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Home My WebLink AboutStaff Report 4.A 12/19/2011 ArvidcvItevw#4A ic p:L a,A w R rouik.* /ass DATE: December 19,2011 TO: Honorable Mayor and Members of the City Council through City Manager FROM: Dan Fish, Chief of Police SUBJECT: Discussion:and Possible Direction on Maintaining Current Medical Marijuana Dispensary Moratorium BACKGROUND In 2006, the City Council initiated a moratorium that temporarily prohibited medical marijuana dispensaries and cultivation within City limits. In May 2007, the City Council adopted Ordinance 2269, permanently prohibiting medical marijuana dispensaries within the City limits. Information provided to the City Council in 2007 is included as Attachment 1 to this report. At its goal setting session earlier this year, the City Council briefly discussed-the pros and cons of allowing medical marijuana dispensaries to operate in Petaluma, and particularly the potential financial benefit from taxing such businesses. The Council asked staff to revisit this issue, and to provide information regarding the issues surrounding dispensaries and cultivation related to medical marijuana and revenue-generating opportunities. DISCUSSION It may be helpful to begin with a review of the legal framework for medical marijuana use, cultivation, and dispensing. Proposition 215, an initiative authorizing the limited possession, cultivation, and use of marijuana,by patients and their care providers for certain medicinal purposes recommended by a physician without subjecting such persons to criminal punishment under stateilaw, was passed by California voters in 1.996. This was supplemented by the California State Legislature's enactment in 2003 of the Medical.Marijuana,Program,Act (SB 420) that became effective in 2004. The language of Proposition 215 was codified,in California as the Compassionate Use Act, which added section 11362,5 to the California Health & Safety Code. Much later, the language of Senate Bill 420 became the Medical Marijuana Program Act (MMPA), and was added to the California Health & Safety Code as.section 11362.7 et seq. With respect to marijuana dispensaries, the reaction of counties and municipalities to these businesses has been decidedly mixed. Some have issued permits for such enterprises. Others have refused to do so within their jurisdictions. Still others have:permitted such operations on the Agenda Review: City Attorney Finance Director City Manager __ 1 • condition that they not violate any state or Federal law, or have reversed course after initially allowing,such activities within their jurisdictional bounds by either limiting or refusing to allow any further dispensaries to open in their community: This summary explores these matters, including the apparent conflicts between Federal and California law; the potential benefits of medical marijuana dispensaries to a community; the direct and indirect adverse impacts of medical marijuana dispensaries in local communities; the potential revenue options available to the local community with regard to taxation and fiscal remedies; and the impacts of increasing accessibility of drugs to our youth population. Federal Law Except for very limited and authorized research purposes, Federal law through the Controlled Substances Act(CSA) prohibits and criminalizes the use of marijuana''and classifies marijuana as a banned Schedule I drug. Schedule 1 is the most serious schedule of the five that are currently listed in the CSA. Substances listed on this schedule are defined as having no currently accepted medical use in treatment in the United States, lack accepted safety for use under medical supervision, and have at least some potential for abuse-sufficient to warrant Federal control under the CSA. There are numerous illegal drugs listed in Schedule I. Some of the more common include marijuana and all of its forms, mescaline, Lysergic Acid Diethylamide (LSD), Psilocybin (mushrooms), heroin, most opiates and their derivatives, peyote, gamma- Hydroxybutyric acid (GHB), MDMA-Methylenedioxymethamphetamine (ecstasy), to name a few. Under Federal law, none of these substances can be legally prescribed as medicine by a physician. Under Federal law, possessing, using, and/or cultivating marijuana is illegal. California medical marijuana statutes do not substitute, negate, or provide a legal defense for cultivating,or'possessing'marijuana - even with a physician's recommendation for use for purposes of'federal law. California's Compassionate Use Act of 1996 and Medical Marijuana Program Act of 2004 do not create an exception to this Federal law. Persons engaged in such =activities remain subject to Federal prosecution. The United States Supreme Court has ruled that this Federal regulation supersedes any state's,regulation of marijuana, including California (Gonzales v. Raich (2005) 125 S.Ct. 2195, 2215). More recently, the 9th Circuit Court of Appeals found that there is no fundamental right under the United States Constitution to use medical marijuana'(Raichv. Gonzales (9th Cir. 2007) 500 F.3d.850, 866). This notwithstanding, on-March' 19, 2009, U.S. Attorney General Eric.Holder; Jr. announced that under the new Obarina Administration, the U.S. Department of Justice plans to target for prosecution only those marijuana dispensaries that use medical marijuana dispensing as a front for dealers of illegal drugs. California Law Generally, the possession, cultivation, possession for sale, transportation, distribution, furnishing and giving away of marijuana is unlawful under California state law. (See Cal. Health & Safety Code secs. 11357-11360). But, on November'5, 1996, California voters adopted Proposition 215, an initiative statute decriminalizing for purposes of California law certain medical use of marijuana.The initiative added California Health and Safety code section 11362.5, which allows "seriously ill Californians the right to obtain and use marijuana for medical purposes where that medical use is deemed appropriate and has been recommended by a physician" The codified initiative is known as the Compassionate Use Act of 1996. The State Legislature also passed Senate Bill 420 in 2003. It becamethe Medical Marijuana Program Act and took effect on January I, 2004.This Act expanded the definitions of"patient" and "primary caregiver"and created guidelines for identification cards. It defined the amount of marijuana that "patients and primary caregivers" can possess. It also created a limited affirmative defense to criminal prosecution under California law for qualifying individuals that collectively gather to cultivate medical marijuana,as well as to the state law crimes of marijuana possession, possession for sale, transportation, sale, furnishing, cultivation, and maintenance of places for storage, use, or distribution of marijuana for a person who qualifies as a "patient," a "primary caregiver," or as a member of a legally recognized "cooperative," as those terms are defined within the statutory scheme. Nevertheless, there is no provision in any of these laws that authorizes or protects the establishment of a "dispensary" or other storefront marijuana distribution operation. The California medical marijuana laws create narrow affirmative-defenses and limited immunities for particular individuals with respect to enumerated marijuana activity otherwise prohibited under California law. All conduct, and people engaging in it, that falls outside of the • areas protected under the CUA and MMPA remains illegal, even under California law. Relatively few individuals are able to assert the affirmative defense and/or to qualify for the limited immunities established in the California medical marijuana statutes. To successfully do so, a person must be a "qualified patient,""primary caregiver," or a member of a "cooperative." Qualified persons are entitled to assert CUA statutory defenses to specified state law marijuana crimes at trial. In addition, the MMPA provides immunity from,arrest for certain specified state law marijuana crimes for certain persons with valid identification cards. California's medical marijuana laws apply to patients, primary caregivers, and true collectives. If their conduct comports to California law, they may have some legal protection for specified marijuana activity for purposes of state law. However, all marijuana establishments+and.activities not covered by the CUA or MMPA, including and "storefront" dispensary facilities, are illegal under California as well as federal law. These establishments have no legal protection. Also, even those marijuana establishments and activities that are covered by the CUA and MMPA remain illegal under federal law. Neither the former California Attorney General's opinion nor the current California Attorney General's draft guidelines present a contrary view. A more detailed analysis of the Attorney General guidelines follows later in this report. I. Patients and Cardholders. A "qualified patient" as defined by the California Health and Safety Code is an individual with a physician's recommendation that indicates marijuana will benefit the treatment of a qualifying illness. Qualified illnesses include cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which marijuana provides relief. A physician's recommendation that indicates medical marijuana will benefit the treatment of an illness is required before a person can claim to be a medical marijuana patient. Accordingly, such proof is also necessary before a medical marijuana affirmative defense can be claimed. A "person with an identification card" means an individual who is a qualified patient who has applied for and received a valid identification card issued by the State Department of Health Services. (Cal. H&S Code secs. 11362.7(c) and 11362.7(g).) 