Los Angeles Marijuana Dispensaries

March 24, 2011

California Dispensaries lead the Way — Medical Marijuana a $1.7 Billion Industry

U.S. sales of medical marijuana are expected to reach $1.7 billion this year, according to a report in the Wall Street Journal.

Our Los Angeles medical marijuana defense lawyers see the picture getting more complicated for dispensaries and patients alike. Certainly money is a part of it. Los Angeles can’t decide whether it wants to trample the rights of patients or tax the product — so it’s doing both.

We reported recently on our Marijuana Lawyer Blog that the Internal Revenue Service is weighing in with audits.

The dispensaries that have fought unfair ordinances have met with some success. While those that have not have often been forced to close. Yet we are amazed at the number of these dispensaries that have never consulted with experienced legal representation. You enjoy a confidential relationship with your attorney. Most businesses with income rivaling local pot shops have legal counsel to back them up. Let’s just say we see it as especially essential when your product happens to be a narcotic that remains illegal under federal law.

In just a few short years, the medical marijuana industry has grown to rival that of Viagra, which has annual sales of $1.9 billion. Not only are there growers and dispensaries, but a host of secondary businesses that are profiting, including real estate companies and those selling hydroponic equipment.

Marijuana is currently sold in California, Colorado, Michigan, Montana, Oregon, Washington and New Mexico. Five other states will open for business this year, including Arizona, Maine, New Jersey, Rhode Island and the District of Columbia.
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March 16, 2011

No Reason Given for West Hollywood raids on Medical Marijuana Dispensaries

By Cannabis Law Group

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 10, 2011

Eagle Rock collectives ordered closed as Los Angeles dispensary lawyers fight for their rights

By Cannabis Law Group

Four Eagle Rock medical marijuana dispensaries have been ordered to close by the Los Angeles City Attorney or face daily fines of $2,500, the L.A. Times reported.

Our Los Angeles medical marijuana defense lawyers represent one of the shops and are actively litigating this case.

“My clients seek to remain open because the ordinance unreasonably restricts medical marijuana and is a violation of their rights,” said Damian Nassiri, a Los Angeles medical marijuana defense lawyer with the CANNABIS LAW GROUP. “So far, our clients and the other collectives involved in the lawsuit have won our motion against the City ordinance and in fact portions of the ordinance have been deemed to be unconstitutional and unenforceable.”

Despite being ordered into settlement conference by a judge — and despite knowing the dispensaries have legal representation — the city issued the letters and directed them at the dispensaries, not at their legal counsel.

“Judge Mohr has recently ordered the parties to participate in a settlement conference to work these issues out,” Nassiri said. “My office is not in receipt of any such letter requesting my client’s to close their doors.”

The Eagle Rock Patch reported the dispensaries are among 141 across the city that were ordered to shut down for failing to sign up for the lottery. The “lottery” is the city’s latest attempt to salvage its disastrous medical marijuana ordinance. The Los Angeles Times reported that 228 dispensaries had replied to remain open by the Feb. 18 deadline.

The four facilities in Eagle Rock are the American Eagle Collective, one of the neighborhood’s most popular collectives; House of Kush; Organic Healing Center; and Cloud Nine.

The city voted to limit L.A.’s medical marijuana facilities to 100 as part of its patchwork of ill-conceived efforts, most of which have been shot down by court rulings.
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March 2, 2011

228 medical marijuana dispensaries apply for lottery in Los Angeles

By Cannabis Law Group

The City of Los Angeles has released a list of medical marijuana dispensaries that are fighting for survival, the L.A. Times reported.

As our Los Angeles marijuana dispensary attorneys reported on our Marijuana Lawyer Blog, the dispensaries choosing to fight for their rights have enjoyed a number of recent court victories. Those that have not sought legal representation are generally not enjoying the same protections. A total of 228 dispensaries have applied for a lottery to choose the 100 permitted to operate in the city.

The lottery system was written into the city’s ill-conceived medical marijuana ordinance in case fewer than 100 of the city’s more than 400 dispensaries were able to comply with the ordinance’s restrictions. Ultimately, fewer than 50 would have survived under the city’s haphazard plan.

