Closed Pot Dispensaries Undeterred by Federal Crackdown

October 13, 2011

Andrea Swayne, Dana Point Times

Four United States Attorneys on October 7 announced a federal crackdown on commercial medical marijuana dispensaries in California, a statement that according to an attorney representing one of two dispensaries still fighting the city in court will have little effect on ongoing litigation. “Given that my client is already closed, the federal government’s announcement doesn’t really mean anything at this point. Our appeals will all go forward,” said Beach Cities Collective attorney Jeffrey Schwartz.

“The court has already ruled we cannot open, so we will not open until that ruling is overturned on appeal. And I have no doubt whatsoever that it will be overturned.”

Since 2009 when the city first subpoenaed medical records of all the dispensaries operating within the city limits, legal wranglings have been many—the city’s withdrawal of their request for records, a raid of The Point Alternative Care and the red tagging and closure of Beach Cities Collective and Holistic Health for building code and zoning violations.

This year, the City of Dana Point won three cases in Orange County Superior Court rendering Beach Cities Collective, Holistic Health and The Point Alternative care medical marijuana dispensaries closed for alleged illegal for-profit operations and on the line to pay the city upwards of $6 million in combined judgments.

Last month, two cases—Holistic Health vs. The City of Dana Point and Beach Cities Collective vs. The City of Dana Point—in which the dispensaries sued the city, City Council and staff seeking a combined $50 million, were dismissed after Superior Court Judge Glenda Sanders ruled against both but allowed the dispensaries to amend their complaints.

“Beach Cities declined to amend and has filed a dismissal,” said Dana Point City Attorney Patrick Munoz. “Holistic Health neither filed an amendment nor a dismissal and the time limit to do so has now passed.”


The announcement of a coordinated enforcement “targeting the illegal operations of the commercial marijuana industry in California” by the state’s four U.S. Attorneys, André Birotte Jr., Laura E. Duffy, Melinda Haag and Benjamin B. Wagner says in part that:

“The statewide enforcement effort is aimed at curtailing the large, for-profit marijuana industry that has developed since the passage of California’s Proposition 215 in 1996”—an industry, the statement says, has grown to include “numerous drug-trafficking enterprises that operate commercial grow operations, intricate distribution systems and hundreds of marijuana stores across the state — even though the federal Controlled Substances Act makes illegal the sale and distribution of marijuana.”

The crackdown efforts will include lawsuits against the owners/landlords of properties involved in selling marijuana and marijuana sales that violate local ordinances and has already resulted in arrests and criminal cases filed in federal courts over the past few weeks in San Diego, Los Angeles, Fresno and Sacramento.

“While California law permits collective cultivation of marijuana in limited circumstances, it does not allow commercial distribution through the storefront model we see across California,” said United States Attorney André Birotte Jr. in the October 7 statement.

Wagner added that “large commercial operations cloak their money-making activities in the guise of helping sick people when in fact they are helping themselves” and that the crackdown is “aimed at enforcing federal criminal law not prosecuting seriously sick people and those who are caring for them.”

The announcement makes it clear that commercial marijuana operations are illegal under federal law and that the law will be enforced, he said.


It seems that the crackdown announcement will not put an end to city spending with regard to medical marijuana dispensary litigation.

According to Munoz, the city has so far spent about $400,000 in its effort to rid Dana Point of what it considers businesses that amount to nothing more than store-front drug dealers.

“We feel like it’s about time the federal government is finally recognizing what the city has known all along—that these businesses operating in California are about making money as opposed to trying to comply with the law and certainly don’t meet the criteria the voters had in mind when the Compassionate Use Act was approved,” said Munoz. “Hopefully the burden will no longer be on cities to do what they should have been doing all along.”

City Manager Doug Chotkevys agreed saying that the U.S. Attorneys’ announcement validates the city’s legal actions.

“I’m pleased that the government realizes that this fight is about people profiting off of a piece of legislation that was meant to help seriously ill people,” said Chotkevys. “I am pleased that they are stepping in to put an end to unscrupulous individuals illegally profiting off of legislation that was designed to assist seriously ill individuals.”

When asked how the city plans to respond to Holistic Health and Beach Cities who say they will continue to pursue their appeals, Munoz had this to say:

“They certainly can’t reopen in Dana Point. I don’t know why they want to keep running up against windmills. We have proven that they are illegal operations. We stopped pursuing the zoning issues and continued to pursue their violations of state law. I’m not sure how they think they can get around that.”

