Medical Marijuana Crackdown By Feds Forces Hundreds Of California Shops To Close

Medical marijuana dispensaries are shutting their doors in California.

Even in the weed haven of San Francisco, three of the best-known dispensaries were forced to close after receiving warning letters from U.S. Attorney Melinda Haag. And the state’s oldest medical dispensary, the Marin Alliance for Medical Marijuana in Marin County, is bracing to pull all cannabis products from its shelves after receiving a threatening letter from Haag invoking a federal law.

“We’re basically worried about a D.E.A. raid destroying things,” said Charles Pappas, chairman of Divinity Tree in San Francisco’s Mission District. “We didn’t want to put our staff and patients through that. We’re very concerned about our patients.”

Before it closed on Veteran’s Day, Divinity Tree employed 14 people at its dispensary in San Francisco’s Tenderloin neighborhood. Mission-area collective Medithrive and Mr. Nice Guy on Valencia Street, which together employed an estimated 34 workers, closed the same week.

“The guys, half of them with kids, were crying at our last meeting,” said Pappas, who paid his workers $20 an hour with full health benefits. “Most of them had been with me for over two years, and all of them for at least two years. They’re all laid off now.”

The United Food and Commercial Workers Union, which worked to unionize California cannabis workers before the crackdown, has estimated that 20 percent of marijuana stores statewide have shut down.

Hard numbers are difficult to come by. California’s National Organization for the Reform of Marijuana Laws keeps an index of dispensaries, but it hasn’t been updated as quickly as shops around the state have closed.

“I know in places like Sacramento County, virtually all of those facilities closed down,” said Don Duncan, executive director of Americans for Safer Access. “In Los Angeles it’s a mixed bag. We’ve seen some in the Valley close. San Diego has been moving against collectives, but to what degree it’s hard to say from city to city. I think to a certain degree that it’s up to local authorities how they use the federal pressure.”

Only 25 of an estimated 38 dispensaries in the city of Sacramento remain open. City officials, who collect 4 percent in taxes on all medical marijuana sales, will allow the shops to stay open until mid-August of 2012, though permitting for new dispensaries has been suspended.

In the surrounding county, the numbers for pot shop owners are even more grim. Only eight of an estimated 99 shops have not closed, according to The Sacramento Bee.

In San Diego, nearly two-thirds of some 222 dispensaries have been shut down after receiving toughly worded letters from federal officials. Another 9 percent have promised to close in the next week, according to an announcement from the office of U.S. Attorney Laura Duffy.

The closures come less than two months after the state’s U.S. attorneys held a Sacramento news conference to announce federal actions against California medical marijuana entrepreneurs. Federal prosecutors also sent letters to hundreds of state law-abiding dispensaries around the state, threatening criminal charges and asset forfeiture if they continued to operate beyond 45 days.

The IRS, meanwhile, has declared California pot clinics can no longer deduct salaries, rent or other operating expenses on their tax returns, rendering business essentially unviable.

“Unless and until ordered otherwise, we will continue to do our duty in enforcing federal narcotics laws,” U.S. Attorney Benjamin Wagner said in a statement last month.

Medical marijuana collectives having been thriving in California since 1996, when voters enacted Prop. 215, a law that permits the possession and use of medical marijuana, even though the drug remains illegal under federal law. Since then, 15 other states have followed suit.

David Goldman, a core leadership group member at San Francisco Americans for Safe Access, warned that the crackdown could have unfortunate political ramifications for President Obama, who while on the campaign trail in 2007 promised to leave the business of regulating medical cannabis to the states.

“If that what he wants — if he wants to erode his base of support in California — then he’s going on the right track right now to do that,” said Goldman of Obama. “Our friends in Colorado are not liking this either,” he added, “and Colorado’s a swing state.”

But in Colorado, interestingly, the federal government has taken little action. Their model, which allows for the sale of state-regulated medical marijuana, has some people hopeful that pot shops in California may be able to push back against federal officials.

Lawsuits have been filed in each of California’s four federal judicial districts. And Americans for Safe Access, the country’s largest medical marijuana advocacy organization, has filed a fifth suit, alleging the Department of Justice overstepped its constitutional authority in policing local medical marijuana laws within the state of California.

But the legal road ahead does not look promising. The most recent blow came just last week when U.S. District Judge Saundra Brown Armstrong wrote in a 27-page ruling that she would not halt federal actions because “marijuana remains illegal under federal law, and in Congress’ view, it has no medicinal value.”

Now some dispensaries have turned to delivery service, a development ASA’s Don Duncan finds somewhat problematic.

“There’s definitely a need for delivery services, but I think the best benefit for the patient is to have a place where they can come and there’s some peer support,” he said. “I would hate to see the market forced into a delivery only format. I don’t think that’s best for the patients.”

Steve DeAngelo, executive director of Oakland’s Harborside Health Center, says it’s one thing to crack down on the state’s bad actors, but U.S. attorneys have been targeting the state’s model dispensaries.

