Pubdate: Sun, 19 Jul 2015
Source: Sacramento Bee (CA)
Copyright: 2015 The Sacramento Bee
Author: Peter Hecht


The Alturas Rancheria - totaling three members or nine, depending on 
which faction one believes  had not been content with the earnings 
from its humble wood-plank gambling house, the Desert Rose Casino. It 
had pursued various ill-fated ventures, including payday lending and 
manufacturing cigarettes.

Now, Del Rosa warned in a series of letters to authorities, the tribe 
was converting a cavernous, tented event center on the reservation 
into a huge facility for growing marijuana.

"The tribe is acting as a beard for private operators who are 
attempting to use the medical marijuana law of this state and tribal 
sovereignty for massive personal profit," Del Rosa wrote Executive 
Assistant U.S. Attorney Philip Ferrari in a letter dated May 27.

On July 8, federal and state agents and the Modoc County Sheriff's 
Department raided vast marijuana cultivation operations at the 
Alturas Rancheria and on the neighboring land of a larger sister 
tribe, the Pit River Tribe. The enforcement actions, which so far 
have not resulted in criminal charges, revealed an audacious effort 
to capitalize on the California marijuana market.

In a remote northern region where the county seat, Alturas, lacks a 
single traffic light, the scale of the operation suggested its 
investors held exuberant expectations about their ability to grow 
marijuana without legal repercussions and distribute it in the state 
that boasts America's most lucrative cannabis economy.

A federal search warrant affidavit said the tribal pot-growing 
ventures were "designed" by a powerful tribal law firm in Sacramento 
and financed by the wealthy chief executive officer of a major 
Canadian cigarette manufacturer.

Authorities seized 12,000 plants and 100 pounds of pot at the two 
tribal locations. They also discovered 40 newly constructed 
greenhouses at the Pit River Tribe's XL Ranch near Highway 395 and 
the banks of the Pit River.

Even longtime advocates for marijuana legalization described the 
Alturas and Pit River operations as an overreach  based on an 
aggressive interpretation of a 2014 Justice Department memo that said 
sovereign Indian nations could sanction cultivation and use of 
marijuana on tribal lands. The scope of the operation also went far 
beyond cultivation restrictions being debated in the Legislature to 
regulate California's existing medical marijuana industry, as well as 
limits contemplated by those pushing for legalization in 2016.

"This is overreach by promoters that are jumping the gun," said Dale 
Gieringer, California director for the National Organization for the 
Reform of Marijuana Laws, a group partnering in efforts to legalize 
marijuana beyond medical use in 2016. "They don't understand 
California law, and they are coming in to try to establish grows that 
go far beyond anything legally permitted in California."

According to a July 7 affidavit by Charles Turner, a special agent 
for drug enforcement with the Bureau of Indian Affairs, the growing 
had already started in March, when a tribal delegation met with Modoc 
County Sheriff Mike Poindexter to fill him in on the operation.

The lawyer representing the project was John M. Peebles, a founding 
partner of Fredericks Peebles & Morgan, a Sacramento law firm 
specializing in tribal economic development. Peebles met the Modoc 
County sheriff with a delegation that included Alturas Rancheria 
chairman Phillip Del Rosa and vice-chair Darren Rose.

Phillip Del Rosa is the brother of Wendy Del Rosa. Both claim to be 
the rightful chair of the tribe, and they've been dueling it out in 
courtrooms for years.

This is overreach by promoters that are jumping the gun.

In a recent interview, Poindexter said he was struck by the 
confidence Peebles expressed in the legitimacy of the growing 
operation during the meeting and in follow-up correspondence after 
sheriff's investigators began to probe the venture. "He said that we 
needed to cease our investigation of this because it is legal," 
Poindexter said.

The sheriff was further taken aback that the tribe was converting the 
Alturas Rancheria event center, a popular gathering spot for 
community functions in the town of 2,800 residents, into a giant grow 
room for pot.

"Tell me how closing that down and filling that up with marijuana is 
a good thing," he said, adding: "There is no way this is good for our 
bucolic lifestyles."

Turner said confidential informants told authorities 4,000 marijuana 
plants were being grown inside the Alturas Rancheria event center by 
April and that there were plans to build a multimillion-dollar 
electrical station to provide power for cannabis greenhouses on the 
XL Ranch of the Pit River Tribe, a 2,000-member band that operates 
the Pit River Casino in the Shasta County town of Burney.

In May, a sheriff's sergeant stopped a Penske rental truck leaving 
the Alturas Rancheria with a posted "plant transfer manifest" for 
3,000 marijuana plants in designer strains from Platinum Kush to Star 
Dawg. Turner wrote that informants told authorities the venture 
intended to distribute pot as far as 750 miles away.

In addition, Turner wrote, there was a frequent visitor to the 
cultivation sites: Jerry Montour. He is the CEO and controlling 
stockholder of an Ontario, Canada-based cigarette company, Grand 
River Enterprises, which sells more than a billion dollars of 
cigarettes annually under such brands as Sago, Putters, DK's and 
Golden Leaf in Canada and Seneca in the United States.

Montour, who did not return a call for comment after the July 8 raid, 
has a 1988 conviction in Canada for conspiracy to smuggle marijuana 
into the country from Mexico, according to authorities.

On June 9, Peebles and Alturas Rancheria went public with their plans 
in front of the Modoc County Board of Supervisors. Peebles asserted 
that the tribe had put in place regulations and oversight vastly 
exceeding California's nebulous cannabis laws, which merely say that 
qualified medical marijuana patients can assemble to cultivate and 
share marijuana.

