Issue:
96
Page: 24-27
Federal Action against Medicinal Cannabis Businesses Continues
by Lindsay Stafford Mader
HerbalGram.
2012; American Botanical Council
Just over one
year ago, on October 7, 2011, 4 US attorneys in California held a news
conference to warn medicinal cannabis dispensaries to shut down their
operations or be served with criminal charges.1 The months following
this announcement have been characterized by medicinal cannabis advocates as an
all-out assault of federal powers extending into California, Colorado,
Washington, and other states where medicinal cannabis (Cannabis spp., Cannabaceae) has been legalized — shocking and
angering many who interpreted a 2008 campaign statement by President Barack
Obama as a promise that he would leave this industry alone.
Several states’
US Attorneys, who are part of the Department of Justice (DOJ), have been taking
action by sending letters to landlords who own property where dispensaries are
located, warning of asset forfeiture proceedings if tenants are not evicted.2
They are also posting forfeiture notices onsite at some businesses. The DOJ defines
asset forfeiture as an “initiative that removes the tools of crime from
criminal organizations, deprives wrongdoers of the proceeds of crimes, recovers
property that may be used to compensate victims, and deters crime.”3
Forfeiture statutes enable the federal government to seize property if it can
prove that the property was used for criminal purposes or is the result of
criminal activities. Some businesses in Colorado, meanwhile, are being ordered
to shut down based on Title 21, Section 860 of the Controlled Substances Act,
which states that controlled substance manufacturers and distributors cannot be
located within a 1,000 feet of a school or college.4
Many businesses
that received warning letters during the last year, including dispensaries and
medicinal cannabis cultivation operations, have shut down and more have closed
voluntarily out of fear — to the tune of about 400 businesses in California, a
reported 57 in Colorado,4 and dozens more in other states with
legalized medicinal cannabis.2 In July of 2012, one of the country’s
largest and best known dispensaries — Harborside Health Clinic in Oakland and
San Jose, California — received a forfeiture letter. It is currently appealing
the order in federal court, though every similar appeal thus far has been
rejected.5 The City of Oakland also has filed a lawsuit against the
federal government on Harborside’s behalf.6 As of press time,
Harborside was still open but trying to fight eviction by its landlords, who
want the business to leave the property, as well as claims from the Internal
Revenue Service that it must stop deducting wages and other expenses from its
income taxes according to section 280e of the federal tax code that “prohibits
companies from deducting most expenses if they are ‘trafficking in controlled
substances.’”7
“State-based
medical cannabis business[es] have been severely traumatized by the Obama
Administration’s actions,” said Kris Hermes, media specialist of the nonprofit
Americans for Safe Access. “Some have gone underground. Most won’t conduct
interviews or make public comments for fear of reprisal. Some are also now
reluctant to register with city or state governments. Many dispensary operators
who have been shut down as a result of federal threats have reopened as
delivery services with no fixed address or easy way for the authorities to
identify them” (email, August 27 and September 3, 2012).
One of the
major impacts of this federal crackdown are the jobs lost as dispensaries
close, said Amanda Reiman, PhD, California policy manager of the Drug Policy
Alliance. “Berkeley Patients Group, one of the oldest and most respected
facilities in [California] was forced to close in May and lay off over 60
people,” said Dr. Reiman, “and if Harborside has to close, they will be laying
off over 100 people” (email, September 19, 2012).
Are the federal
government’s actions legal? No, according to attorney Robert Corry of
Denver-based Corry & Associates, which represents many medicinal cannabis
businesses.
“The Federal
Government’s actions are unconstitutional under the US Constitution Commerce
Clause and the Tenth Amendment, which provides for a limited federal
government of limited powers, and provides that the People retain the power
within the several states,” said Corry (email, September 3, 2012).
