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Dispensaries raided for acting like for-profit businesses

September 9, 2009 - 9:22 pm

The police raids on numerous San Diego County medical marijuana dispensaries that took place throughout the afternoon are the culmination of a five-month investigation, CityBeat has learned. A law enforcement source close to the operation and familiar with the details told CityBeat the investigation revealed that many of the marijuana collectives and co-ops were functioning as for-profit businesses, and thus lost the protection granted to them by voters under Proposition 215 in 1996.

Since February’s announcement by U.S. Attorney General Eric Holder that the Drug Enforcement Administration would not be raiding marijuana dispensaries, California has seen explosive growth in new storefront marijuana collectives and co-ops. They are governed by guidelines (PDF) laid out by California Attorney General Jerry Brown last year. Brown’s rules use precedent set by the courts and the language of Prop. 215 to define ways in which patients and primary caregivers can band together to grow marijuana, and thus take advantage of economies of scale. But Brown’s guidelines are also very specific, stating that a dispensary under whatever legal form it takes cannot operate as a for-profit business. In the final paragraph, the guidelines lay out some indicators of for-profit operations for law enforcement:

“When investigating collectives or cooperatives, law enforcement officers should be alert for signs of mass production or illegal sales, including (a) excessive amounts of marijuana, (b) excessive amounts of cash, (c) failure to follow local and state laws applicable to similar businesses, such as maintenance of any required licenses and payment of any required taxes, including sales taxes, (d) weapons, (e) illicit drugs, (f) purchases from, or sales or distribution to, non-members, or (g) distribution outside of California.”

CityBeat‘s source said that police investigations have tracked the accounting and operations of dozens of San Diego County dispensaries. The source said police  have pictures of safes “filled with marijuana and cash,” evidence of the “excessive amounts” indicated by the law.

Some dispensaries advertise like businesses (full disclosure: many dispensaries advertise in CityBeat) and run promotions like businesses, (e.g. offering three free joints with new memberships or discount coupons).

The source said that the DEA’s involvement is mostly focused where the businesses are getting their marijuana. The Attorney General’s guidelines say that a primary caregiver can possesses six ounces of dry marijuana, up to six mature marijuana plants or 12 immature marijuana plants per patient. The guidelines allow co-ops and collectives to possess this amount per patient member. But, according to the investigation, many of the dispensaries are not growing their own marijuana and are buying it illegally. The source also said some dispensaries who claim to be growing the marijuana on their own are selling far more than the six plants per patient would make possible, and thus must be supplementing their supply illegally.

District Attorney Bonnie Dumanis will hold a press conference tomorrow at 10 a.m. to provide additional details of the investigation. She may also announce a new interpretation of the term “primary caregiver” that will require a more intimate relationship between the caregiver and the patient. Such an interpretation would likely exclude many of the storefront collectives currently in operation.

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20 Comments leave one →
  1. September 9, 2009 - 10:13 pm 10:13 pm

    The city has no legal basis for prosecuting coops for buying marijuana illegally. There are no laws, state or federal, forbidding the purchase of marijuana, medical or otherwise, or any other controlled substance, by anyone. After purchasing marijuana, buyers are liable for prosecution for possession, but patients and collectives are immune to these charges under Prop. 215. San Diego is inventing non-existent drug crimes to justify its action against the dispensaries.

  2. Tloc permalink
    September 9, 2009 - 10:35 pm 10:35 pm

    The coops are buying it from other patients !!
    I hate how they just make stuff up .

  3. Chris P permalink
    September 9, 2009 - 11:10 pm 11:10 pm

    First off. Coops in LA are abiding by Browns guidelines as soon as they came out. Any LLC or Non-profit can advertise – that’s apart of your free speech. – Why can a prostitute advertise in the Beat or reader but not a collective? And ads and marijuana mags and weeklies are all over all cities north of San Diego.

    Also, many of the collectives raided were categorized on city documents as non-profits – Especially Hillcrest Compassion – in my opinion.

    Lastly, a lot of the collectives are secure. You cannot see or discuss anything about marijuana without a card. Just on that basis alone, in order to sell marijuana to a collective for sale to their patients you must register as a member to the collective. So if every vendor is a member and everything received is documented and invoiced – whats the problem?

