Pubdate: Thu, 06 Sep 2012
Source: Seattle Times (WA)
Copyright: 2012 The Seattle Times Company
Author: Jonathan Martin


Many Shops Close After Stern Letters From DEA

3 Former Owners Facing Federal Prison

Just three weeks ago, Seattle's booming industry of medical-marijuana
dispensaries celebrated at Hempfest by offering free joints to new
customers and advertising heavily in four marijuana-industry

For a moment, Seattle's dispensaries - about 145, according to city
data - outnumbered its 139 Starbucks locations. More sought to open
each month, especially in pot-friendly Seattle.

Now, the gilt is suddenly off medical marijuana's "green rush."
Dispensaries have closed without notice. Three former dispensary
operators appear headed to federal prison. And others are leaving
once-promising, if legally questionable, businesses altogether.

In late August, Seattle's office of the federal Drug Enforcement
Agency (DEA) sent letters to the landlords or operators of 26
dispensaries, threatening property forfeiture unless the storefronts
closed within 30 days. The letters targeted dispensaries within 1,000
feet of schools or playgrounds, but DEA spokeswoman Jodie Underwood
said relocation "will not make any of them legal."

The letters arrived three days after owners of two Seattle
dispensaries pleaded guilty to federal drug-dealing or
money-laundering charges. Combined, the effect was swift. Most of the
targeted businesses - nearly all in Seattle - closed the same day.

As Washington voters weigh an initiative to legalize recreational
marijuana use this fall - and potentially strong push-back from
federal authorities - a chill has settled on the local
medical-marijuana industry. Some of the dispensaries are looking for
new sites farther from schools. But sites are scarce because landlords
are now even more skittish.

"If clamping down on the industry was the goal, then mission
accomplished," said Aaron Pelley, a Seattle attorney who represents
medicalmarijuana dispensaries.

State vs. federal law

Dispensaries are not authorized by Washington's medical-marijuana law,
but the storefronts have relied on a broad interpretation of a 2011
amendment to the law that authorized 10-patient, 45-plant "collective

Some cities, including Seattle, accepted that interpretation, viewing
dispensaries as a safe alternative for legal medical-marijuana patients.

But federal authorities - here, in Spokane and in some other
medical-marijuana states - increasingly treat dispensaries as dealers
of a drug that remains illegal under federal law.

In a statement Wednesday, Underwood said the DEA believes "the
operation of any marijuana-distribution storefront is illegal under
both federal and state law" and that dispensaries will continue to be
subject to "an ongoing enforcement strategy."

Shoreline's Green Hope Patient Network was among the businesses
ensnared in the conflict between local tolerance and federal
prohibition. Shoreline last year issued Green Hope a dispensary
permit, which banned - as do federal drug-sentencing enhancement rules
- - any marijuana sales within 1,000 feet of a school.

The DEA apparently considers the Interurban Trail, a multiuse trail
adjacent to Green Hope, a "playground" and sent the dispensary a
shutdown notice. Green Hope quickly closed.

The DEA's interpretation puzzled Ian Sievers, Shoreline's city
attorney. Including the trail as a prohibited area would eliminate
most available locations in the city. "It's a little vague" to call
the trail a playground, he said.

"Close, and close fast"

John Davis, co-founder of Hempfest and CEO of a West Seattle
dispensary, began tracking the DEA letters as they arrived last month.

Some dispensaries plan to stay open the full 30 days, although those
operators are "changing their mind 20 to 30 times a day," he said.

But the "fear" and "nervousness" were so pervasive that two
dispensaries that did not receive letters closed as well, Davis said.

And most that did get letters shut down, despite startup costs,
including security and renovation, of $30,000 and up.

"This is not something you can fight," said Doug Hiatt, a criminal
defense attorney and longtime advocate of legalizing marijuana. "My
advice has been to close, and close fast."

Seattle regulates dispensaries lightly, requiring only that the
storefronts get business licenses and abide by city codes. That has
helped make Seattle the dispensary heart of Washington, with the
mayor, City Council and City Attorney Pete Holmes all advocates of

Holmes said the DEA letters were "a pretty soft touch," compared to
other states, where federal agents summarily raided and closed
dispensaries, and reiterated a consistent federal message.

"If there was one sacred cow of all of marijuana-dom regulations, it's
to not be within 1,000 feet of a school," Holmes said. "The fact that
these knuckleheads wanted to push the rule, it makes me have no sympathy."

And the city, he noted, still has more than 100 dispensaries. "I think
we have plenty of capacity."

Bidding war

Dustin Guse co-founded and helped run the Nebula dispensary in the
University District for more than a year. But after receiving a DEA
shutdown letter last month, apparently citing a preschool in a nearby
church, he promptly did so, and says he's finished with the industry.

Guse said Nebula was barely profitable.

"I don't want to go to jail," said Guse, 30, a Navy veteran. "I'm

But others are not. Realestate broker Tom Gordon, who specializes in
siting dispensaries, said there is a bidding war among would-be
dispensary operators for a prime spot near Dick's restaurant in
Seattle's Wallingford neighborhood.

That is in part because other landlords are so leery. "The first
question: Is this associated with medical marijuana?" said Gordon.
"They'll either hang right up, or hang up after a few seconds."

That makes finding new sites challenging, he said, but hasn't ended
the "green rush."

"Everyone is on the street trying to relocate their dispensaries. And
there's a new group who still wants to get into the game."
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MAP posted-by: Matt