2. Primary Caregivers. The only person or entity authorized to receive compensation for services provided to patients and cardholders is a primary caregiver. (Cal. H&S Code sec. 11362.77(c). Nothing in the law authorizes any individual or group to cultivate or distribute marijuana for profit (Cal. H&S Code sec. 11362.765(a). "Storefront" 3 marijuana businesses typically'cannot satisfy the•statutory caregiver requirements. The same is true of businesses that call themselves "cooperatives," but function like storefront dispensaries. In People v Mower, the court was very clear that the defendant had to prove he was a primary caregiver in order to raise the.medical marijuana affirmative defense. Mr. Mower was prosecuted for supplying two people with marijuana.He claimed he was their primary caregiver under the medical marijuana statutes. This claim required him to prove he"consistently had assumed responsibility for one's housing, health, or safety" before he could assert the defense (emphasis added). The.key to being a primary caregiver is not simply that marijuana is provided for a patient's health. The responsibility for the health must be consistent; it must be independent of merely providing marijuana for a qualified person; and such aprimary caregiver-patient relationship must begin before or contemporaneously with the time of assumption of responsibility for assisting the individual with marijuana. (People v. Mentch (2008) 45 Cal.4th 274, 283). Any relationship a storefront marijuana business has with a patient is much"more likely to be transitory than consistent, and to not include providing for a patient's health needs beyond just supplying him or her with marijuana. A "primary caregiver" is an individual or facility that has "consistently assumed responsibility for the housing,health, or safety of a patient" over time. (Cal. H&S Code sec. 11362.5(e).) "Consistency" is the key to meeting this definition. A patient can elect to patronize any dispensary that he or-she chooses. But, in light Of the holding in People v. Mentch, supra, to qualify as a.primary caregiver, more aid to a person's health must occur beyond merely dispensing marijuana to a given customer. Additionally, if more than one patient designates the same-person as the primary caregiver,all individuals must reside in the same city or county. And, in most circumstances, the primary caregiver must be at-least 18 years of age. The California Legislature had the opportunity to legalize the existence of dispensaries when setting forth what types of facilities could qualify as "primary caregivers." Those included in the-list clearly show the Legislature's intent to_restrict the definition of eligible facilities to those typically involved in significantand long-term commitment to the patients' health, safety, and-welfare. The'only facilities which the Legislature. authorized,to serve as "primary caregivers" are clinics, health care facilities, residential care facilities, home-health-agencies,.and hospices which actually provide medical care or supportive services to qualified patients. (Cal. H&S Codesec. 11362.7(d)(1). Any business that cannot prove that its relationship with the patient meets the statutory requirements is not a primary caregiver, and may not legally dispense marijuana to qualified patients/cardholders. 3. Cooperatives and Collectives. According to the:California Attorney General's recently issued Guidelines for the Security and Non- Diversion of Grown for Medical Use, unless they meet statutory requirements, dispensaries also cannot reasonably claim to be cooperatives or collectives. If a dispensary is only a storefront distribution operation open to the general public, and there is no indication that it is a collective and that the collective's members are responsible for growing or cultivating marijuana for the benefit of the members, even if it is a non-profit enterprise, it will not qualify as a cooperative so as to avoid criminal penalties under California's marijuana laws. Legally recognized cooperatives generally possess "the following features: control and ownership of each member is substantially equal; members are limited to those who will avail themselves of the services furnished by the association; transfer of ownership interests is prohibited or limited; capital investment receives either no return or a limited return; economic benefits pass to the members on a substantially equal basis or on the basis of their patronage of the association; members are not personally liable for obligations of the association in the absence of a direct undertaking or authorization by them; death, bankruptcy, or withdrawal of one or more members does not terminate the association; and [the] services of the association are furnished primarily for the use of the members." Marijuana businesses do not normally meet this legal definition. Based on the foregoing, it would appear that the majority of marijuana dispensaries are not legal enterprises even under or California law. As noted above, no dispensaries or collectives are legal enterprises under federal law. Potential Local Government Liability from Local Medical Marijuana Regulation, and California Statutory Limits on Local Regulation of Medical Marijuana Some have surmised that officials of local government agencies that choose to regulate access to medical marijuana, such as through a permitting program, may be liable aiding or abetting violations of federal law. At least one reported California case, Puck v. Superior Court (City of Long Beach) (201 1) 199 Cal.App.4°i 1070 has considered this issue, in dicta. The Pack case addressed whether the comprehensive medical marijuana dispensary permitting scheme of the City of Long Beach was preempted by federal law, because it authorized or required conduct illegal under federal law. The court concluded that the Long Beach scheme was at least partly preempted by federal law, because the Long Beach regulations required transportation of medical marijuana for testing, in violation of federal law, and because the regulations authorized marijuana cultivation in the city, creating an obstacle to enforcement of federal law. In dicta, the Pack court considered whether the Long Beach regulations could make city officials liable for aiding and abetting violation of the federal CSA. Aiding and abetting a crime occurs when someone commits a crime, the person aiding that crime knew the criminal offender intended to commit the crime, and the person aiding the crime intended to assist the criminal offender in the commission of the crime. The court noted that the Ninth Circuit has held that physicians do not aid and abet CSA violations by recommending that patients use marijuana, but that they could aid and abet by providing patients the means to acquire marijuana. The court also noted that. California courts have concluded that return of confiscated marijuana by law enforcement officials does not violate federal law. However, the court also noted that United States attorneys have advised that state employees conducting activity mandated by Washington State proposed legislating for licensing marijuana growers and dispensaries would not be immune from liability under the CSA. Accordingly, the court in Pack cautioned that federal courts may take a different view concerning possible aiding and abetting liability from local medical marijuana regulations. Some have also concluded that local agencies may lack the power to enact certain local medical marijuana regulations under Government Code section 31700, which provides that city legislative bodies may pass ordinances not in conflict with the U.S. Constitution or federal or state law. This is certainly true where, as in the Long Beach regulations partially struck down in the Pack case, local medical marijuana regulations conflict with, and are preempted by, federal i 5 Jaw. '(Given the state of California;medical marijuana l'aw,;discussed above;preemption of local medical marijuana rules by California.law is.less likely, since the MMPA has•been construed to permit local regulation that imposes greater restrictions on medical marijuana use than are imposed under the;MMPA: In view of potential aiding and abetting liability, and federal preemption of local medical marijuana rules, if the City Council intended to repeal the existing ban'ondispensaries and to adopt instead a local regulatory scheme, it would be necessary to carefully research then-current case law to ensure that the regulatory scheme under consideration is not preempted by the federal CSA or other law, and does not potentially require City officials to aid and abet violation of federal law. How Existing Dispensaries Operate Since the passage of the Compassionate Use Act of 1996, many._storefront medical marijuana businesses have opened in California. Some are referred to as dispensaries, and some as cooperatives or collectives, but it is how they operate that determines whether or not they may qualify for affirmative defenses to or immunities from California criminal prohibitions. (As far as we can determine, no medical/marijuanab'usinesses, excluding certain federally sanctioned research activities, are lawful under federal law.) It