Those applying for the lottery must have been in operation before Sept. 14, 2007, as was required by the original ordinance, and must have at least one of the original operators.

“This is likely to take us a while,” said Holly L. Wolcott, the clerk’s executive officer. “I have no prediction as to when we will complete this process, but we are working diligently to review each packet.”

That is likely an understatement; the city’s administrative handling of the ordinance has been one fiasco after another since it went into effect last summer.

This new, expanded lottery is the latest strategy hatched by city leaders and their attorneys. Hundreds of operators who don’t make the cut could ultimately be targeted for police harassment, despite legally selling medical marijuana to patients under state law.
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February 28, 2011

City resists judge’s order to hold settlement talks with Los Angeles marijuana dispensary defense lawyers

By Cannabis Law Group

Calling it “high time” for the city to sit down with the dozens of medical marijuana dispensaries suing it over its medical marijuana ordinance, a judge set a May 9 deadline for both sides to schedule the first of a series of mandatory settlement conferences.

The Los Angeles medical marijuana dispensary attorneys at the CANNABIS LAW GROUP represent more than a dozen dispensaries and collectives in Los Angeles and the surrounding area. Noting litigation has been ongoing for more than a year, Judge Anthony Mohr ordered the sides to begin settlement discussions.

The city has resisted the idea, saying it’s too soon to begin to try to resolve the issues. Even the judge has apparently tired of the millions of tax dollars the city is wasting trying to defend its ill-conceived ordinance.

“The goal of the collectives will be to settle their cases with the city by having the city agree to grandfather them in or at least give them the chance to move to another location that is approved by the city,” said medical marijuana attorney Damian Nassiri of the CANNABIS LAW GROUP.

Nassiri noted only about 226 collectives remain in business. Before the Los Angeles medical marijuana dispensary ordinance went into effect over the summer, estimates ranged as high as 550.

“These collectives will continue to fight for their right to provide medicine to their patients — 226 does not seem to me to be too many,” Nassiri said. “It seems as though we could reach a settlement and stop wasting so much of the tax payer’s dollars on these lawsuits.”

Instead, Nassiri said the city has “chosen to lead a witch hunt after collectives that are legal under California’s medical marijuana laws.”

The city’s case was stayed until April 26; officials have indicated they will likely amend their complaint to attack collectives under the latest urgency ordinance. The city passed its emergency urgency ordinance without waiting to see what was wrong with its initial ordinance.

Attorneys for the city also indicated they intend to appeal the judge’s ruling against the ordinance’s use of criminal sanctions. The judge said the Medical Marijuana Program Act (MMPA) permits collectives to assert a defense for charges involving the sale of marijuana.
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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 21, 2011

Vote no on Measure “M” – tax on Los Angeles marijuana dispensaries illegal, city attorney says

By Cannabis Law Group

The Los Angeles Times is encouraging voters to say “no” to Measure M, which would create a city tax on medical marijuana even as the city attempts to force most existing dispensaries out of business.

As our Los Angeles medical marijuana defense lawyers have reported, the city is seeking to tax medical marijuana despite championing an embattled ordinance that seeks to close the vast majority of medical marijuana dispensaries operating legally under state law.

Similar taxes have already been approved in Oakland, Berkeley, Sacramento, San Jose and Long Beach. However, the Los Angeles city attorney’s office has said it does not believe such a tax would be legal. City council — never ones to listen to its own legal advice — voted to put the issue before voters anyway.

Central to the issue is whether collectives and dispensaries can be considered for-profit enterprises. The state Attorney General’s Office has already ruled that marijuana businesses must operate as nonprofit cooperatives. Nonprofits are exempt from city taxes.

Other municipalities have gotten around the issue by claiming the vast majority of marijuana businesses have not registered as nonprofits with the Internal Revenue Service because marijuana sales are illegal under federal law.

So voters are essentially being asked to condone an unlawful tax on non-profits that is being pushed by politicians in direct opposition to the advice of their own legal counsel. City council will no doubt next be hollering about the legal fees associated with defending its actions.
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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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