  4. September 9, 2009 - 11:27 pm 11:27 pm

    if any one who works a HCC pls send a comment on this site this is thomas the painter let me know you are ok pls you frend thomas… ps paul call me iv got ideas hee hee

  5. Dave permalink
    September 10, 2009 - 12:41 am 12:41 am

    All of this will get thrown out in court. None of it will stick and most, if not all, of these owner will be operating again… The question is WHEN? These people stick their necks out to provide a service to people who need them.
    There are simply too many people in the world who think they should regulate what everyone else can say, do, or think. It’s ridiculous, and it’s wrong.

  6. theSand.Man permalink
    September 10, 2009 - 8:46 am 8:46 am

    This reminds me of a similar situation back in Germany when the SS rounded up all the Jews and took them to camps. Are they setting up camps for the MM Patients yet? Bonnie Dumanis needs to be recalled and I am going to lead a genuine recall effort against her. Anyone else game to sign the petition? I need 15% of the registered voters to sign. Then we elect her ass out of office!!!

  7. Farm Member permalink
    September 10, 2009 - 9:13 am 9:13 am

    Bonnie Dumanis was on KUSI “Good Morning San Diego” this morning and is supposed to be having a press conference today at 10am although I am not sure where that will be televised. During her news interview she clearly stated that she considers all storefront collectives illegal and that she will continue to shut down those storefront collectives that law enforcement deems are operating for profit. She continued to say that cultivation amongst patients is completely legal and that she recognizes cannabis as a medicine for “sick people”. Apparently the rich, white conservatives in our town have decided that they dont want cannabis in their public image but if we all just cultivate behind closed doors and don’t flaunt it we will be okay. What a joke! THe AG Guidelines clearly state that a storefront collective is totally legal as long as they operate in a non-profit manner now the question is just how can we know were safe in San Diego?

  8. Mary Ann permalink
    September 10, 2009 - 9:19 am 9:19 am

    All these raids and destruction of property are designed to terrorize patients and discourage them from using MMj. My sister died of complications of chemotherapy and refused MMj because she feared prosecution. She died drugged and unconscious when MMj could have given her months or even years of quality living. I do not use cannabis but I support it 100% for medical use, especially for cancer patients. It works for many illnesses and I have seen the amazing results with my own eyes. These are human lives that runaway law enforcement is wrecking and seriously ill people they are attacking.

  9. Patient permalink
    September 10, 2009 - 10:10 am 10:10 am

    STOP persecuting patients! Some of these collectives were legitimate as they paid taxes. So farmacies that sell Oxycontin should also be not for profit? Makes no sense. Oh yeah, Pharmaceutical companies don’t make money off MMJ, that’s why these scumbags target the industry..

    • Inflorescence permalink
      September 11, 2009 - 7:35 pm 7:35 pm

      Yes, Big pharma should also make No profit.

      That’s why we SHOULD socialize medicine.

      It’s just that prop 215 was ahead of the curve in realizing this.

      Medicine and capitalism should not mix.

      Medicine is a Right, not a commodity only reserved for the wealthy.

  10. Relaxed permalink
    September 10, 2009 - 10:22 am 10:22 am

    Let’s see, co-ops follow AG guidelines, BUT, if they run in a manner in which benefits patients and patients flock to this location due to the respectable and responsible manner in which they operate and they become a large entity, let’s say they get a patient base of 5000, all of a sudden they turn into some sort of profit based business because a safe has a what looks like a lot of cash and marijuana in it? Where are the forensic accountants within the Sheriffs office to have determined this in advance for them to have come to this conclusion? How does this work for MMJ Collectives but not other non-profits, like the: RED CROSS $9.4B revenues and $5.4B expenses with $539M surplus and $3.9B in assets; UNITED WAY, SALVATION ARMY $3.2B revenues and $3B in Expenses with $309M surplus and $9.64B in assets; SHRINERS HOSPITALS FOR CHILDREN $1.24B revenue and $605M expenses with surplus $636M and $9.54B in assets, BOYS AND GIRLS CLUBS OF AMERICA $1.45B Income and $1.27B expenses with $178M surplus and $2.61B in assets; should all of these be looked into also? It would appear from most lay-men eyes that these entities would also have problems because of the lack of expenses vs revenue with the logic the police are using to justify these raids….