Others say that
the federal government is acting
within the law. Richard Meyer, special agent and public information officer for
the US Drug Enforcement Administration’s (DEA) San Francisco office, said in
2004:
“According to
the United States Constitution there is a supremacy clause, which says that in
case of conflict, federal law precedes state law.”8
And Seattle
attorney Deborah Jacobs wrote in Forbes
on September 12, 2012, “Marijuana is a controlled substance under the Federal
Controlled Substances Act. Growing, distributing and possessing marijuana in
any capacity, other than as part of a federally authorized research program, is
a violation of federal law… All of the [state] legislation is preempted by
federal legislation, making the activities a federal crime.”9
The Obama
Promise
The federal
action has caused a mix of shock, disappointment, and feelings of betrayal
toward the administration of President Obama, who famously said during his 2008
campaign about the state-based medicinal cannabis industry:
“What I’m not
going to be doing is using Justice Department resources to try to circumvent
state laws on this issue simply because I want folks to be investigating
violent crimes and potential terrorism. We’ve got a lot of things for our law
enforcement officers to deal with.”10
Obama also told
the media that doctors and patients using medicinal cannabis would not be
bothered because “there really is no difference between that and a doctor
prescribing morphine or anything else.”10 When Obama was elected as
the 44th President of the United States, his Attorney General Eric Holder
followed suit and announced in 2009, “It will not be a priority to use federal
resources to prosecute patients with serious illnesses or their caregivers who
are complying with state laws on medical marijuana.”11
Many people in
states with legalized medicinal cannabis used these statements as a basis for
growing their industry. But the Obama administration’s policy always has been
somewhat unclear. In fact, Obama said in the same interview quoted above that
he had some concerns about medicinal cannabis businesses: “I think there are
legitimate concerns in not wanting to allow people to grow their own or start
setting up mom and pop shops because at that point it becomes fairly difficult
to regulate.”10 And according to the Washington Post, Holder said “federal prosecutors should focus only
on cases involving higher-level drug traffickers, money launderers, or people
who use the state laws as a cover.”11
In April 2012,
well into the current federal crackdown, the president sought to explain his
administration’s actions in an interview with Rolling Stone:
What I
specifically said was that we were not going to prioritize prosecutions of
persons who are using medical marijuana. I never made a commitment that somehow
we were going to give carte blanche to large-scale producers and operators of
marijuana — and the reason is because it’s against federal law. I can’t nullify
congressional law. I can’t ask the Justice Department to say, ‘Ignore
completely a federal law that’s on the books.’ What I can say is, ‘Use your
prosecutorial discretion and properly prioritize your resources to go after
things that are really doing folks damage.
The only
tension that’s come up — and this gets hyped up a lot — is a murky area where
you have large-scale, commercial operations that may supply medical marijuana
users, but in some cases may also be supplying recreational users. In that
situation, we put the Justice Department in a very difficult place if we’re
telling them, ‘This is supposed to be against the law, but we want you to turn
the other way.’ That’s not something we’re going to do.12
Based on these statements, it would appear that the
federal government is taking action against dispensaries and businesses that
are noncompliant with even state laws, i.e.,
providing cannabis to non-medical users.13 And authorities have
claimed that they are focusing on cannabis businesses within 1,000 feet of a
school or park frequented by children.1
All sources
interviewed for this story, however, unequivocally said that the shutdowns are
random and are affecting honest and legitimate businesses. John Davis, chief
executive of Northwest Patient Resource Center in Seattle, has been analyzing
data on cannabis businesses in the Western district of Washington, including
letters from federal authorities and locations of targeted and non-targeted
businesses.
“In looking at
[the data], there are many locations that did not receive letters that, in my
opinion, had an inappropriate proximity to schools,” said Davis. “Around half
of those that received letters were businesses that I know and they were
attempting to do things right. I believe the actions taken are intended to have
a chilling effect on the industry, to cool the market and make it less inviting
both to entrepreneurs and property owners” (oral communication, email,
September 17, 2012).
Hermes of ASA
also said that the federal government is targeting a variety of dispensaries
with no clear method.
