Pubdate: Mon, 29 Jan 2007
Source: Los Angeles Business Journal (CA)
Copyright: 2007 Los Angeles Business Journal Associates
Contact: http://www.labusinessjournal.com/contact.asp
Website: http://www.labusinessjournal.com
Details: http://www.mapinc.org/media/4405
Author: Deborah Crowe, Los Angeles Business Journal Staff
Cited: Americans for Safe Access http://www.safeaccessnow.org
Bookmark: http://www.mapinc.org/mmj.htm (Marijuana - Medicinal)
Bookmark: http://www.mapinc.org/topics/Proposition+215
Bookmark: http://www.mapinc.org/topics/SB+420
Bookmark: http://www.mapinc.org/find?115 (Marijuana - California)
Bookmark: http://www.mapinc.org/topics/Americans+for+Safe+Access

RIDING HIGH

With Little Fanfare Until This Month, Los Angeles County Has Quietly 
Become the Country's Capital of Medical Marijuana.

In the last two years the number of marijuana dispensaries in the 
county has ballooned from a relative handful to more than 200, 
according to most estimates.

And in the city of Los Angeles, police said, 45 such shops opened in 
December alone as entrepreneurs sought to beat a proposed moratorium.

Many of them have opened in strip shopping centers, typically using 
such names as "compassionate caregivers" or "patient collectives" 
names that seldom mention marijuana.

Even the Rev. Scott Imler, who co-authored the ballot initiative that 
legalized medical marijuana, thinks the industry that he 
inadvertently helped create has gotten out of control.

"We created this beast that frankly the state and local governments 
have been too slow to regulate," Imler said. "We're a liberal state 
and everyone wants to bend over backwards to be compassionate and 
understanding and groovy. And they get taken advantage of."

The high-profile raid of 11 marijuana dispensaries by U.S. Drug 
Enforcement Administration agents on Jan. 17 highlighted the sudden 
industry, as well as its shaky legal foundations: The shops are legal 
under Proposition 215, passed by state voters in 1996, but still 
illegal under federal law.

"Los Angeles has had a significant growth in the number dispensaries 
recently, but remember that this is the second largest (metropolitan 
area) in the U.S.," said William Dolphin, communications director for 
the Oakland-based pro-medical marijuana group Americans for Safe Access.

So far, there isn't a good handle on the value of the economic 
activity that medical marijuana generates in the county. While 
dispensaries pay employee taxes and some collect retail sales taxes, 
public agency record-keeping is sketchy given the quasi-legal status 
of the enterprise.

A report presented to an Oakland oversight committee last fall 
estimates Californians consume between $870 million and $2 billion 
worth of medically related marijuana each year and anywhere from a 
third to a half of that is likely consumed in Los Angeles County 
alone, given the county's size.

The rapid growth of the industry has taken city officials, law 
enforcement agencies and others by surprise. Many have started to ban 
or at least regulate marijuana clinics more tightly.

However, the local actions have not been enough to halt the raids by 
the DEA officials, who categorize the dispensaries as illegal drug 
selling operations despite California law.

"Granted they're acting under the guise of legal state law, but under 
current federal law they're still drug organizations," said Sarah 
Pullen, spokeswoman for the Los Angeles field office of the DEA. The 
agency's Jan. 17 sweep was the first time the Los Angeles office had 
targeted multiple clinics at the same time.

Mushrooming Industry

California was the first of 10 states to pass a medical marijuana 
law. But no other metropolitan area has nearly as many marijuana 
storefronts as Los Angeles. The Bay Area, for example, has about 70.

Still, the medical marijuana industry got a slow start in California.

The state ballot initiative approved by voters in 1996 legalized 
marijuana for medical use. (Marijuana is said to help with nausea and 
stimulate appetite for cancer patients and others who are seriously 
ill.) Though not originally conceived in the law, cooperatives 
developed so that patients could cultivate, process and distribute 
marijuana among themselves.

However, in 2001 a West Hollywood cooperative that was organized by 
Imler was raided by federal authorities and shut down. He faced 
criminal charges and a possible prison sentence.

As that case made its way through the courts, the California 
Legislature in 2003 passed SB 420, which recognized the right of 
patients and caregivers to associate collectively to cultivate 
medical marijuana. Subsequent court decisions expanded that 
protection to retail-style dispensaries.

However, the industry remained stunted because of criminal cases such 
as Imler's. But in 2005, Imler's case was settled. He got one year's probation.

Attorney John Duran, a councilman in West Hollywood who successfully 
defended Imler, said that once it was clear that Imler wouldn't be 
heading to prison, local entrepreneurs were emboldened to launch 
their own clinics despite the threat of federal raids.

The dispensaries were aided by the lack of specific regulations 
covering these businesses within many jurisdictions of Los Angeles 
County, particularly in the city of L.A. The county and many cities 
inside it scrambled to enact moratoriums to give them time to decide 
whether to regulate or ban the shops.