    Numbers were taken from Forbes list of America’s 200 Largest Charities – http://www.forbes.com/2007/11/21/largest-american-charities-pf-philo-07charities-cz_wb_1121charities_land.html

  11. September 10, 2009 - 12:50 pm 12:50 pm

    I’m all for medical marijuana. Hell, I’m for outright legalization, but that’s another issue. I do believe, however, that these co-ops/dispensaries/whatever you want to call them have been doing some things to shoot themselves in the foot.

    Driving into PB the other day, on Garnet, if you look left near the Wienerschnitzel, there’s the most blatantly ridiculous advertising for the dispensary on the second floor. It basically screams “WEED, Man! CHEECH AND CHONG!” Pictures of pot leaves, Rasta colors, etc.

    In and of itself, this stuff is fine – but if you’re trying to live up to specific state regulated guidelines for an business in the health care industry, in an legal area with (ahem) “grey areas”, in a notoriously anti-drug/conservative city, where not long ago ALL dispensaries were raided and shut down, to promote your business like it’s a head shop is just plain stupid.

    I guess, though, that if they’re in it to win it, make 1/2 million dollars in a few months and then shut up storefront and move on, they have to go balls to the wall with their advertising/promotion. But they do not better than come across as drug dealers – they need to professionalize and realize where they are, and how they are contributing to their own demise.

  12. Donna Lambert permalink
    September 10, 2009 - 3:20 pm 3:20 pm

    The important thing that Bonnie has not done, is to set up guidelines, or a positive description of what she actually thinks is legal. She promised to do this in 2003, but changed her mind after a visit from the then Bush administrations federal drug czar.
    Bonnie needs to understand that medical marijuana patients need and deserve the safe and affordable access that was mandated by sb420.
    The fact that she would raid Hillcrest Compassion Care, and Movement in Action, two very legitimate collectives illustrate that she makes NO DISTINCTION between the legitmate collectives and the illegal storefronts.
    The fact that she has me, an almost 50 year old woman with no criminal record, who has dealt w/ Hep C, Cancer, Cirrhosis, Sjoegrens disease, and several related surgeries on trial for helping a valid medical marijuana patient twice (with NO storefront), when the judge at my prelim ruled I was clearly NOT in it for profit, the fact that she is putting me on trial for 7 felonies is all the illustration that anybody needs that these indiscriminate raids have absolutely nothing to do with law enforcement, and everything to do with pursuing a political agenda.
    Donna Lambert

  13. LostClusters permalink
    September 11, 2009 - 6:06 am 6:06 am

    It seems the point of contention is profit. Co-ops are not suppose to make a profit. From the reading I have done it seems that all dispensaries fall into this category. Can anyone in the know expound on this?

    • kysmit permalink
      September 21, 2009 - 5:15 pm 5:15 pm

      The following (from NORML site) helped me to understand how they were getting away some of this nonsense…. hope it helps you !
      California Supreme Court Ruling Limits Medical Marijuana Distribution
      November 24th, 2008 By: Allen St. Pierre, NORML Executive Director

      Smelly Money Leads To Major Legal Review Of California’s Medical Marijuana Distribution
      In an important legal case decided today that cannabis reform advocates have been waiting on for nearly two years, the California Supreme Court ruled that criminal defendants are not entitled to a defense as Proposition 215 (Prop 215) caregivers if their primary role is only to supply marijuana to patients.
      “We hold that a defendant whose care-giving consisted principally of supplying marijuana and instructing on its use, and who otherwise only sporadically took some patients to medical appointments, cannot qualify as a primary caregiver under the Act and was not entitled to an instruction on the primary caregiver affirmative defense. We further conclude that nothing in the Legislature’s subsequent 2003 Medical Marijuana Program (Health & Saf. Code, § 11362.7 et seq.) alters this conclusion or offers any additional defense on this record. ”