may be helpful to review the mechanics of medical marijuana operations. The former Green Cross dispensary in San Francisco illustrates how atypical marijuana dispensary operates. An employee (sometimes a,guard) may check for medical marijuana cards or physicians recommendations at the entrance. Many types and grades or marijuana are usually available. Employees, who are neither pharmacists nor physicians, often make•,recommendations about what type of marijuana will best relieve a given medical symptom. Baked goods containing marijuana may be available orsold: The dispensary will often times give the customer a form to sign declaring the dispensary is their"primary caregiver". The customer then selects the marijuana desired and is told what.the contribution will be for the product, unless there is a price list posted, which is often the case. The California Health and Safety Code specifically prohibits the sale of marijuana to a patient, so "contributions" are made to reimburse the dispensary for its time and care in making a "product":available. The "contributions" can easily add up to millions of dollars per year. That is a very large cash flow for a non-profit organization that denies any participation in the illegal sales of narcotics. Before its application to renew its business license was deniedby the City of San Francisco;.there were single days that Green Cross sold $45,000 worth of marijuana. On Saturdays, the business could,sell marijuana to forty-three customers an hour. The marijuana.sold at the dispensary was obtained from growers who brought it to the stores in backpacks. A medium sized backpack can hold approximately $16,000 worth of marijuana or more. - Dispensaries that operate as if they are businesses, as in the Green Cross example, are not legally valid cooperatives for purposes of California law. Also, such operations, and their employees, typically cannot qualify under California law as"primary caregivers" of patients, although they usually claim that status. As in the Green Cross example, a storefront marijuana business' relationship with a.patientis typically too transitory to cover the patient's housing, health or safety. Courts have found that a patient's act of signing a piece of paper declaring that someone is a primary caregiver does not on its own satisfy CUA and MMPA requirements. All storefront marijuana businesses are subject to enforcement for violation of Federal law. Even collectives in full compliance with the CUA and MMPA are unlawful under federal law. As can be seen from the case law, such as the Pack case discussed above, California local agencies have no authority to authorize or require violations of federal law at local medical marijuana operations, although such operations may qualify for affirmative defenses and/or immunities concerning state law marijuana prohibitions. Also, even under the CUA and MMPA, there is no express authority (or affirmative defenses or immunities) for storefront marijuana businesses like the Green Cross. The MMPA provides defenses for patients and primary caregivers growing and cultivating marijuana for a collective . There are no legal protections for individuals simply selling marijuana to collectives or patients, or for collectives or dispensaries simply selling marijuana to patients outside of a primary caregiver relationship, even under California law. Although California Health and Safety Code section 11362.775 offers some legal protection for true collectives and cooperatives under state law, no parallel protection exists for any storefront business providing marijuana. Such storefront operations are illegal under California as well as federal law. Adverse Secondary Effects The adverse secondary effects of dispensaries and storefront cooperatives are of serious concern. Besides being in violation of Federal and state law by selling a prohibited schedule I drug, marijuana dispensaries often attract or cause numerous other ancillary social problems as byproducts of their operations. Such incidents can be criminal acts, and adversely affect our youth population. In the past few years, Violent crimes and crimes associated with medical marijuana operations and cultivation have continued to escalate in the state and Sonoma County. A few of these incidents were outlined in the 2007 memo from this Department (Attachment 1) and the incidents have not subsided since that time. There are numerous criminal cases and incidents (statewide and locally) that support the position that the distribution of medical marijuana is associated with an increase in crime and a reduced quality of life. These crimes include armed robberies, murders, burglaries, traffic, noise complaints, drug dealing, organized crime, money laundering, firearms violations, poisonings, unjustified and fictitious physician recommendations, increases in grow houses in residential areas, increased safety hazards related to grow houses, increased gang activities, impaired public health and increased exposure of minors to marijuana. Support for this position can also be found by searching for medical marijuana related cases in the local media (Attachment 2). Marijuana is becoming increasingly and more easily available to minors. Two recent reports on smoking describe two very different trends. When it comes to tobacco, a state Health and Human Services Agency survey found that more and more California residents are quitting smoking of tobacco products. The rate of decline is more than double the national average. However, when it comes to teenagers, a survey funded by the National Institute-on Drug Abuse found that a decline in cigarette smoking has been eclipsed by an increase in.marijuana smoking. The study found a growing trend of marijuana I use_byyounger teens and even`tweensl. Sixteen,percent of-eighth graders said they had smoked pot in the last year, an increase of about PO%.from the previous year survey: High school seniors reported,sinoking marijuana over cigarettes'by a margin of 21.4% to 19.2 %. The proportion of eighth graders who said they smoked marijuana daily increased from 1 to 1.2 percent between 2009 and 2010. The rate amongst 10h graders went from 2.8 percent to 3.3 percent and high school seniors from 5.1 percent to 6.1 percent. The survey questioned 46,482 students from 396 public and private schools from across the country. An analysis of patient records seized during search warrants at several dispensaries showed that 52% of the customers purchasing marijuana were between the!ages of 17 and 30, and 63% of primary caregivers purchasing marijuana were between the ages of 18 and 30. As well, only 2% of customers submitted a.physician's recommendation for AIDS, glaucoma or cancer. The other 98% had recommendations for "other illnesses", including headaches. There is an increasing trend in marijuana-related events and days of suspension in the Petaluma City Schools for violations of Education Code 48900 C for use or possession of illegal substances.' See table below: Suspension Data For Education Code 48900CEvents 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 (thru 5/3/11) 7-8 grade 8 10 18 18 37 9-12 grade 46 86 69 118 82 Total 54 96 87 136 119 suspension events Days of 260 475 435 612 594 suspension Marijuana Related Events And Days Of Suspension 2009-2010 2010-2011 (thru 5/3/11) 7-8 grade 17 events 26 events 81 suspension days 157 suspension days 9-12 grade 101 events 68 events 443 suspension days 327 suspension days Accessibility According to the Sonoma County Prevention Partnership and the Sonoma Alliance for Medical Marijuana, there are currently twelve store front marijuana dispensaries in Sonoma County. Cotati has one, Santa Rosa has six, Sebastopol has one, and there-are four in the unincorporated area of the county. Furthermore, additional research indicates that as of March 2011, there are sixteen service providers that offer home delivery of medical marijuana. Due to the fact that many of these services are internet companies, it is not known if any of the delivery-services 2008-2009 marijuana specific data not available origin-ate in Petaluma, but it is clear that they all will deliver anywhere in the county and elsewhere. There are also five-dispensaries outside of Sonoma Countywhere,authorized patients can'have medical marijuana delivered. Those businesses operate in Mann,Lake and Alameda counties. The City of Sebastopol The City of Sebastopol is sometimes discussed locally as the model business plan for a medical marijuana dispensary, and it has been used as anecdotal evidence that dispensaries can be legal and safe fora community. The Sebastopol dispensary opened in October 2007 and is thus far the only dispensary that has been allowed to operate in Sebastopol. The Sebastopol dispensary includes a multifaceted approach to holistic medicine. In addition to obtaining marijuana, patrons can take yoga and massage classes, or other instruction with regard to cultivating and processing marijuana at home. Only a small area of the business is designated for retail sales of paraphernalia and ingestion equipment. Although the Sebastopol model has been discussed as preferable to storefront models found in other cities, analysis of marijuana trends in Sebastopol suggests an increase in undesirable, related activity. In 2007, the Sebastopol Police Department conducted an analysis of all known marijuana trends in the City of Sebastopol. Between 2004 and 2007, Sebastopol.averaged 76 total marijuana incidents. That number:jumped