At least eight cities now have moratoriums in place, while Torrance 
and Pasadena in the past year have banned clinics. On Jan. 16, West 
Hollywood gave initial approval to an ordinance intended to lower the 
number of clinics in the city from six to four. L.A. County passed an 
ordinance that went into effect in June that regulates when and where 
the shops open.

In November, Los Angeles police officials began talking seriously 
about enacting a moratorium. That set off a scramble by many to open 
shops to beat any decision and led to the 45 shops that opened in the 
city. In all, the city of Los Angeles has 148 retail-like medical 
marijuana shops or home-delivery services.

"Out of the chaos, that's where the opportunists move in," Duran said.

Dispensary owners who contend they work hard to run a reputable 
operation take issue with the opportunist label, though several 
declined to talk to the Business Journal for this story. However, one 
operator who opened a small dispensary north of downtown L.A. five 
months ago, said he pays sales taxes, is insured by Lloyd's of 
London, and desires a good working relationship with the officers who 
patrol his neighborhood.

"This is new territory for us," said the operator, who would only 
allow his first name, Ed, to be used in the wake of the DEA raids. 
"Everyone is very spooked right now. We are not drug dealers and we 
don't want to be confused with that."

Under state law, in order to receive medical marijuana, patients must 
get a doctor to provide a written recommendation nicknamed scripts, 
although they're technically not prescriptions. The scripts also give 
the recipients the right to legally grow marijuana for medical purposes.

For roughly $70 to $100, depending on the neighborhood, patients with 
a script can purchase one-eighth of an ounce of processed marijuana 
for personal use. They can roll a joint to smoke on premises if the 
dispensary offers a smoking lounge, or take it home. Many shops also 
offer pot-laced edibles for those unable or disinclined to smoke.

Prices at dispensaries, sometimes known as cannabis clubs, tend to be 
equivalent to or slightly higher than pot available on the street, 
with clinic owners touting the greater safety and cleanliness of 
their facilities.

Investigators contend that much of the marijuana sold by L.A. clinics 
comes from many of the same sources as what's available on the 
street. It's often imported from Canada and Mexico, Pullen said, in 
violation of California law that requires medical marijuana to be 
grown within the state.

A dispensary might pay $3,000 to $4,000 wholesale for a pound of 
marijuana then mark that amount up by as much as 100 percent, 
according to the DEA.

But clinic owners such as Ed consider the DEA's contentions 
ludicrous, at least for clinics that care about their clients. 
Mexican pot is apt to be laced with allergy causing pesticides, he 
said, and Canadian weed tends to be grown indoors, producing a 
product that's less potent and hence less effective for therapeutic purposes.

Instead, many clinics prefer to obtain their pot from small 
California suppliers, often patients themselves who have the legal 
right to grow it.

"In any case, why would you need to import marijuana when California 
has the best climate for growing anything you want," Ed said.

Taking Precautions

However, even some patient advocates admit larger dispensaries often 
turn to underground growers. The DEA also believes that clinic sales 
to people without scripts or under false pretenses are more 
widespread than the clinic community acknowledges.

Ed said he drills his staff on state law and recommended codes of 
conduct promoted by patient advocacy group Americans for Safe Access. 
Clinic staff workers must independently verify new clients, Ed said, 
and will fax forgeries to other clinic owners as an alert, much as 
retail businesses do for bad check writers.

But even Ed acknowledged that more than a few bad apples have snuck 
into the local clinic community in recent months. He said an 
increasing number of clinic operators, with support from ASA, are 
organizing to self-police their industry using peer pressure and 
other means he wouldn't specify.

Still, many law enforcement officials and community critics paint a 
sordid picture of the clinics as crime magnets that are often located 
too close to schools and parks and are too lax in screening clients. 
They also are apt to become targets of robberies and other crimes 
themselves because of their large caches of drugs and cash.

L.A. Police Chief William Bratton's staff report to the Board of 
Police Commissioners in December called for a moratorium and strict 
operating rules. In addition, facilities would be forced to move if 
located within 1,000 feet of houses of worship, parks, schools and 
day care facilities.

But cops on the beat in communities friendly to medical marijuana 
tend to be circumspect when describing their relations with 
dispensaries. Capt. Benny Goodman, who heads the West Hollywood 
station of the Los Angeles County Sheriff's Department, said a 
station liaison meets bi-monthly with clinic managers, who have been 
responsive to neighborhood complaints.

"We have not been actively pursuing these clubs as illegal places of 
business, but when there are complains we deal with that," Goodman 
said. "We focus on the other crime priorities in the city."

City Councilman Duran maintains that the services provided by the 
clinics in his community, which has a large HIV-positive population 
and elderly residents with various age-related ailments, make the 
clinics "the lesser of two evils."

"We can have these commercial enterprises that likely sometimes 
provide marijuana to people they shouldn't. Or we can have patients 
looking for drug dealers in the back alleys of the Sunset Strip," he said. 
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MAP posted-by: Richard Lake