Holistic Health founder Garrison Williams agreed with Schwartz in that because his collective is already closed the federal crackdown will not deter his determination to appeal the judgments against him in lawsuits brought by the city and maintains that his collective never engaged in illegal operations.

“The city has violated patient rights, slandered us in the papers and lied to the courts,” said Williams. “We are going to continue to try and make them regret these actions through the courts.”

Schwartz said he feels that one of the Fourth District Court of Appeals’ rulings against Beach Cities flies contrary to settled California law.

“In another we’re waiting for their ruling but I expect the court to rule similarly on both. If this is the case, we fully intend to petition the California Supreme Court to review the appellate court’s decisions,” said Schwartz.


The crackdown statement has prompted a varied reaction from groups—both for and against medical marijuana—that have been closely watching cases play out in Dana Point and other cities across the state and nation.

Members of Californians for Drug Free Youth praised the effort citing new research published in the Journal of Drug Policy Analysis about users of dispensaries and marijuana rates in states with medical marijuana laws that they say show very few of those seeking prescriptions had cancer, HIV/AIDS, glaucoma, or multiple sclerosis.

“This kind of leadership will make our communities and kids safer,” remarked John Redman of CADFY in a statement. “The existence of dispensaries has increased drug dealing to vulnerable populations, underage youth and people with mental health and addiction issues in our neighborhoods and sends the wrong message to youth about drug use.”

CADFY also pointed to another article by Columbia University researchers on drug and alcohol dependence showed that “marijuana use was almost twice as high in states with medical marijuana versus states without it” and included an opinion by Gabrielle Antolovich, executive director for Voices United.

“The medical marijuana laws were meant to serve the very sick,” she said. “However, it seems that anyone can purchase a card and marijuana. It is creating a new social norm and message to young people that marijuana is like an over-the-counter drug used for aches and pains and whatever minor ailment you may have. It’s time we stop buying and selling drugs under the guise of medicine.”

Kris Hermes, a spokesman for the medical marijuana advocacy group Americans for Safe Access couldn’t disagree more.

“President Obama has shown his cards very clearly in that he has taken an aggressive policy against medicinal marijuana not only in California but throughout the country. The threats are serious as are the consequences but it still remains to be seen whether the federal government will have the willingness and ability to go after a significant number of people,” said Hermes. “This is a public relations campaign, in a sense, where they are hoping to intimidate enough people to undermine the California medical marijuana community and the laws that have been passed over the years. These intimidation tactics are tragic because, as patients in Dana Point are all too acutely aware, when you shut down these facilities you deny people safe and legal access to the medicine they need.”

Hermes went on to say that by aggressively enforcing the laws in this way, the government—and the prosecutorial discretion on part of the Obama administration—they are pushing patients into illicit markets and to some extent complicating their work in terms of addressing marijuana on illicit markets everywhere.

Sending threatening letters to property owners is something that the Bush administration engaged in back in 2007, said Hermes.

“Back then, it had a limited effect. Out of the 400 to 500 dispensaries operation in California, a few dozen shut down. But for the price of postage they got to intimidate a huge number of property owners across the state,” he said. “This time it looks as if the federal government is actually prepared to take legal action against landlords. At the same time, there are probably between 1,000 and 1,500 dispensaries still operating in California. Well over 100 are still open in Los Angeles alone.”


The two dispensaries with facilities still in Dana Point remain closed. But as cases like Pack vs. The Superior Court of Los Angeles County continue to unfold, both sides will be watching closely to see how the court rules on the rights of cities to ban store front dispensaries on the basis of zoning.

In that case, an appellate court judge ruled that a city may not permit dispensaries because they are illegal under federal law.

The law says that if a group of qualified patients collectively and/or cooperatively work together to cultivate and use medical marijuana, they can not be prosecuted under California law.

“It does not mean that you can sell marijuana and more importantly, it does not mean you can open a store front to sell medical marijuana,” said Munoz. “Just because something is lawful as a use, doesn’t mean the city can not prohibit it from existing through zoning laws.”

For instance, things like junk yards, nuclear power plants, airports and landfills that have significant impacts on a city are routinely prohibited by city governments despite being legal as a matter of general law.”

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