Pubdate: Sat, 08 Oct 2011
Source: San Francisco Chronicle (CA)
Copyright: 2011 Hearst Communications Inc.
Contact: http://www.sfgate.com/chronicle/submissions/#1
Website: http://www.sfgate.com/chronicle/
Details: http://www.mapinc.org/media/388
Page: A1
Author: Bob Egelko

U.S. TARGETS POT SUPPLIERS WHO PROFIT IN STATE

California's federal prosecutors announced a campaign Friday to shut 
down scores of marijuana dispensaries, which they described as 
profit-making criminal enterprises masquerading as suppliers of medicine.

The announcement at a Sacramento news conference angered medical 
marijuana advocates, who said President Obama had reneged on his 
promise to let states set their own policies on therapeutic use of 
the drug. But prosecutors insisted they weren't going after patients 
and their caregivers.

"People are using the cover of medical marijuana to make 
extraordinary amounts of money," said San Francisco's U.S. attorney, 
Melinda Haag, speaking alongside her counterparts from Sacramento, 
Los Angeles and San Diego.

The prosecutors said dispensaries are violating California law - 
which allows medical marijuana distribution only by nonprofit 
organizations - as well as federal law that bans all use of the drug.

Targeted stores

Haag, whose district runs from Monterey County to the North Coast, 
said she is initially targeting a limited number of marijuana stores 
located near schools, playgrounds or Little League fields. A Sept. 28 
letter, released by medical marijuana advocacy groups, advises the 
owner of an unidentified Mission District dispensary to shut down 
within 45 days or face possible criminal charges and loss of the property.

Haag declined to say how many outlets received the letters, but 
added, "We will almost certainly be taking action against others. 
None are immune from action by the federal government."

The other three prosecutors said they had each sent letters to dozens 
of marijuana retailers in their districts notifying them that they 
were violating federal law and subject to property forfeiture and 
possible prosecution.

"This is not an idle threat," said San Diego's U.S. attorney, Laura 
Duffy. "This is our commitment to the concerned citizens and parents 
of our community. ... So-called medical marijuana has become a law 
enforcement nightmare."

Advocates for medical marijuana - first legalized by California 
voters in 1996, and later by 15 other states and Washington, D.C. - 
cited Obama's campaign promise that he would let states chart their 
own course on the issue. His Justice Department issued guidelines in 
October 2009 discouraging federal prosecutors from going after people 
who were complying with state laws.

"Barack Obama is betraying promises made when he ran for president 
and turning his back on the sensible policies announced during his 
first year in office," said Ethan Nadelmann, executive director of 
the Drug Policy Alliance.

Policy change?

With Friday's announcement, said Assemblyman Tom Ammiano, D-San 
Francisco, "Obama's medical marijuana policies are worse than Bush 
and Clinton."

But the Justice Department denied it was changing course.

"The department has maintained that we will not focus our 
investigative and prosecutorial resources on individual patients with 
serious illnesses like cancer or their immediate caregivers," Deputy 
Attorney General James Cole said in a statement. "However, U.S. 
attorneys continue to have the authority to prosecute significant 
violations" of federal narcotics laws.

In one criminal case unsealed this week, said U.S. Attorney Andre 
Birotte of Los Angeles, a purported medical marijuana supplier in the 
San Fernando Valley is alleged to have distributed 600 to 700 pounds 
of marijuana per month and made nearly $15 million in profits in eight months.

"We have yet to find a single instance in which a marijuana store was 
able to prove that it was a not-for-profit organization," Birotte said.

Other federal agencies have also joined the crackdown.

Last month the Bureau of Alcohol, Tobacco, Firearms and Explosives 
notified all federally licensed gun dealers that the ban on selling 
guns and ammunition to users of illegal drugs applied to anyone who 
consumed marijuana, even with a doctor's approval.

Meanwhile, the Internal Revenue Service, in an apparent turnabout, 
has told some medical marijuana providers it will not allow them to 
deduct employee payroll and operating costs from their taxable income.

Threatened closure

Harborside Health Center in Oakland, one of the largest marijuana 
dispensaries in the world, said it got a $2.5 million tax bill from 
the IRS this week and may have to close if its appeal is unsuccessful.

The Fairfax-based Marin Alliance for Medical Marijuana, which 
describes itself as the nation's oldest licensed marijuana 
dispensary, has received two potentially lethal messages from federal 
authorities - a $1 million IRS bill in March, and a letter to its 
landlord from Haag on Sept. 29 demanding a shutdown because the 
office is within 1,000 feet of Bolinas Park.

Federal laws against illegal drugs contain additional punishment for 
transactions within 1,000 feet of places where children regularly gather.

"This is ridiculous - after 14 years of paying taxes and doing 
everything else we were supposed to do," said the dispensary's 
founder and owner, Lynette Shaw. "I think that Obama has turned his 
back on the medical marijuana movement, the people who worked hard to 
put him into office."

Shaw said her nonprofit dispensary has always worked closely with the 
IRS and gotten approval for all of its business deductions until this 
year. Any suggestion of danger to children at the nearby park is 
unfounded, she said, because they've learned from their parents that 
marijuana is medicine and "they don't steal pot from someone who's sick."
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MAP posted-by: Keith Brilhart