Risky Business, Even in Pot-Friendly States
April 18, 2012
Chris Morris, CNBCWhether the grower is licensed or not, pot is still a risky business in states that have approved its use for medicinal purposes.
Take California. While the state has had medical marijuana dispensaries for more than 15 years, it remains a target for federal law enforcement officials, where the U.S. Drug Enforcement Administration arrested nearly 8,500 people forpdf'>marijuana-related offenses between 2004 and 2010.
California's hardly alone. Several other states with dispensaries have seen an increase in both arrests and the confiscation of marijuana plants. However, a look at DEA records shows what appears to be an uneven enforcement policy among pot-friendly states over the past several years.
For example, while arrests and eradication in California climbed fairly steadily in the seven-year time frame, they remained essentially flat in Maine. Colorado, meanwhile, saw a reversal in both trends halfway through the time period.
Americans for Safe Access, which advocates the legalization of medical marijuana, says the Justice Department has conducted nearly 200 raids on dispensaries and growers since President Barack Obama took office.
"The assault on medical marijuana patients currently under way by the Obama administration is unprecedented in this country's history," said Steph Sherer, the organization's founder and executive director. "The intensity and breadth of the attacks has far surpassed anything we saw under the Bush administration and has resulted in the roll-back of numerous local and state laws, not just in California."
The government's focus on the industry has taken many lawmakers and medical marijuana activists by surprise. During his presidential campaign four years ago, Obama vowed to maintain a hands-off approach toward pot clinics and dispensaries that adhere to state law.
Perhaps not surprisingly, California, which legalized marijuana in 1996 and has long been considered a hub for the pot community, has been the state most targeted by federal officials. In 2004, the DEA made 869 marijuana-related arrests, seizing 1.2 million plants that were cultivated to produce marijuana buds. Both numbers climbed steadily through 2009, according to statistics provided by the DEA, peaking at 1,738 arrests and 7.5 million plants. (In 2010, the numbers slipped slightly to 1,591 arrests and 7.4 million plants.)
California and federal officials have been at odds for years over medical marijuana, since the Controlled Substances Act still classifies the drug as illegal. Federal prosecutors have frequently targeted dispensaries that make profits, noting California law requires those facilities to run as not-for-profit collectives. Those dispensaries, though, are often significant sources of tax income.
Michigan may not boast the hard arrest and confiscation numbers that California does, but federal officials have been even more active there since medical marijuana was legalized in 2008. Arrests have climbed 223 percent since legalization (from 290 in 2007 to 647 in 2010). Plant seizures have increased by 68 percent in that time, according to the DEA.
Similarly, Montana, which legalized medical usage in 2004, saw a slight increase in arrests (with the biggest spike coming the year dispensaries opened) between 2004 and 2010. Last year, though, federal officials executed a series of raids that largely shut down pot providers in the state.
Since New Mexico legalized medicinal marijuana in 2007, however, arrests (which were never noteworthy to begin with) have dropped — from 16 in 2006 to just 4 in 2010 — while confiscations have generally fallen over the years, but spiked in 2010, with more than 8,400 plants destroyed.
It's worth noting that these DEA statistics, while interesting, do not paint a complete picture. The agency focuses on big targets and distributors (including growers who work within the boundaries of the state law as well as those who do not). Its numbers do not include individuals who are arrested on possession charges, something that's largely done on a city and county basis.
DEA officials play down the numbers, noting there are intangible factors that cause them to fluctuate each year.
"It's difficult to draw conclusions based on the superficial data you're looking at," says Todd Scott, an agent who has worked with the DEA for 17 years. "What prompts a raid on [a dispensary] is a whole host of factors. I think there's a misconception that a particular raid is a medical marijuana raid. If you find a grow, you don't often know prior to that that it's a 'medical marijuana grow'."
The reasons for the raids vary, as they do with any criminal investigation. There are some red flags, though. For instance, if a dispensary is suspected of illegally trafficking pot to people without prescriptions, that could attract federal attention. If a grow operation is of a substantial size (with tens of thousands of plants), that too can turn heads (since it's such a flagrant violation of the Controlled Substances Act). Growers and dispensaries, though, say there has not been an obvious pattern to recent raids.
Nowhere is the fluctuation more in evidence than Colorado, where medicinal pot has been legal since 2000. From 2004 to 2007, arrests and eradications varied somewhat, but not wildly. They peaked at 341 in that period, while the DEA destroyed between 5,000 and 7,500 plants per year. In 2008, though, things changed considerably.
Plant eradications skyrocketed to over 30,000, while arrests fell to just 36. The numbers ebbed and flowed a bit more in the following two years, but arrests remained low, while more plants were destroyed.
Meanwhile, in Rhode Island (which legalized the drug for medicinal purposes in 2006), the threat of raids and employee prosecution from the U.S. Attorney's office has kept dispensaries from opening. But looking at the DEA's arrest record, no one seems to be taking much notice of the pot trade in the state. Through 2010, federal officials had only made nine arrests — and destroyed just 16 plants.
The DEA notes that cases tend to roll from one to another. An arrest in one incident can lead to tips about other illegal activity, which can explain the discrepancies. And since federal officials focus their efforts on larger busts, some operations might be too small to capture their attention.
"We are a proactive agency," says Scott. "We don't have to wait for a bank to get robbed or a car to get stolen to launch an investigation. As a federal agent, is it a productive use of my time to investigate a guy with five plants? Probably not. Is it worth my time for a guy who's growing 500 plants? Well, probably so. But is there a number [that constitutes a cut-off point]? No."