      Prop 215 defines primary caregiver to be the “individual designated by the [patient]… who has consistently assumed responsibility for the housing, health, or safety of that person.” According to the Court, these words ” imply a caretaking relationship directed at the core survival needs of a seriously ill patient, not just one single pharmaceutical need. ”

      The Court concluded, ” a defendant asserting primary caregiver status must prove at a minimum that he or she (1) consistently provided care-giving, (2) independent of any assistance in taking medical marijuana, (3) at or before the time he or she assumed responsibility for assisting with medical marijuana. ”

      The Court’s ruling effectively limits the caregiver defense to relatives, personal friends and attendants, nurses, etc. In particular, it excludes its use by medical marijuana “buyers’ clubs,” retail dispensaries and delivery services.

      http://blog.norml.org/2008/11/24/california-supreme-court-ruling-limits-medica

      • Inflorescence permalink
        September 23, 2009 - 1:49 am 1:49 am

        “In particular, it excludes its use by medical marijuana “buyers’ clubs,” retail dispensaries and delivery services.”

        But it doesn’t exclude true collectives, which even Bonnie and jerry sanders agree with.

  14. Joe.Md permalink
    September 13, 2009 - 11:47 pm 11:47 pm

    LARGE AMOUNTS OF CASH HUH? I Wonder if they’ve tried to but the stuff for sALE THERE! It’s not cheap for the dispensaries either Officers of the LAW(oh yeah , BY the PEOPLE, OF the PEOPLE, And FOR the PeoPLE). 4k to 6k for most of what i’ve seen. HOW can they imburse patients for the fruits of their labor if they can’t break a 100? non-profit doesn’t mean you can’t make money, it means ur tax exempt UNTIL profit is made(this is where guidelines need to be made clear). ANd After such profit is made-THESE ARE SIMPLY THE RESULTS OF ANY ENTITY THAT HAS TO PAY BILLS.
    Enterprise is not illegal-people will make money-BOOHOO-such is capitalism. Mebbe if the SHOPS STEP UP AND START CONTRIBUTING TO THE NEW D.A.’s non-profit ties(check it out)She’ll ease up like she did the alcohol industry here.

    • kysmit permalink
      September 22, 2009 - 12:32 pm 12:32 pm

      Here, I think is the other catch that is being used against dispensaries.

      EDMUND G. BROWN JR. DEPARTMENT OF JUSTICE
      Attorney General State of California

      GUIDELINES FOR THE SECURITY AND NON-DIVERSION OF MARIJUANA GROWN FOR MEDICAL USE August 2008

      4. Collectives Should Acquire, Possess, and Distribute Only Lawfully Cultivated Marijuana: Collectives and cooperatives should acquire marijuana only from their constituent members, because only marijuana grown by a qualified patient or his or her primary caregiver may lawfully be transported by, or distributed to, other members of a collective or cooperative. (§§ 11362.765, 11362.775.) The collective or cooperative may then allocate it to other members of the group. Nothing allows marijuana to be purchased from outside the collective or cooperative for distribution to its members. Instead, the cycle should be a closedcircuit of marijuana cultivation and consumption with no purchases or sales to or from non-members. To help prevent diversion of medical marijuana to nonmedical markets, collectives and cooperatives should document each member’s contribution of labor, resources, or money to the enterprise. They also should track and record the source of their marijuana.

  15. SlowDeath permalink
    September 22, 2009 - 11:14 am 11:14 am

    All of you are stupid. Please stop whining you hippy freaks, cut your hair, and get a real job so you can move out of your parents house.

  16. Johnny permalink
    October 13, 2009 - 11:42 am 11:42 am

    These idiot’s are in it for the MONEY! WHY would you want to sell MJ= to help the handicaped?
    The dispensaries should be ran by the government or police. Then there would be NO problems! THEY WOULDN”‘T DUHHHH
    There is no Pharmacy owned by some young stoners!! The pharmacies don’t charge extra! they give you good deals for the same shit!! Duhhhhh
    Someone told me the dispensaries sell low grade stuff for full price so that the patients keep coming back! RETARDED

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