What appeared to many to be a “green gravy train” is becoming fraught with litigation. Medical Marijuana dispensaries are under attack.
Medical marijuana dispensaries in California received a surprise this week in the form of letters from the U.S. Justice Department. The letters ordered dispensaries to shut down within 45 days or face property seizure and possible 40-year prison terms. In a press conference held on October 7, the four U.S. attorneys who have jurisdiction over California announced that they are targeting large-scale commercial marijuana dealers who they say are illegally profiting from the state’s medical marijuana laws.
California was the first state to allow the medical use of marijuana when voters approved Proposition 215 in 1996. The law removed state-level penalties for possessing, growing and using marijuana under a doctor’s recommendation. The law did not legalize sales of the drug – the intention was that the drug would be distributed through non-profit channels. Today most marijuana dispensaries are run as private entities that pay taxes and turn a profit for their owners. The California Board of Equalization estimates that the medical marijuana industry generates $1.3 billion in sales and as much as $105 million in taxes per year.
Possession and sale of marijuana are still illegal under federal law. Federal prosecutors have initiated a crackdown on dispensaries as part of an effort by the Obama administration to stop the spread of medical marijuana outlets. During Obama’s campaign for the presidency, he stated that the federal government should adopt a hands-off policy when it comes to the medical use of marijuana in the 16 states where it has been legalized. After he took office, U.S. Attorney General Eric Holder announced that this policy would be officially adopted. Once the federal government announced that medical marijuana users would not be prosecuted under federal law, the number of California dispensaries quickly multiplied.
Anticipating increased tax revenues, the Northern California cities of Oakland and Berkeley recently began to make plans to allow industrial-scale marijuana cultivation. The cities dropped these plans after the U.S. Attorney for the Bay Area threatened prosecution.
According to Laura Duffy, U.S. Attorney for Southern California, a growing portion of the California marijuana industry is centered around distributing marijuana for profit rather than on providing medical marijuana to people who are ill, putting it in violation of federal law. These for-profit marijuana dispensaries benefit from doctors who write phony medical marijuana recommendations. The U.S. attorneys emphasized that they are targeting large-scale growers and distributors, many of whom engage in interstate drug trafficking and other criminal activity.