“The U.S. prosecutors alleged in their scary press conference that their many targets were people who were using the medical cannabis laws as a shield for criminal activity and for profiteering. In fact they did target a couple of people who were using the medical cannabis laws as shield for criminal activity, and we don’t have any problem with that — in fact we support that,” said DeAngelo. “What we had a problem with was, in addition to targeting those people, they also targeted people like Matt Cohen from Northstone Organics, or Charlie Pappas from the Divinity Tree, or Harborside Health Center. We are all amongst the most legitimate, regulated, compliant and transparent distributors of medical cannabis that you’ll find in the entire state of California.”

It’s not the first time dispensaries have seen federal intervention. When the Bush administration targeted marijuana dispensary landlords during his first term in office, Duncan said, some shop owners just “closed the blinds and turned off the lights and laid low for a while,” reopening again after the feds backed off.

But Pappas isn’t convinced his shop will recover.

“I don’t see it going back to the way we were,” he said.

– Article from The Huffington Post.



  1. DML on

    Prop 19 – which “legalized” having an ounce of pot in your own living room and the growing of about one mature plant per landlord-approved household – would have kept pot illegal for 95% of the growers and dealers, and therefore would have likely resulted in an increase in arrests due to the narcs being supplied with millions in pot tax dollars. It was a good thing it got voted down or we would have been stuck with the shittiest version of legalization possible – worse than just the imperfect 215 by itself:

    Prop 19 – 2010 version

    “If it goes totally legal, the mom-and-pop growers are going to be a
    thing of the past,” – Dale Gieringer, co-author of Prop 215 and state
    coordinator of California NORML, High Times, Nov. 2010, p. 80

    Prop 19, otherwise known as the “Regulate, Control and Tax Cannabis Act of 2010”, was not the legalization we’ve been hearing about for the last 40 years from pot activists. Despite claiming on it’s website that it will “Control cannabis like alcohol” [50] it more closely resembled the much more tightly controlled cannabis legalization suggested to us by governments and police. Pay close attention to the wording found in the purposes section – unique to any “legalization” proposition or model ever put before anyone else other than police and governments:

    “B. Purposes
    5. Put dangerous, underground street dealers out of business, so their influence in our communities will fade.” [51]

    Keep in mind those “dangerous” underground street dealers once included – and most likely currently include people similar to – people like High Times founder Tom Forcade and med pot movement founder Dennis Peron, and their “influence” in the community include High Times magazine, Prop 215, and “legalization for all”.

    Prop 19 limited the number of legal growers to 1) those over 21 who 2) lived on their own in their own house or who rented from a landlord who was willing to risk their property being seized and who 3) would allow themselves to be limited to 25 square feet of grow space – smaller than the average jail cell. [52) It’s hard to estimate what percentage of current growers this would have left “illegal”, but I suspect the percentage is greater than 50%.

    The meaning of this section was debated constantly before the vote. Did the “25 square feet in your own house to be shared with the rest of the people living in the residence” rules also apply to med pot users who currently enjoyed no such restrictions? Suffice to say that attorney Bill Panzer – despite voting for Prop 19 for the message it would send regarding support for eventual “full” legalization – made the strongest argument (and yet to be answered in public by the yes side) as to why med pot cultivation rights could have been threatened by Prop 19:

    “If an appellate court were inclined to find that Prop 19 preserved all 215/420 rights, there is language in 19 to support that. If, on the other hand, an appellate court was inclined to find that 19 allowed local municipalities to impinge on 215/420, there is language that could support that position too. The bottom line is that the body of the statute could have clearly stated that local municipalities are not authorized to pass any ordinance or regulation that infringes on 215/420 in any manner, but it doesn’t.” [53]

    Another section of Prop 19 made sure only licensed dealers would be allowed to deal – all other dealers were going to be punished by civil fines or worse. [54] The trouble with only allowing licensed dealers to deal is that – in one third of California, places such as Los Angeles and Oakland – there are very few licenses handed out. Oakland has four licenses in a city of 400,000 people – one license for every 100,000 people. Los Angeles has 41 licenses for 14.8 million people – or one license for every 360,000 people. Author of Prop 19 Richard Lee could have chosen to insist on “Sufficient community outlets” to prevent illegal dealing (in other words, unlimited outlets) and affordable, competition-encouraging $1000 licenses for retailers (instead of the current $60,000 or more Oakland retailers must pay) as Jack Herer did in his initiative.

    But Lee chose not to remove the discriminatory licensing system in his initiative. This was a tactical error on his part, as the decision not to remove the discrimination spelled doom for any unlicensed grower or dealer (or any family member of any unlicensed grower or dealer) who lived in – or feared they would one day live in – a pro-monopoly jurisdiction such as Los Angeles or Oakland. There are literally hundreds of thousands of these people all over California and they very well may have tipped the scales in favor of the “no” side on Nov. 2nd.