Peebles said the tribe wouldn't operate any pot stores on its lands 
or in Modoc County and maintained "strict inventory controls" in a 
collective that would provide marijuana to patients through medical 
cannabis dispensaries elsewhere in California. He invited supervisors 
to tour the growing operations and view "how we intend to strictly 
monitor what is going on."

In the tense board session, Modoc Supervisor David Allan questioned 
the tribe's motives. "A tiny handful of people, tough guys, are 
desperately looking for some minuscule little loophole to make this 
happen, to profiteer," Allan said.

According to a leading medical marijuana lawyer who coauthored 
California's Proposition 215 Compassionate Use Act, which legalized 
medicinal use in 1996, the tribal cultivation plan appeared to be a 
business-to-business program to sell pot to California dispensaries, 
something not allowed by state law.

Oakland attorney William Panzer said in an interview that the 
enterprise would have violated state law soon after the marijuana 
left the tribal lands.

Under a 2003 state law governing medical marijuana distribution, 
medical users are allowed to share marijuana within closed membership 
groups of patients. Panzer said the tribal plan appeared to assume 
the creation of "a giant collective" to distribute pot into multiple 
patient networks or dispensaries.

"You're talking about wholesaling cannabis, and you just can't do 
it," he said.Legislation recently passed in the Assembly, AB 266, 
would create California's first formal medical marijuana business 
licensing and oversight program to govern retail sales, cultivation 
and transportation of cannabis. The bill proposes commercial 
cultivation licenses for farms raising up to 500 mature marijuana 
plants  a fraction of what was being contemplated by tribes in Modoc County.

In recent years, federal authorities aggressively targeted purported 
wholesale marijuana production in California.

In 2011, a city of Oakland plan to license four cavernous warehouses 
for pot growing prompted the federal government to conduct sweeping 
raids on California pot businesses it said were operating in an 
"unregulated free-for-all." Threats of U.S. prosecution also 
shuttered private marijuana greenhouses licensed by the Sacramento 
Delta town of Isleton. In another production scheme, the government 
won guilty pleas from two former Sutter County tomato growers and an 
Oakland medical marijuana entrepreneur.

We thought, 'Wow, what are these guys up to? Are they smoking their 
own product?'

Tribal groups nationally began seeing marijuana as a potential source 
of new revenue soon after voters in Colorado and Washington legalized 
it for recreational use in 2012.

Following the legalization votes, the Justice Department issued a 
2013 memo declaring it wouldn't intervene in states allowing 
marijuana for medical or recreational purposes if they enacted 
"robust controls" including regulating sales and distribution to keep 
pot from minors and prevent interstate distribution, environmental 
degradation and involvement by criminal gangs.

A 2014 follow-up memo said those guidelines also applied to Indian 
tribes, though it said federal authorities reserved the right to 
investigate and bring marijuana prosecutions, "including in the event 
that sovereign Indian Nations seek to legalize the cultivation or use 
of marijuana."

Within months, a Kansas City, Kan., investment group, FoxBarry Cos., 
and a Colorado consulting firm called United Cannabis announced a 
marijuana growing partnership in January with the Pinoleville Pomo 
Nation in Mendocino County.

Those investors outlined ambitious plans for numerous greenhouses and 
over 100,000 square feet of growing space. The Mendocino County 
Sheriff's Department responded by threatening to enforce the county 
growing standards  a limit of 25 plants per parcel.

So far, the tribe has planted just a few dozen plants on adjoining parcels.

Mendocino County Supervisor John McCowen said he was happy to see the 
federal government crack down in Modoc County. Speculators, he said, 
are pitching "outrageous" cultivation schemes.

"It smacks of commercial exploitation, almost on parallel with casino 
developments," McCowen said. "In many incidents, it's not the tribes 
that are benefiting. It's outsiders who are coming in and saying, 
'Here is how you can do it.'"

In a statement after the July 8 raids, Jerrilyn Spencer, chief 
executive officer of Pomari-Awte, a management entity for the Pit 
River Tribe, said the tribe believed it was operating properly under 
federal guidelines when it adopted "a comprehensive medical marijuana 
program ordinance that authorized the cultivation ... on tribal land."

She said the tribe believed the 2014 Justice Department memo had 
provided assurance "that such activity would not trigger federal 
enforcement action."

Yet, more than three weeks before attorney Peebles addressed the 
Modoc supervisors, he got a stern warning from U.S. Attorney Benjamin 
Wagner and Ferrari, the official in Wagner's Sacramento office to 
whom Wendy Del Rosa had written.

Wagner and Ferrari's May 14 letter to Peebles said "distribution of 
marijuana by Indian tribes" within California's 34-county Eastern 
District was a matter "of real concern" to the Justice Department and 
local sheriffs. It went on to say: "The prospect of large-scale, 
for-profit marijuana operations has the potential to introduce 
quantities of marijuana not contemplated by the Compassionate Use 
Act" in California.

Peebles and Alturas Rancheria members backing the plan declined to 
return calls after the raids.

Wendy Del Rosa - who had reported tribal members, including her own 
brother, to the feds  had a tribal consultant and political ally 
respond on her behalf.

In an interview, Wayne Smith, a former deputy assistant secretary of 
the Bureau of Indian Affairs, said Wendy Del Rosa was "screaming from 
Day One" the marijuana operation was illegitimate. "It was a 
cultivation and distribution ring beyond anyone's imagination," Smith 
said. He added: "We thought, 'Wow, what are these guys up to? Are 
they smoking their own product?'"
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MAP posted-by: Jay Bergstrom