“There is no
real pattern except to intimidate,” said Hermes. “The federal government may
make claims that certain facilities are making a profit, but no evidence of
that has been supplied and many if not most of the locations are in full
compliance with local and state laws. The feds may focus on areas with more
dispensaries, but this is not always the case. For example, the feds have
threatened and successfully shut down more than 200 dispensaries in San Diego,
but for whatever reason they haven’t focused as much attention on Los Angeles,
which has far more facilities.”
There has been
some speculation in the industry that federal authorities are targeting states
controlled by fewer regulations.14 Many more raids and shutdowns
have occurred in California versus Colorado, which requires dispensaries to be
licensed and comply with all local zoning codes, and dispensary operators to
oversee 70% of cultivation of the business’s cannabis.15 California
has no such state regulations.
“Yes, most
[shutdowns] are occurring in California but I think the only reason for this is
the fact that California has the largest medical marijuana industry,” said
Aaron Smith, executive director of the National Cannabis Industry Association.
“It seems that the federal government is prioritizing enforcement action
against some of the most well-respected and well-regulated facilities in the
industry” (email, August 31, 2012).
Hermes also
disagreed with this theory.
“This
interpretation of the federal government’s tactics completely miss[es] the aim
of the attacks.
Colorado has
not been immune from federal attacks. Montana and Washington tried to pass
dispensary licensing laws, but legislators were threatened by US Attorneys for
trying to implement such schemes, derailing those laws. There are more than 50
municipalities in California that have adopted dispensary ordinances, a far cry
from an unlicensed environment.”
And, apparently
going against Obama’s persistent vow to not target actual patients, Hermes
stressed that the administration’s action against dispensaries “has been
devastating” to patients.
“The vast
majority of the hundreds of thousands of patients across the country rely on
centralized distribution to safely and legally obtain their medical cannabis,”
said Hermes. “Without such a supply, patients are being forced to either go
without a medication that is legal under state law, or they now need to travel
long distances to a still-operating facility, or they have to get it from the
illicit market, thereby putting themselves in harm’s way and complicating the
job of law enforcement. This is especially relevant because the Obama
Administration goes to great pains to underscore that it is not targeting sick
patients. Unfortunately, it’s sick patients who are most widely and adversely affected.”
Dr. Reiman of
Drug Policy Alliance pointed out that the federal crackdown is driving
businesses back underground, which she said, “Jeopardizes the safety and
well-being of not only patients, but the community as a whole.”
“I don’t know
how people expect patients to have safe access if businesses aren’t able to
run,” said Davis of Seattle’s Northwest Patient Resource Center. “The only way
to get a legitimate source of medicine is through a business.”
Medical
Marijuana Business Daily, an online news site, has suggested that President
Obama is allowing these actions to happen in order to avoid election-year
“accusations that he allowed the medical marijuana industry to grow out of
control under his watch.”15 Davis indicated that perhaps the Obama
administration feels little connection or responsibility to the situation by
basically claiming, “It’s not us; it is the US Attorneys,” who are brought in
by presidents but answer to their own localities, and often have their own
political futures in mind.
Legislation and
Strategies for Industry
In April 2012,
senators and representatives from California, Colorado, New Mexico, Maine, and
Washington sent an open letter to the federal government, calling for an end to
the interference and arguing that states are trying to help ill patients and
are entitled to “depart from federal policy and chart their own course on the
issue of medical marijuana” based upon the United States’ “federalist system of
government.”17
Some federal
lawmakers are taking it one step further, proposing national legislation in
Congress that would address the current situation. In 2011, HR 2306 Ending
Federal Marijuana Prohibition Act was introduced, followed by the Truth in
Trials Act in July 2012, and later Representative Barbara Lee’s (D-CA)
introduction of HR 6335, the States’ Medical Marijuana Property Rights
Protection Act, on August 2, 2012.2,18
The 2012
presidential election season, however, made it unlikely that such controversial
legislation received any attention. So what can state cannabis businesses do in
the meantime? Though many cannabis businesses are shutting down their
operations, Davis — one of the few business owners who speaks to the media —
said his Northwest Patient Research Center will “keep doing what we’re doing.”