    (a) Any ordinance, regulation, or other act adopted pursuant to
    Section 11301 may include the imposition of appropriate general,
    special or excise, transfer or transaction taxes, benefit assessments,
    or fees, on any activity authorized pursuant to that enactment, in
    order to permit the local government to raise revenue, or to recoup
    any direct or indirect costs associated with the authorized activity,
    or the permitting or licensing scheme, including without limitation:
    administration; applications and issuance of licenses or permits;
    inspection of licensed premises; and other enforcement of
    ordinances adopted under Section 11301, ***** including enforcement
    against unauthorized activities.*****

    The Full Text of the Regulate, Control and Tax Cannabis Act of 2010

  2. Anonymous on

    Having lived in California as a med pot user I have to say the system is corrupt and needs to be REVISED! Seriously when people are selling pot for $300 to $500 an oz how is that ETHICAL? Remember this is supposed to be medicine,set up to HELP PATIENTS WHO ARE SICK.
    As a fibromyalgia sufferer I would have to say that a high level of income is not something that most med pot users have. Does anyone with a disability have an abundance of cash?
    Pot is illegal for one main reason and that is the GREED OF GROWERS AND DISTRIBUTERS!!
    When was the last time a mint tea farm got raided?
    A med pot dispensary needs to be NOT FOR PROFIT if it is in fact medicine. If not, then there needs to be extreme variance in price to suit every economic situation.
    If someone wants to pay exorbitant prices let them but have the decency to have low end quality product available as well.
    I mean sure there are $1000 bottles of wine but you can also get a decent one for $15.
    The marijuana industry is probably one of the most unethical that I know of because the prices charged are not fair when it comes to a reasonable mark up on product. What risk did a licensed grower in California take? Plus most pot is grown outdoors so there is not even the added cost of power or an indoor setup.
    If we the consumer or patient want to see marijuana legalized in our lifetimes then the War on Drugs should be to lower the prices until they are so dirt cheap that there is no value in them on any level and to grow and smoke is for the love of the herb not the green in our pocket or heartlessly taking from another forcing them to do without so you can have way more than you would ever need in this lifetime.

  3. Catharine Leach on

    Prohibition = 0 Jobs; 0 Taxes

    Dispensaries = JOB$ TAXE$

    enough said.

    Ron Paul 2012.

  4. Anonymous on


    The Federal Tort Claims Act or “FTCA”, (June 25, 1948, ch. 646, Title IV, 62 Stat. 982, “28 U.S.C. Pt.VI Ch.171” and 28 U.S.C. § 1346(b)), is a statute enacted by the United States Congress in 1948. “Federal Tort Claims Act” was also previously the official short title passed by the Seventy-ninth Congress on August 2, 1946 as Title IV of the Legislative Reorganization Act, 60 Stat. 842, which was classified principally to chapter 20 (§§ 921, 922, 931–934, 941–946) of former Title 28, Judicial Code and Judiciary.
    That Title IV of the Legislative Reorganization Act act of August 2, 1946 was substantially repealed and reenacted as sections 1346 (b) and 2671 et seq. of this title by act June 25, 1948, ch. 646, 62 Stat. 982, the first section of which enacted this title (Tort Claims Procedure). [1]
    The FTCA permits private parties to sue the United States in a federal court for most torts committed by persons acting on behalf of the United States. The FTCA constitutes a limited waiver of sovereign immunity.

    The Federal Tort Claims Act of 1946, for the first time, gave American citizens the right to sue the federal government.” [4]

    Bill O’Reilly Thinks Medical Marijuana is a Sneaky Plot to Give People Medicine, Or Something

    Bill O’Reilly’s indignant posturing is typical of the contemporary medical marijuana skeptic: I have no problem with medical use, but any plan for supplying patients is a fraud and anyone who grows or sells marijuana is a scumbag.

    The primary reason for this communication was to create an awareness of the methods of omission used by all parties in this great crime against humanity itself. Now if you look closely you will not find the mentioning of powerful antibiotic actions of marijuana nor will you find the mentioning of the Lyme plague (Lyme disease primarily is treated with powerful antibiotics ) which was so disturbing to myself — you the reader are being directed to these specific omitted facts with all the background provided.

    Cannabis plant extracts can effectively fight drug-resistant bacteria.

    Antibacterial Cannabinoids from Cannabis sativa

    The audience of the communication has at length in time now been exposed to the Lyme plague instrumented by the United States Government and their facilitating agents. The email sent out by Joseph Mercola clearly demonstrates the aggressive actions by the criminal parties which must be responded to with every action possible.

    Thus the difficult yet apparent facts of this bio weapon being empowered by marijuana Prohibition comes to light. This is the 2012 moment and we have to prosecute this crime.

  5. Worm on

    I will bet almost all of the dispensary owners voted against legalizing out of greed and now they have nothing.

  6. Bhonze on

    Oh well y’all had the chance too legalize in 2010 and were too greedy! lets do it in 2012 and take on the FEDS!!!