to 137 between the opening of the dispensary and the end of 2008. The number of medical marijuana-related incidents averaged 5 in the same time frame and jumped to 15. The age of the youngest suspect averaged 13 and was in a positive upward trend until the opening of the dispensary. It has since declined to 10 years old. Proliferation.of Grow Houses in Residential Areas In recent years, the proliferation of grow houses in residential neighborhoods has significantly increased and is a problem across the nation. The purchasing and renting of homes for marijuana growing operations has become common practice. The types of residences used for grows range from very small, inexpensive dwellings to high priced mansion-type homes. In 2007 alone, illegal operations were detected.and shutdown by Federal and state law enforcement officials in 41 houses in California, 50 homes,in Florida.and 1 1 homes in New Hampshire. Since then, the problem has increased. Typically, a gutted house can.accoiminodate approximately 1;000 plants that cam each.yield almost a half pound of smokeable marijuana Collectively, this nets=about 500 pounds of usable marijuana per harvest with an average of three to four harvests per year. A successful grow house can bring in between five and ten million dollars a year because the hydroponically grown marijuana can fetch a much higher price due to its higher potency, sometimes as much as $3,000 to $5,000 per pound. There are some significant safety hazardsassociated with residential and commercial grow houses. In Humboldt County; structure fires caused by u nsafe indoor marijuana grow operations have become commonplace. The City of Arcata, which supports four marijuana dispensaries, was the site of a house fire in which a fan had fallen over and ignited a fire. The residence had been converted into a grow house by the tenants. Altered and makeshift "no code" electrical service connections and overloaded wires used to operate high-powered grow lights and fans are common causes of the fires. Large indoor growing operations can create such excessive draws of electricity that PG&E power pole transformers are blown. An average 1,500 square-foot tract home, used for marijuana growing operations, can generate rnonthlyelectrical bills from $1,000 to $3,000 per month. The dangers associated with indoor marijuana grow operations are not specific to Humboldt County. Sonoma County communities have all experienced the dangers in one form or another. Commonplace features of grow houses includes air vents being cut into roofs, water seeping into carpets, windows blacked-out, holes cut into floors, wiring substandard or jerry-rigged, and electrical outlets overloaded to operate grow lights and other equipment. These operations cause significantneighborhood discord and complaints and have been the source for numerous . residential burglaries and armed home invasions. To compound matters further, escape routes for firefighters are often obstructed by blocked windows in grow'houses, electrical wiring is tampered with in order to steal'electricity, and some residences are.even,boobytrapped to discourage and repel unwanted intruders, including law enforcement and fire officials. FINANCIAL IMPACTS Analysis of the taxation and revenue generation that can be accomplished from local regulation of medical marijuana dispensaries is somewhat complex. What is clear is that any plans for a city or county to regulate or generate revenue from medical marijuana should be carefully analyzed by legal experts prior to adoption. The law is complexandrapidly evolving in this area. There are a number of different local government strategies that have been employed to tax and raise revenue from medical marijuana operations. Some approaches seem to better comport with California law than others. For example, as discussed above, no medical marijuana operation may be run as a:profit-making:enterprise. California law does not authorize any individual or group to cultivate_or-distribute marijuana for profit(Cal. H&S Code sec. 11362.765(a)). As a result, the-collection of taxes or business license fees based on a net-profits from medical marijuana operations is not even consistent with California law As an alternative, a business license tax applied as a percentage of gross payments or contributions (as opposed to net profits), provided that California law on establishment of new-taxes is satisfied, would appear. to comport better with the CUA and MMPA than a tax on profits. It appears that nonprofit collectives operated in compliance with the CUA and MMPA.could be made subject to a voter- approved tax on payments of patient members of the collective to the collective operators. The California State Board of Equalization (BOE) has adopted apolicy of taxing medical marijuana transactions and requiring that businesses engaging in such transactions hold a•seller's permit., According to the BOE , the seller's permit does not allow individuals to make unlawful sales, it merely provides away to remit any sales and use-taxes due. In February 2011, the BOE ruled that the sale of medical marijuana is not exempt from sales tax as exempt medicine. The Federal government, on the other hand, has taken a different approach. The Internal Revenue Service has ruled that dispensaries cannot deduct.siandardbusiness expenses such as payroll, security or rent. The IRS ruling is based on a portion of the tax code (section 208E) which was passed in 1982 and bans.any tax deductions related to trafficking in controlled substances. At-the--same time, the IRS requires all businesses,,regardless of legality, to report any and all income derived from such activities, even if it is considered illegal. The medical marijuana business is no exception and is classified in the same category as illegal gambling, prostitution, organized crime and drug trafficking. 10 There are two basic approachesto collecting taxes on the sales of medical marijuana. The first is through sales tax and the other is through business license taxes. Sales tax revenue is the approach,the,state°and.aminority of cities and counties have taken. The more prevalent revenue source for local governments is collection through business license taxes and fees as regulated by local ordinances. That is the mechanism that is recommended if Petaluma were to repeal its dispensary ban and adopt a medical marijuana regulatory scheme. In Petaluma, the business license or tax is determined by gross sales receipts of as outlined in Chapter 6 of the Municipal Code. The business license tax is determined after a year of sales operations. The initial cost for the business license is $45 for a,category of businesses including retailers. After a year of sales, the tax is figured bymultiplying..016% of the gross receipts ($0.16 per $1000 or $45 whichever is higher). The business license tax is the same process followed in every city in this county although the percentages,and base fees may be different. The definition of gross business receipts subject to tax under the Petaluma business license tax is probably broad enough to be applied to receipts from patient.members of non-profit collectives reimbursing collective operators for marijuana and other services provided in accordance with the CUA and MMPA. However, currently, the Petaluma business license tax could not be applied for revenue generation purposes to lawful medical marijuana collectives, because to comply with the law, they must operate on a non-profit basis, and non-profit entities are exempt from Petaluma's business license tax. If the City Council intended to pursue regulation of medical marijuana and generation of revenue from collective operations, the Council may wish to consider establishment of a tax rate in excess of the .016%, in addition to amendment of the exemption for non-profits in the City's business license tax. Other jurisdictions have passed ballot measures that range from 2.5 to 10%. Some of those examples are set forth below. Possible use of sales tax to generate revenue from medical marijuana,operations raises additional considerations. First, even though the local sales tax rate charged to retail customers is nine percent, the State Board of Equalization only returns the equivalent;of approximately one percent of the sales tax to the municipality at the point of sale. For example, if$9 were collected'as the sales tax on a $100 purchase, only.