Justice Dept. Targets Marijuana Distributors in Calif.

Oct. 7, 2011 — -- The Justice Department announced today it is cracking down on the illegal distribution of marijuana in four federal districts in California, which has had a growing cannabis industry since legalizing medicinal marijuana in 1996.

The action places into question marijuana-related activities in 15 other states and the District of Columbia, which have legalized medicinal marijuana in some form.

The U.S. attorneys for Sacramento, San Francisco, Los Angeles and San Diego revealed enforcement actions against at least 16 cannabis distributors in those federal districts at a news conference in Sacramento.

Deputy Attorney General James Cole said the department will not focus the investigation on individual patients with serious illnesses like cancer or their immediate caregivers.

California voters approved Proposition 215 in 1996, legalizing medical marijuana.

"However, U.S. attorneys continue to have the authority to prosecute significant violations of the [federal Controlled Substances Act] and related federal laws," Cole said in a statement.

The attorney generals in California say the medical marijuana industry has grown to include drug-trafficking enterprises that operate "commercial grow operations, intricate distribution systems and hundreds of marijuana stores across the state."

The Marin Alliance for Medical Marijuana in Fairfax, Calif., received a letter from the attorney general's office on Sept. 28 threatening to close down the facility because it was operating "within a prohibited distance of a park."

The letter referred to the Controlled Substances Act, which prohibits the distribution, possession with intent to distribute, or manufacturing of a controlled substance. The law describes harsher penalties for those actions within 1,000 feet of a school, university, playground or public housing facility, or within 100 feet of a youth center, public swimming pool or video arcade facility.

Greg Anton, an attorney representing The Marin Alliance for Medical Marijuana, called the action "hypocritical and abhorrent."

Anton said the alliance has the longest-running medical marijuana dispensary in the state, and has "14 years without one incident of complaint or criminality in anywhere near the dispensary."

"There's a dispensary where I live that is selling guns, narcotics, alcohol and tobacco," said Anton, who lives in Sonoma County, "and it's called Wal-Mart."

Anton said his client is speaking with a number of other dispensaries to decide on a response.

"We'll serve all legal rights and we're networking together to figure out whether Obama seriously wants to divert his limited resources to do this," Anton said.

Stephen DeAngelo, executive director of Harborside Health Center in Oakland, Calif., one of the largest medical cannabis distributors in the country, said the center had not received a letter but was on alert.

"I think it just makes no sense at all," DeAngelo said. "The federal action, if successful, is going to deprive sick and suffering patients to get regulated medicine and send them to the streets."

DeAngelo said hundreds of thousands of patients and thousands of jobs and tax dollars could also go to waste.

In California's Northern District, which includes Oakland, owners and lien holders of marijuana stores close to schools, parks and other prohibited areas received letters saying they were breaking zoning laws and must shut down in 45 days or face criminal charges or confiscation of their property.

In addition, the IRS asked Harborside Health Center to pay $2 million in back taxes and $500,000 in penalties last week for taking business deductions that were related to "trafficking in controlled substances." The penalty is based on section 280E of the tax code, passed during the Reagan administration in 1982, which prohibited drug dealers to take any deductions based on trafficking activities.

Aaron Smith, executive director of the National Cannabis Industry Association, called the Justice Department's actions "absurd."

A spokeswoman said the association is lobbying Congress to change banking and tax policies and organizing "hundreds" of business owners across the country to "educate the public on the merits of a regulated industry versus the black market."

Jill Lamoureux, executive director of the Medical Marijuana Business Alliance and chairwoman of the National Cannabis Industry Association, owns four medical marijuana centers and grow facilities in Colorado.

She said Colorado medical marijuana dispensaries are concerned about the threats in California, though Colorado citizens' right to access medical marijuana is legalized in the state's constitution.

"We have the most regulated system in the country," she said. "It would be a travesty to shut down businesses providing alternative medicine to patients that are licensed and taxed on a local and state level. Our industry is creating jobs, taking revenues out of the hands of cartels and instead providing badly needed tax resources for infrastructure and services."