“Not only is it
a business, but a great deal of my life is tied to it,” he said. “I serve these
people. There is a sense of responsibility that comes with it. I want people to
know what’s going on. I don’t want it to be us hiding in the shadows. Can the
DEA close me? Absolutely. Tomorrow if they like. Until then, I’m going to stay
open.”
“It’s vital
that operators in the industry maintain the highest of ethical standards and
maintain best business practices in every area,” said Smith of trade
organization NCIA. “However, there will be no guarantee that they won’t end up
in the federal crosshairs since we’re seeing some of the most well-run
facilities being unfairly targeted. The most important thing these
businesses can do is get involved with the fight to change draconian federal
law.”
Dr. Reiman said
that cannabis reform organizations are going to propose to the federal
authorities that they “freeze all actions against licensed medical cannabis
businesses until an independent review can determine whether they are indeed in
compliance with state law.” Meanwhile, hundreds of medicinal cannabis patients,
industry members, and supporters in several states are organizing large
protests of the federal crackdown.
As for the
presidential election this November, Colorado attorney Corry said he is
“encouraging cannabis voters this fall to vote ‘ABO,’ Anybody But Obama.” Davis
disagrees with this strategy.
“Is Romney
going to be better on it? Hell no,” he said. “I believe [Obama will] be
reelected and I hope that in a second term, he will have a little more
political capital to do something about it. This industry will survive. It will
move on. It fills a need within society.”
—Lindsay Stafford Mader
References
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- Congresswoman introduces bill to protect landlords of compliant medical marijuana businesses [press release]. Americans for Safe Access: Washington, DC. August 3, 2012. Available at: www.safeaccessnow.org/article.php?id=7263. Accessed August 16, 2012.
- Weber R. Introduction. Asset Forfeiture. United States Department of Justice Executive Office for United States Attorneys. Washington, DC. 2007; 55(6).
- Medical marijuana crackdown in Colorado: 10 more dispensaries near schools forced to shut down. Huffington Post. September 19, 2012. Available at: www.huffingtonpost.com/2012/09/19/medical-marijuana-crackdo_n_1896385.html. Accessed September 19, 2012.
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- Barack Obama interview [video]. Mail Tribune News YouTube. Video by Nelson G, Pennell B. March 22, 2008. Available at: www.youtube.com/watch?v=Ad9whO0VwKk&feature=player_embedded. Accessed August 27, 2012.
- Johnson C. US eases stance on medical marijuana. The Washington Post. October 20, 2009. Available at: www.washingtonpost.com/wp-dyn/content/article/2009/10/19/AR2009101903638.html. Accessed August 27, 2012.
- Wenner J. Ready for the fight: Rolling Stone interview with Barack Obama. Rolling Stone. April 25, 2012. Available at: www.rollingstone.com/politics/news/ready-for-the-fight-rolling-stone-interview-with-barack-obama-20120425#ixzz26lK9uXcO. Accessed September 17, 2012.
- Owners of marijuana dispensaries plead guilty to drug distribution charges, admit selling marijuana in violation of federal and state law [press release]. Seattle, Washington; United States Attorney Jenny A. Durkan Western District Of Washington. August 20, 2012. Available at: www.justice.gov/usao/waw/press/2012/August/corbray.html. Accessed September 17, 2012.
- Stafford L. The growing industry of medicinal cannabis analysis. HerbalGram. 2012;94:21-23. The American Botanical Council.
- State laws. NORML website. Available at: www.norml.org/states. Accessed September 17, 2012.
- Feds raid 2 California dispensaries, order 66 other MMJ businesses to close. Medical Marijuana Business Daily. August 22, 2012. Available at: https://mmjbusinessdaily.com/2012/08/22/feds-raid-2-california-cannabis-dispensaries-order-66-other-mmj-businesses-to-close/. Accessed September 18, 2012.
- Graves L. Lawmakers in 5 states tell feds to back off medical marijuana. Huffington Post. April 2, 2012. Available at: www.huffingtonpost.com/2012/04/02/lawmakers-in-5-states-tell-feds-medical-marijuana_n_1397811.html. Accessed August 27, 2012.
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