$l of that would be returned to the City. The remainder is retained by the State for its use. Second, state law imposes limits on local sales taxes; which are capped at 1% (Rev. & Tax. Code §7202(h)(1)). Special statutory authorizations may support local transaction and use taxes above 1%, but only up,to a maximum of 2.5%. The small share of local sales tax received by the City, and the state law caps on local sales tax, probably make sales tax an unattractive way to generate local revenue from medical marijuana operations. Around the state, voters in at least nine cities last year approved ballot measures to tax medical marijuana as a means to increase revenue. These actions are being referred to as medi-tax ordinances and they can be somewhat confusing. Thereappear to-be discrepancies in terminology between business license taxes, like we pursue in Petaluma, and actual sales tax measures. In Albany,voters decided 83 percent to 17 percent in favor of Measure Q which allows city officials to impose a $25 per square-foot tax on non-profit medical cannabis operations. Under the measure, for-profit ventures would be taxed at a rate of 2.5 percent of gross receipts. In Berkeley, voters approved Measure S which enacts a 2.5 percent business license tax on medical marijuana operators. The new fee is imposed in addition to Berkley's existing business tax which applies to all businesses that operate within the city limits. ` i In La Puente, voters backed Measure N authorizing the city officials to collect local taxes on existing medical marijuana dispensaries at a rate of$100 per square foot of business space or 10 percent per $1000 of gross receipts. City officials there estimate that the taxes could generate as much as $3 million annually in revenue. Oakland voters, for the second time in two years, decided in favor of a local ballot Measure V which authorized specific taxes on the retail sale of medical marijuana. The new proposal imposes a tax upon licensed:medical marijuana dispensaries of$50 for every $1000 in gross receipts. The new 5% tax rate is almost three times the supplemental sales tax rate already imposed on local dispensaries and could increase revenues by as much as $1 million. Rancho Cordova voters decided in favor of Measure O. Unlike most other citywide ballot proposals,,which impose taxation on commercial production or retail sales of medical marijuana, this measure affects personal home grows as well. The proposal imposes taxes of$600 to $900 per square foot on personal medical marijuana grows. The tax means that medical marijuana consumers who cultivate their own product in a five-foot by five-foot space could be required to pay an annual local levy of$15,000. In Richmond, voters approved Measure V which imposes a 5% business license tax on local medical marijuana dispensaries, and Sacramento approved Measure C which allows a similar local business license tax. The specific rate in Sacramento was to be determined by city officials but was estimated to be as high as 4% of the businesses annual gross receipts. Likewise, Stockton approved Measure I which imposed a 2.5% business license tax also based on annual gross receipts. In San Jose, voters endorsed Measure U which allows city officials to levy an additional 10% tax on the area?s existing medical marijuana:dispensaries. Proponents of taxation-claim that it is a steady and large revenue stream that can be used to offset budget deficits acrossthe state and-that it could cause an immediate drop in the price of medical marijuana making it more affordable to the general public. Opponents of the taxation say that it is wrong, and very likely illegal, to tax medicine and non-profits and that the income stream to cities will create an incentive to allow more illegal operations. The extent to which various taxing and regulatory schemes comport with California medical marijuana law should also be factored into these general policy considerations. For example,based on the discussion above of current California medical marijuana law, a square-footage based tax that is otherwise lawful would seem to comport better with California law than some other approaches, because it applies irrespective of profit and revenue (although relative size of the operation presumably reflects relative revenue in comparison with smaller operations). A tax on receipts may also comport with California medical marijuana law, so long as the regulated entities are non-profit operations. However, under the Pack case reasoning it could be.problematic to adopt regulations taxing (and authorizing) for-profit medical marijuana operations or retail medical marijuana sales that clearly are ineligible for the CUA and MMPA protections, and are therefore illegal even under California law. Clearly, any proposed local scheme for regulating medical marijuana would require careful research under existing law and careful drafting to avoid federal preemption and potential local government liability. l/) Revenue Projection Based on Oakland;Data The City of Oakland currently sales taxes from its very large dispensaries. The City of Oakland's Treasury Office reports that the city collected a,combined total of$280,000 in sales tax last year. The Oakland dispensaries are considered by many to be the largest in the state, although patient records are considered confidential by the businesses and total sales are hard to identify. In just one news article, one of the Oakland dispensaries claims to have over 72,000 patients in a city with a population of 391,000. There are a total of four dispensaries allowed and that are operating in Oakland. The City of Oakland also charges a business tax fee which is 5% of the total gross revenues whichiequates to approximately 1.4 million dollars on top of the sales tax figures. The total approximated revenue, excluding other permits and fees, is $1,680,000 although these figures are not verifiable as most cities, including Oakland, cite confidentiality rules from the StateFranchise`Tax Board. Based on the number of patients reported, the total revenue per patient would be approximately $23.33 (1.68 million divided by 72;000 patients.) Based on total population, the revenue would be approximately,$4.30 per resident. Based on the total number of patients reported and the total population of Oakland, approximately 18.5% of the population are patients. Using the same assumptions and applying them to Petaluma based on population and using the Oakland percentage of population to patient ratio,results in estimated revenue of approximately 5240;000 per year. (Population 56,000 x$430 per resident is $240,800;Population 56,000 x 18.5% equals 10,360 patients x $23.33 per patient equals $241,698). Federal Intervention With the passage of the California Compassionate Use Act, there has been.a tension between California law, which decriminalizes specified medical marijuana activity for purposes of state law, and Federal law, which:recognizes no medical purpose for marijuana and criminalizes virtually all use and possession of marijuana. The Federal law enforcement agencies have so far taken a somewhat hands-off approach concerning "compassionate use" of medical marijuana in accordance with state law. However, the Federal government has taken a stricter approach to enforcing federal prohibitions against commercial cultivation, sales and transportation of marijuana, notwithstanding state.law decriminalization of some of these activities. On February 1,201,1, the United States Attorney for the Northern District of California cautioned the City of Oakland&that;dispensaries permitted,and operating in that City are in violation of the Federal Controlled Substances Act. Specifically, the letter cited Title 21, Section 841. (manufacturing, distributing, or possession with intent to.distributemarijuana), Title 21, Section 856 (unlawful to rent, lease, or maintain property used to store or manufacture marijuana), and Title 21, Section 846 (conspiracy to commit'any crimes set forth in the controlled substance act). See Attachment 3. A news article forwarded.to all California Chiefs of Police.on May 9, 2011 by the California Police Chiefs Association, entitled "New Federal Crackdown Confounds States that Allow Medical Marijuana," suggests that Federal government appears to be stepping up its enforcement efforts. The Federal government representatives take the position that no part of the state laws decriminalizing medical marijuana are legal because marijuana use violates the Controlled Substance Act, Letters have gone out to governors in Arizona, Colorado, Montana, Rohde i3 Island, Vermont and Washington warning that-involvementin the medical marijuana trade may be illegal. Two United States Attorney's said the Federal government would prosecute "vigorously against individuals and organizations that participate in unlawful manufacturing-and distribution activity involving marijuana, even if such activities are permitted understate-law." See Attachment 4. In October of 2011, the media covered the announced Federal crackdown on medical marijuana 'around the nation and more specifically in California. Four U.S. attorneys in California announced they would aggressively enforce Federal drug laws by reining in a medical marijuana industry that meant to be strictly non-profit and medicinal but that has spread into organized crime and violence. According to local DEA officials, the first wave of enforcement will be directed at large-scale medical marijuana sales operations andassoci'ated grows, dispensaries near schools and parks, and locations-where there are community complaints about the operations. The subsequent seizures will eventually lead to investigation of all medical marijuana-dispensaries to ensure their-non-profit status and,to enforce the Federal Controlled Substances Act under which marijuana not medicinal but rather as;an:illegal drug. The actions will also focus oh property owners who allow their property to'be.used'in the trade regardless of their personal.involvement. Seizures of property and warning letters have already taken place in California and, as stated previously, the IRS will be pursuing tax violations associated with the illegal medical marijuana trade. An example of this new focus in our area can be seen in the recent Federal raid of a medical marijuana cooperative (Northstone Organics) near Ukiah on October 13, 2011. In that case,. Federal agents raided a medical marijuana cooperative that holds a Mendocino County Sheriffs permit to,grow medical marijuana. The seizure of 99 plants came less than a week after the U.S. Department