Pubdate: Thu, 12 Jul 2012
Source: Los Angeles Times (CA)
Copyright: 2012 Los Angeles Times
Author: Joe Mozingo


Justice Department Moves to Shut Down Harborside Health Sites in the Bay Area.

The federal government is moving to shut down the nation's largest 
and highestprofile medical marijuana dispensary operation, filing 
papers to seize properties in Oakland and San Jose where Harborside 
Health Center does business.

Copies of the federal Complaint for Forfeiture were taped to the 
front doors of the two dispensaries Tuesday, alleging that they were 
"operating in violation of federal law."

Medical marijuana advocates, as well as some state and local 
officials, denounced the action, saying it hurts patients in 
legitimate need of the drug and breaks repeated promises by President 
Obama's Justice Department that it was targeting only operations that 
were near schools and parks or otherwise in violation of the state's laws.

The U.S. attorney for Northern California, Melinda Haag, said she now 
found "the need to consider actions regarding marijuana superstores 
such as Harborside" because they presented unique opportunities for abuse.

Harborside was cofounded by outspoken marijuana activist Steve 
DeAngelo in 2006 and was the subject of a reality show, "Weed Wars," 
on the Discovery Channel last year. While other dispensary operators 
have sought a low profile since California's four U.S. attorneys 
began cracking down on the industry in October, DeAngelo has 
consistently railed against the federal intervention, advocated for 
better state regulations and become a leader in the movement.

"People are not going to stop using cannabis, they're just going to 
buy it in the illegal marketplace ... on the streets," he said 
Wednesday in an interview. "Why are federal prosecutors using their 
discretion to do something so profoundly destructive?"

DeAngelo said that he would fight the Justice Department "openly and 
in public" and that he would resist any effort by his landlords to 
evict the dispensaries in response to the federal complaint - which 
targeted the property owners, not the tenants.

While all marijuana use and sales are illegal under federal law, 
Atty. Gen. Eric H. Holder told the House Judiciary Committee last 
month that federal agents were targeting only those large-scale 
growers and dispensaries that have "come up with ways in which they 
are taking advantage of these state laws, and going beyond that which 
the states have authorized."

In a statement released late Wednesday, Haag suggested "superstores 
such as Harborside" fit that bill.

"The larger the operation, the greater the likelihood that there will 
be abuse of the state's medical marijuana laws, and marijuana in the 
hands of individuals who do not have a demonstrated medical need."

She noted that Harborside claims to have "over 108,000 customers."

California's medical marijuana laws are nebulous in regard to how the 
drug is to be distributed, and courts have yet to settle the matter. 
Still, marijuana activists often hail Harborside as a model of 
professionalism and compliance. Its main facility in Oakland is one 
of four independent enterprises permitted and strictly regulated by the city.

"If Harborside is not in compliance with state law, no one is," said 
DeAngelo, 54.

The Oakland dispensary was awarded its permit in 2006 after the city 
put out a request for proposals. DeAngelo says that it does about $22 
million in annual sales and that the San Jose shop does about $8 
million. Together they pay about $3 million in city and state sales 
taxes, and employ more than100 people.

The state Board Equalization estimates collects $58 million $105 
million in annual sales taxes from dispensaries.

"If we continue to drive everything underground, we're going to 
create an unsafe environment for patients who need this product ... 
and lose revenue," board member Betty Yee said.

This week's move against Harborside further highlights the continuing 
conflict between local and federal officials over the drug.

"The city of Oakland has developed a system to assure such 
distribution occurs according to state law in a fair and orderly 
process," Nancy Nadel, Oakland City Council member and vice mayor, 
said in a statement. "It is most unjust to our citizen patients and 
distributors who have followed local guidelines to be harassed and 
treated as criminals by federal officials."

Medical marijuana advocates said the Obama administration has 
repeatedly reneged on its promises that it would not meddle with the 
state laws.

"This is the most obvious and significant step by the federal 
government in attacking completely lawabiding dispensaries," said 
Kris Hermes, spokesman for the advocacy group Americans for Safe 
Access. "It becomes more untenable for them to say they are just 
going after certain facilities and not just undermining the state's 
marijuana laws."

Hermes said the Justice Department has sent more than 200 letters to 
dispensaries and their landlords, threatening to seize their property 
if the shops do not close.

It has been an effective strategy. With the letters, raids by the 
Drug Enforcement Administration and IRS audits, the government has 
forced over 400 dispensaries to close in the state, Hermes said, 
including the nearby Berkeley Patients Group, which was also seen as 
a model in the industry.

He knew of only half a dozen cases in which federal prosecutors 
actually filed an asset forfeiture complaint, as they did with Harborside.

Already, Harborside was in a battle with the IRS, which was seeking 
$2.5 million in back taxes, using an obscure tax code provision to 
say dispensaries cannot deduct routine expenses such as rent and wages.

Under Haag's supervision, agents and prosecutors have targeted a 
number of leaders in the medical pot movement.

In October, DEA agents raided the Mendocino County marijuana farm of 
Matthew Cohen, who helped push for permitting and regulating cannabis 
cultivation in that county. In April, they targeted a pot trade 
school and dispensary run by Richard Lee, who put the legalization 
measure Proposition 19 on the ballot in 2010.

In her statement, Haag said: "The filing of the civil forfeiture 
complaints against the two Harborside properties is part of our 
measured effort to address the proliferation of illegal marijuana 
businesses in the Northern District of California."
- ---
MAP posted-by: Jay Bergstrom