California medical pot advocates call for statewide regulation

February 12, 2011

Peter Hecht, Sacramento Bee

Alarmed by a police backlash against pot dispensaries in some California cities, lawmakers and advocates for medical marijuana are calling for statewide regulation of medical cannabis stores and new laws to clarify rules under which they operate.

Additionally, some medical marijuana advocates are pushing lawmakers to consider regulations – similar to those in Colorado – that would permit medical marijuana providers to operate as for-profit businesses.

Currently, under California law, dispensaries providing medical marijuana must operate as nonprofit "collectives" of registered medical marijuana patients who reimburse dispensaries for the costs of providing medicinal pot.

But medical cannabis in California has boomed into an industry generating an estimated $1.3 billion in transactions and paying hundreds of millions of dollars in salaries, rent and overhead costs.

Authorities, looking for illicit profiteering, last year raided scores of dispensaries in San Jose and Chico and prosecuted medical marijuana providers in San Diego County. The district attorney in Los Angeles, Steve Cooley, branded a local boom in medical marijuana outlets as "storefronts illegally pushing pot."

Assemblyman Tom Ammiano, D-San Francisco, said he intends to introduce an "omnibus cannabis bill" to create a state oversight program to regulate medical marijuana dispensaries and all aspects of delivering marijuana to legal medicinal users.

Ammiano said the Legislature needs to clarify the rules due to the wildly divergent approaches towards dispensaries. They are embraced in some California cities and raided in others.

"In the context of suspicion by law enforcement, I think we need a cohesive response," Ammiano said.

Some medical pot advocates blame the raids on vague state laws that fail to define how dispensaries should account for cash flow, what they may pay in salaries and what constitutes illegal profits.

"Unfortunately 'profit' isn't defined," said Allison Margolin, a West Hollywood attorney specializing in marijuana cases. "And there is no definition of nonprofit."

The issue has played out dramatically in San Jose, where Santa Clara County arrested dozens of dispensary operators in raids seeking evidence of illegal profiteering.

One pot store operator was charged with felony money-laundering and possession of marijuana for sale. While no others have been charged, the raids stirred widespread protests among medical marijuana advocates.

"You can't just go in with guns and arrest people," said Lauren Vasquez, Silicon Valley director for Americans for Safe Access, a medical marijuana advocacy group.

New Santa Clara District Attorney Jeffrey Rosen, who took over last month, appears to be putting the brakes on the police crackdown. Rosen said he is awaiting updated guidelines from Attorney General Kamala Harris on state laws governing medical marijuana dispensaries.

Meanwhile, Rosen said, pot stores generally should be regulated through land use ordinances, not police actions.

"The voters of California have said they want sick people with documented medical conditions to be able to use marijuana to alleviate their symptoms," Rosen said. "The second thing is that the voters said that we don't want to legalize marijuana."

Sacramento attorney George Mull, who represents medical marijuana dispensaries in several California cities, is lobbying lawmakers to create a "California cannabis commission" to oversee marijuana stores statewide.

Marijuana outlets are treated as part of the urban fabric in Oakland and San Francisco.

Sacramento police consider them a low priority, but last week Sacramento County sheriff's narcotics officers raided a local dispensary, the Horizon Collective, alleging the operator illegally sold marijuana to people without medical recommendations. The Sheriff's Department also was investigating alleged profiteering at the dispensary. The dispensary claimed it was operating legally.

Mull said police raids will continue elsewhere as long as operators of some dispensaries are earning hundreds of thousands of dollars in pay and there are no state rules for bookkeeping or salaries.

"Should you make more money running a medical marijuana establishment than the governor of California?" he asked.

Mull is also advocating that California sanction a for-profit medical marijuana industry, arguing that a for-profit model will drive prices down and end confusion that can trigger police raids.

In Colorado, for-profit medical marijuana dispensaries pay licensing fees and are regulated by the state, with strict requirements for marijuana cultivation and security.

Cindy Besemer, the chief deputy district attorney in Sacramento County, said a for-profit distribution program is unlikely to be embraced by law enforcement.

"I certainly would say we don't believe in retail sales," she said. "That's drug dealing. I don't care how it comes down to it. That's what it is."



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