of Justice prosecutors in California announced theywould be cracking down on medical marijuana. This case is especially significant because it is not near a-park or school, nor does it have a shop associated with-The sale of medical marijuana like a normal dispensary. However, it is considered large-scale and it delivers marijuana to its members, which is a violation of the Controlled Substances Act. California Attorney General Guidelines Attorney General Kamala Harris has drafted new Attorney General Guidelines for the Security and Non-Diversion-of Marijuana Grown-for Medical Use. It is in the form.of a discussion draft; as of April of 2011 and it is the most recent reflection of the state government's stance on the medical marijuana issue. It has not been published as official (see Attachment 6). It has several areas of updated and clarifying language meant to make the document more-responsive to the current state of the law and it differs in several areas from the previous Attorney General's report created by Jerry Brown in August of 2008. The general philosophy of the report has not changed, in fact if anything, it is more restrictive. The 2008 guidelines can be found at (http://an.ca.gov/cros attachments/press/pdfs/n1601 medicalmariivanaeuidelines.pdf). Conclusion It can be, and increasingly is, argued that medical marijuana dispensaries are illegal enterprises that have arisen out o'f'a misinterpretation of the California medical marijuana laws. They continue to operate in violation of Federal law and are illegal under state law if they are making a 1 ' profit or otherwise do not comply with`CUA and:MMPA,requirements. The current Federal shift in`focus"from'a hands-off approach to aggressive enforcement"causes"concermfor currently permitted establishments and those in the planning;process or currentlyopening. Local regulation of medical marijuana for revenue generation purposes is not a risk-free proposition. Potential risks'include invalidity due to federal preemption, potential public agency and public • agency official liability, and potential litigation costs. The medical marijuana industry threatens to become an epidemic concern for law enforcement as agencies are forced to deal with the side effects of a business that can bring With it:violence, blight, property crimes, and quality of life issues, in addition to increased acbess,to illegal drugs and illegally prescribed or acquired drugs for our community's youth. In Sonoma and Marin counties, there are currently more than ample opportunities for legitimate patients to acquire medical marijuana from a variety of sources both north and south of Petaluma. Also, although clearly illegal under federal law, almost every medical marijuana business now delivers, making medical marijuana as easy to obtain as food, • and easier to acquire than gasoline. The Petaluma Police Department recommends that the current prohibition against dispensaries in Petaluma remain in effect. The very recent case of City of Riverside v. Inland Empire Patient's Health and Wellness Center,.Inc. (2011) 200 Cal.App.4th 885 has affirmed the right of cities to ban medical marijuana dispensaries, and that such local bans are permitted under state law. The Riverside court upheld the City of Riverside's zoning code provisions establishing that medical marijuana dispensaries are a prohibited , and that any uses prohibited by state or federal law are prohibited uses, and deemed public'nuisances. The court held that such local restrictions on medical marijuana,dispensaries are not preempted by California medical marijuana law. This is strong legal support'forPetaluma's ban on medical marijuana dispensaries. It is also recommended that before giving direction on potential local regulation of medical marijuana the City Council await further clarification fromthecourts concerning what cities and counties may legally regulate and in what ways . We'also recommend that the Council consider addresses the growing of marijuana at private residences and/or business locations, as some neighboring jurisdictions have. In the meanwhile, staff will monitor changes the case law and in Sonoma County local medical marijuana regulation. ATTACHMENTS 1. Police:Departinent memo dated.April 24, 2007 2. Medical Marijuana Incidents Reported in Local Media 3. Letter dated 2/1/11 from U.S. Attorney General to City of Oakland 4. News article dated 5/9/11 from California.Police Chiefs Association 5. Jones & Mayer client alerts, press releases 6. Discussion draft dated April 2011 - Attorney General Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use ATTACHMENT City of Petaluma; California Memorandum . Police Administration, 969 Petaluma Boulevard North,Petaluma, CA 94952 (707) 778-4370 Fax(707) 778-4502 E-mail:,poliiceadmin acLpetalumacaus DATE: April 24, 2007 TO: Petaluma Mayor and City Council FROM: Steven Hood, Chief of Police SUBJECT: Medical Marijuana Dispensaries • The Petaluma moratorium'on medical marijuana dispensaries expires June 5, 2007. The purpose of this memorandum is to express the position of your Police Department from a public safety perspective. Federal law clearly prohibits the manufacturing, distribution and possession of marijuana and has no exemption for marijuana used for medical purposes. The Federal Controlled Substance Act further states marijuana is•contraband for any purpose, as the federal government has determined marijuana is illegal even when used for medical purposes. In 1996, California enacted the Compassionate Use Act, also refereed to as Proposition 215. Marijuana possession, cultivation and distribution remains illegal in California under the California Health and Safety Code, however the Compassionate Use Act, in Section 11362.5, provides an exception to the law for qualified individuals in limited-medical circumstances. The Compassionate Use Act does not authorize medical marijuana dispensaries, and there is considerable disagreement about how medical marijuana is tosbe regulated, distributed and otherwise obtained by legitimate patients in California. The law allows"primary caregivers" to supply medical marijuana to patients, and a primary caregiver,is defined as"the individual, • designated by a qualified;patient or by a person with an [medical marijuana] identification raid, who has consistently assumed responsibility for the housing,:health or safety of a patient". We -believe this very limited exception was crafted"into law toiallow'a'caregiver to provide marijuana to a person with serious:medical conditions, another requirement of the Compassionate Use Act. • In practice however; medical marijuana dispensaries generally have little if any interaction with those who they dispense marijuana, and the relationship between dispensary and patient is essentially no more than that of a retail pharmacy, which.I believe is in conflict with the law and intent of voters. If medical marijuana dispensaries are allowed in Petaluma, the Police,Department will likely be put into the position of having to enforce federal law that is in conflict with local ordinances. When DEA and other federal agencies interdict marijuana dispensaries they often request local . �w police assistance with intelligence gathering and personnel, for which the Police Department would be obligated to assist. This has already proven to be the casein;the criminal investigation and search warrants served on a'Petaluina marijuana dispensary in 2002. The Police:Department recognizes the exemptions provided for by California law, and takes no exception with a qualified individual patient, or their legitimate caregiver possessing medical marijuana for their own use, provided it,is done in compliance with the Compassionate Use Act. However, the Council should understand allowing medical marijuana dispensaries places the City in the position of condoning,a service for which there is complete conflict between federal and state law. As such, it would be unethical for the Police Department to participate in planning, drafting ordinances, or otherwise advising on this development as we would normally do in any other circumstance. This is also the position of the Sonoma County Sheriff and other Chiefs of Police in Sonoma County. A secondary concern is the real dangers that medical marijuana dispensaries bring to the community. In addition to the,crimes we are aware of, sigmficant\evidence suggests much of the violence and crime associated,with dispensaries goes unreported as,operators do not want the police presence,loss of their local use permits, or negative publicity. Still more crimes are not directly associated with the dispensary as they occur to suppliers, employees and patients away from the actual dispensary location. In the past few years violent crimes have increased dramatically with the proliferation of medical marijuana dispensaries. I have chosen just a few cases in recent years to highlight this growing problem, however the complete list of Sonoma County incidents could go on for pages. • In October 2001, a Petaluma Police officer was shot in the face by one of suspects who were interrupted during a robbery at a Petaluma residence where medical marijuana was being cultivated. • • In January 2007, a reported home invasion robbery involvinga gun occurred in Rohnert Park. There was a marijuana connection to this case. • • In November 2006, a home invasion robbery occurred in Sebastopol by two men armed with a handgun and a shotgun. The suspect forced entry into the home and beat