to tax nonprofits.

Raids are commonplace. And some dispensaries argue the laws are vague and fail to define how cash flow should be accounted for. Never mind the fact that nonprofits need to file with the IRS and growing or selling marijuana remains illegal under federal law. The vague financial laws resulted in one pot operator being charged with felony money laundering.

The Sacramento Bee reports Assemblyman Tom Ammiano, D-San Francisco, intends to introduce a bill that would create a state oversight program to regulate dispensaries and the delivery of medical marijuana to users.

Enforcement is spotty, random and harassing. In Sacramento, police consider enforcement actions against dispensaries and other marijuana businesses to be a low priority. But sporadic raids frequently result in allegations of for-profit sales or sales to patients without a license.
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February 19, 2011

San Bernardino medical marijuana dispensary owners propose their own regulations

By Cannabis Law Group

You want to know what will work when it comes to regulating medical marijuana dispensaries in San Bernardino and Los Angeles?

Ask them.

The Crestline Courier-News reports that dispensary operators have consulted with an attorney and drafted an ordinance that would tax, license and regulate the distribution of cannabis to those patients who should have it. Despite the contentions of some in law enforcement and city politics, our San Bernardino medical marijuana defense lawyers know most dispensary owners would be happy to comply with a set of acceptable rules and guidelines.

Most would go out of their way to help ensure an elimination or drastic reduction of the negative issues associated with the sale of medical marijuana in California. Unfortunately, politicians who know next to nothing about next to nothing, have gone out of their way to violate state law, overstep their bounds, and create draconian ordinances with little or no ability to resolve the issues.

The proposal by the pot shops would:

-Restrict location to commercial areas no closer than 750 feet from sensitive areas like daycare centers and schools.

-Keep collectives at least 1,000 feet apart.

-Provides for safe operational guidelines, including cameras, no excess cash, limited hours of operation, and a detailed security plan.

-A 1.8 percent tax on sales.

The letter said the lack of reasonable regulations has created a lost opportunity for additional public funds while providing safe places for the delivery of cannabis to patients.

Meanwhile, Dr. Paul Chabot, an activist affiliated with the Coalition for a Drug Free California, said California’s medical marijuana law was “just a tactic of the drug industry” and that there is a “rising tide’ against such laws all across America.

We are not sure what he is talking about. As we have reported on our Marijuana Lawyer Blog, 15 states and the District of Columbia have passed medical marijuana laws since California did so in 1994.

Four have done so since 2008.
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February 17, 2011

San Bernardino nursery goes to court for right to grow medical marijuana

By Cannabis Law Group

The Sun reports a nursery is going to court in a bid to grow medical marijuana in San Bernardino after being denied a business license by the city.

The San Bernardino medical marijuana lawyers encourage growers, collectives and patients to continue to fight against needlessly restrictive city and county ordinances. A number of court rulings have recently sided with patients and collectives, but often only benefit those who choose to stand and fight.

In this case, Route 66 Nursery filed a complaint in West Valley Superior Court in Rancho Cucagmonga. The nursery applied for a license to operate a private plant nursery for qualified medical marijuana patients and was denied because the city’s zoning ordinance does not permit medical marijuana dispensaries to operate.

The complaint seeks to differentiate between a medical marijuana dispensary and the rights of a private plant nursery. In this case, qualified medical marijuana patients could obtain a plot of land to grow their own medical marijuana.

It is asking for an injunction against the city, forbidding it from enforcing the ordinance; the nursery also wants the city to pay legal costs and other damages. As is the case with many other municipalities in Southern California, the city is apparently ready to spend tax dollars defending such needless intrusion and regulations. The city attorney’s office said it believed the current law to be sound and it would defend the case as it does with other “routine complaints.”

The nursery applied for the license in June and was denied. The complaint alleges that the city’s ordinance violates Proposition 215, which is the medical marijuana ordinance passed by California voters 15 years ago.
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February 15, 2011

Federal involvement won’t solve medical marijuana issues in Los Angeles

By Cannabis Law Group

The San Jose Mercury News called on the federal government to pass nationwide medical marijuana standards using the Food and Drug Administration, but acknowledged the move was unlikely to happen anytime soon.

Our Los Angeles medical marijuana defense lawyers frequently report on the issue of conflicting city and county ordinances and the mess local politicians have made of a law meant to help patients. Introducing some consistency via federal regulations could indeed by helpful. But, as we reported on our Marijuana Lawyer Blog, the government’s outdated laws and insistence that marijuana is a dangerous drug means the FDA is likely to stay uninvolved.

San Jose has seen the number of dispensaries grow to about 80 since the Obama Administration announced federal authorities were not looking to bust marijuana businesses in states with medical marijuana laws on the books. Meanwhile, city voters have passed a tax — never mind that dispensaries are under mandate to operate as nonprofits and cities are forbidden from taxing nonprofits.

Meanwhile, the medical marijuana industry is a $1 billion business. California has decriminalized possession of small amounts of marijuana but the state failed to pass Proposition 19, which would have legalized marijuana for recreational use. However, we take exception with the Mercury News’ assertion that dispensaries are part of the problem. The vast majority of dispensaries are doing everything possible to comply with the ever-changing laws and are no more responsible for the illegal drug trade than bars are for drunk driving.

Only those dispensaries that stand up and fight for their rights are likely to be around long enough to see the dust settle and a group of rules assembled that are fair and tolerable to all involved.
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