and bound the couple, stealing their marijuana. • In April 2006,a Santa Rosa man was shot in the head during a robbery at his home. The victim was apparently growing marijuana for medical purposes. The suspect(s) stole 25 plants, which had a street value of about $21,000. • In February 2006,a Santa Rosa man and his son were robbed at gunpoint by three men who broke into their home and stole marijuana plants. • In October 2004:an Ukiah man was shot in the hand by a.suspect who had entered his backyard where marijuana was being cultivated. • • In June 2004, two suspects,robbed the victim-at°a'Winds&aparttnentafter purchasing marijuana from the victim. The'suspectstied up, tortured, and killed the victim during,the robbery. • • In April 2004, four armed,men;entered a:residence in Santa Rosa demanding marijuana from the victims. The suspects spent hours in the residence terrorizing the victims. • In January 2004, suspects entered a home in Forestville armed with handguns targeting medical marijuana. • In January 2004, two men; one from Rohnert Park, entered a Covelo home in search of medical marijuana. A shootout occurred injuring one victim and one suspect. • In September 2003, a Santa Rosa man was found dead among several growing marijuana plants in Mendocino;County. • In April 2003, a home invasion robbery in Santa Rosa occurred targeting medical marijuana. The suspects took only two plants then shot two ofthe victims before fleeing. Marijuana dispensaries/also experience many other negative impacts such as high volumes of pedestrian and vehicle traffic, marijuana use in and around the facility, individuals purchasing medical marijuana then reselling'outside to those without doctor's recommendations, including sales to minors. In 1999, the Petaluma marijuana dispensary was robbed by armed gunmen and 50 plants were stolen. During its operation and until its closure after a DEA raid in 2003, the Police Department received chronic complaints regarding these types of issues. Local law enforcement officersr indicate these complaints are still prevalent today in Sonoma County dispensaries. Throughout.California, the DEAreports;finding"dispensaries with false records, counterfeit identification or simply freely providing marijuana to patients without doctor's recommendations, or to those who appear,completely healthy. Santa Rosa Police have reported similar situations at Santa Rosa dispensaries they have investigated this year. California law allows medical marijuana patients to possess'6 mature marijuana plants or 12 immature marijuana plants andup to eight ounces of processed marijuana for their personal use. Although many counties stay within State guidelines the law also:allows them to be increased, and Sonoma County is one'ofthe most lenient in the state. TheSonoma County Board of Supervisors has approved individual possession,of 30 marijuana plants and three pounds of processed marijuana for personal use, one of the,highest standards in.the State. This'quantity, and the'considerable profits it produces, has contributed to the influx of dispensary operators and marijuana cultivators into our county. The Sonoma County standard is also a compelling:reason why every city does not need, nor should they desire a marijuana.dispensary. There are numerous locations where Petaluma residents can purchase medical marijuana within a short drive,including dispensaries in Santa Rosa, Sebastopol, an anticipated dispensary in Cotati, and,several in the unincorporated area of the County. Caregivers Delivers isa:Santa-Rosa based medical marijuana dispensary that advertises delivery"Seven/days a week and promotes its product by stating"if you don't get your • delivery in 1-2 hours-IT'S FREE". Thednternet has also'become inundated with marijuana providers and othercommercial and.volunteer entities that apprise patients where and how to obtain,medical marijuana. Petaluma residents can.currentlygrow as many as 30 plants for their personal usepat home, and purchase up to three pounds of processed marijuana at any given time, or have it delivered daily to their home if they so choose. It is literally a mouse click or phone call away. This ready access to medical marijuana guarantees any qualified patient can obtain as much marijuana'as`:they could;possiblyneed•for any legitimate:purpose, and avoids almost all the negative impacts of physical facility. In 2007,there are so many and varied options for qualified,local patients to obtain marijuana I strongly believe adding a medical marijuana dispensary in Petaluma is counterproductive to our collective efforts to make Petaluma a safer community. Allowingthese dispensaries further places Petaluma in the position of knowingly sanctioning the:sale and distribution of marijuana in direct violation of federal law. The addition of a marijuana dispensary will undoubtedly create an attraction for certain criminal,elements that by themselves have a negative impact'on the public health and;safety of our residents. I believe an increase in violent crime associated with dispensaries is inevitable, and local dispensaries only increase the chances marijuana will find its way into local schools and into the hands of our children. For all the reasons stated above, the Police Department;recommends.the Petaluma City Council wait until the conflict is resolved between state and federal law and prohibit medical marijuana dispensaries within the City of Petaluma. • • tG ATTACHMENT 2 Illegal water•,diversion leads to big Mendocino pot bust(10/13111) Feds raid medical pot co-op'near•Ukiah,(10/13/11) Threat of Federal crackdown doesn'tstop•Bay.Areapot expo'(10/9/11) Fed crackdown to first focus,on pot clubs near schools (10/7/11) Sonoma County not yet in federal pot crosshairs 00/7/11), Feds target Californiamedical pot dispensaries (10/6/11) Federal crackdown on pot clubs pointed at California 00/6/11) IRS hits Oakland pot shop with,$2.4 million tax bill(10/4/11) Judge orders closure,of Santa Rosa pot dispensary(9/19/11) Humbolt County city mulls moratorium on pot club permits (9/7/11) Potter Valley man pleads guilty to supplying marijuana to Montana medical provider(8/10/11) 460.000 pot plants found, 100 arrests in Mendocino National Forrest busts(7/29/11) Sebastopol urges'rejection of dispensary(7/20/11) Feds wont give assurances on medical pot(7/1/11) 3 arrested in suspected Santa,Rosa;medical pot robbery (6/21/11) Pot legislation highlights murky regulatory climate (6/20/11) Drug suspensions soar at city schools (6/9/11) A.G. Holder promises to clarify'medical pot position (6/2/11) Ruling keeps Larkfield pot dispensary shut(6/1/11) Sonoma Valley fire destroys pot,crop.:(5/27/11) Willits man arrested in lighter fluiddttack over marijuana-related debt(5/29/11) Mendocino pot club deliveries run afoul of Sonoma County deputies (5/21/11) Indoor pot growing operations hazard(5/20/11) Marijuana growing linked to Cotati,house fire (5/11/11) San Francisco medical pot advisor faces Sonoma County charges after fire (5/11/11) Pot Dispensaries (editorial shocked,to think council is considering rescinding ban (4/29/11) NO:Don't sacrifice our safety for tax revenues (4/21/11) High hopes for new tax dollars (4/15/]1) Businessman slain atHealdsburg home (3/9/11) Two arrested in Santa Rosa:home:invasion robbery (3/3/11) State dispensaries run afoul,of the tax man (2/27/]1) North coast banks thrust:into Fed's war on drugs (2/26/11) Three hurt when gunman stage.Santa a Rosa home invasion robbery (2/27/11) Santa Rosa apartment fire linked to pot growing(2/14/11) Pot growing lights spark Rosa house fire (2/9/11) Ukiah police investigate shooting, home invasion robbery(12/29/10) Sonoma Valley pot dispensary:drdws scrutiny for proximity to teen center and elementary school 02/28/1]) Feds take over major marijuana:case (in order to eliminate medical defense option 02/11/11) Voters reject marijuana legalization (11/2/10) Feds vow to go after marijuana crimes in state even tfprop'19 passes 00/15/10) Three'arrested in Santa Rosa robbery(10/2/10) Man beaten in"Ukiah pot burglary comes out of coma(9/30/10) Round Valleypot;raids net 11,000 and 32.arrests (9/30/10) Los Angeles County Sheriff calls most pot clinics criminal (9/3/10) Two men hurt, robbed in Santa Rosa home (9/1/10) Man killed, another wounded at Humboldt County pot farm;(8/27/10) . Flourishing pot farm found in Petaluma yard by drug agents (8/25/10) Pot garden found thriving.nedr county landfill(8/25/10) . Thieves targeting medical marijuana patients in Petaluma'(7/17/10) Marijuana delivery services growing in California(6/5/10) Pot delivered to.your door(6/5/10) Armed man steals medical pot from home and spurs school lockdown (Olive and 1St Petaluma)(5/11/10) ATTACHMENT U.S. Department of Justice N".1/ United States Attorney Northeri'District of California Math lien 11th floor,Federal Building (415)436-7200 U ntie:Stain AHonxy 450 Golden Gate Avant.Box 36035 San Francesca,'Carona 94102-3405 F.411415)4367234 • February 1,2011 Jahn A.Russo,Esq. Oakland City Attorney 1 Frank Ogawa Plaza,6th Floor Oakland,California 94612 Dear Mr.Russo: I write in response to your letter dated January 14,2011'seeking guidance from the Attorney General regarding the City of Oakland Medical Cannabis Cultivation Ordinance. The U.S.Department of Justice'is familiar with the City's solicitation of applications for permits to operate"industrial cannabis cultivation and manufacnuing facilities"pursuant to Oakland Ordinance No. 13033 (Oakland Ordinance). I have consulted with the Attorney General and the Deputy Attorney General about the Oakland Ordinance. 'This letter is written to ensure them is no confiision regarding the Department of Justice's view of such facilities. As the Department has stated on many occasions,Congress has determined that marijuana is a controlled substance. Congress placed marijuana in Schedule I of the Controlled Substances Act(CSA)and,as such,growing,distributing,and possessing marijuana in any capacity,other than as part of a federally authorized research program,is a violation of federal law regardless of state laws such activities. The prosecution of individuals and organizations involved in the trade,of any illegal drugs and the disruption of drug trafficking organizations is a core priority of the Department. This core priority includes prosecution of enterprises that unlawfully market and sell marijuana. Accordingly,while the Department does not focus its limited resources on seriously ill individuals who use marijuana as part of a medically recommended.treatment regimen in compliance with state law as stated in the October 2009 Ogden Memorandum,we will enforce the CSA vigorously against individuals and organizations that participate in unlawful manufacturing and distribution activity involving marijuana,even if such activities are permitted under state law. The Department's investigative and prosecutorial resources will continue to be. directed toward these-objectives. Consistent with federal law, the Department maintains the authority to pursue criminal or civil actions for any CSA violations whenever the Department determines that such legal action is warranted. This includes,but is not limited to,actions to enforce the criminal provisions of the CSA such as Title 21 Section'841 mplcinp it illegal to manufacture,distribute, or possess with intent to distribute any controlled substance including marijuana;Title 21 Section 856 making it • John A.Russo February 1,2011 Page 2 unlat'ul to knowingly open,lease,rent,maintain,or use property for the manufacturing,storing, or distribution of controlled substances;and Title 21 Section 846 making it illegal to conspire to commit any of the crimes set forth in the CSA. Federal money laundering and related statutes which prohibit a variety of different types of financial involving the movement of drug proceeds may hkewise,be utilized. The government may also.pursue civil injunctions,and the forfeiture of drug proceeds;property traceable to such proceeds,and property used to facilitate drug violations. • The Department is concerned about the.Oaldand Ordinance's creation of a licensing scheme that permits large-scale industrial marijuana cultivation and manufacturing as it authorizes conduct contrary to federal law and threatens the federal government's efforts to regulate the possession,manufacturing,and trafficking of controlled substances. Accordingly, the Department is carefully considering civil and criminal legal remedies regarding those who seek to set up industrial marijuana growing warehouses in Oakland pursuant to licenses issued by the City of Oakland, htdividuals;who elect to operate"industrial cannabis cultivation and Others manufacturing facilities"will be doing so in violation of federal law. Others who knowingly facilitate the actions of the licensees,including property owners,landlords,and financiers should also know that their conduct violates federal law. Potential actions the Department is considering include injunctiveactions to prevent cultivation and distribution of marijuana and other associated violations of the CSA civil fines;criminal prosecution;and the forfeiture of any property used to facilitate a violation of the CSA. As the Attorney General has repeatedly stated, the Department of Justice remains fumly committed to enforcing the CSA in all states. I hope this letterassists the City of Oakland and potential licensees in making informed decisions regarding the cultivation,manufactiae,and distribution of marijuana. Verytruly yours, Melinda Haag United States Attorney Northern District of California cc: Kamala D.Harris,Attorney;General of the,$tateof California • Nancy E.O'Malley,Alameda County District Attorney • • ATTACHMENT 4 From: Meredith Hesby[cpca @cc.memberclicks.com] on behalf of Meredith Hesby [mhesby @califoiniapolicechiefs.org] Sent: Monday, May 09, 2011 2:11 PM To: Fish, Danny • Subject: CPCA:Information--MedicalTMarijuana and the Feds To all members, The following is offered for your information: Below is a news article regarding the change in the federal government's attitude towards medical marijuana—this article comes from the N.Y.Times. New Federal Crackdown Confounds States That Allow Medical Marijuana • By WILLIAM YARDLEY SEATTLE—Marijuana remains:illegal under federal law, but that has not stopped a fuzzy industry of - marijuana farms and dispensaries from rising to serve the 15 states that allow the drug to be used for medical purposes. Under President Obarna, the federal government had seemed to make a point of paying little attention—until now. As some states seek to increase regulation but also further protect and institutionalize medical marijuana, federal prosecutors are suddenly asserting themselves,.authorizing raids and sending strongly worded letters that have cast new uncertainty on an issue that has long brimmed with tension between federal and state law. How can a drug that federal drug law says is criminal be considered medicine under state law? "It's weird," said Kevin Griffin, co-founder of West Coast Wellness, a medical marijuana dispensary that opened here in February. "We're not a pharmacy. We spent alot of time gathering infomiation, and this is what we came up with.as the most responsible, legal way. Posters featuring Pink Floyd and Tupac Shakur lined the white walls of the office, in the back of a bland building justinside Seattle's'.northem boundary. Glass pipes decorated a shelf. And then there was the medicine, available by "donation only," which included less expensive"medibles" like lollipops and "pot",pies and the-traditional smoked dosages at about $280 an ounce. Questions? Just ask the "budtender"—while you still can. "I'm worried," Mr. Griffin said. "We alight lose something we put a lot of money into." West Coast Wellness, one of scores of newdispensaries in the state, opened just as Washington appeared ready,to approve one of the nation's most expansive medical marijuana policies, broadening its original 1998 law to-include rlicensing growers and dispensaries. The Legislature passed the measure last month. Yet while Gov. Christine Gregoire had initially expressed support, she instead vetoed most of the bill, specifically citing new concerns about federal opposition. file://H:\Medical Marijuana Stuff\CPCA Information--Medical Marijuana and the Feds.htm 12/6/2011 "The landscape has changed;"said the governor, a Democrat: Letters so far have gone out to govemorslin.Arizona, Colorado,Montana,Rhode Island, Vermont and Washington, prompting some:states—including Rhode:Island and Montana, in addition to Washington —to revise or back away from plans to•make the medical marijuana industry more mainstream. In Washington, Ms. Gregoire asked fotguidance,from-the state's two United States attorneys, Mike Ormsby and Jenny Durkan. Ina reply to the governor last month, they said the federal government would prosecute "vigorously against individuals and organizations that participate in unlawful manufacturing and distribution activity involving marijuana, even if such activities are permitted under state law." The changes have angered supporters+of medical marijuana, who say the federal government is sending mixed signals, even as they argue that it not technically changed its position. "How they're obviously coming across is saber rattling," said Alison:Holcomb, director of drug policy for the American Civil Liberties Union of Washington. "If there has-been a shift, then somebody needs to own up to that. We have a very clear memo from 2009." In October 2009, the Justice Department said in a memorandum drafted by David W. Ogden, then the deputy attorney general,that it Would not focus on "individuals whose actions are in clear and unambiguous compliance with existing,state laws providing for the medical use of marijuana." The memo did not allow farms-and:dispensaries or the buying andselling.of marijuana. In many states that allow medical marijuana, state.law does not specify that dispensaries are also legal. The Washington State Department of Health's Web site specifically says-that dispensaries are illegal, as-is buying and selling marijuana. It says that people who'qualify for medical marijuana are allowed to grow their own. Yet with some states and even.thefederal government appearing to look the other way, farming collectives and dispensaries flourished. And law enforcement officials at various levels took notice. In . Spokane, Wash., federal agents-recently conducted searches of seven dispensaries, though no one was arrested. "There didn't seem to.be a recognitionthatthe use and sale of marijuana is against federal law," said Mr. Ormsby, the United States attorney for the Eastern District of Washington. When the Legislature was drafting the bill it passed.in its most recent regular session, Mr. Ormsby said, "No one consulted with me about what I thought of what they were going to do and did I think it ran of'federal l aw. Of the state's current medical marijuana law, he added, "We believe, of course, under federal law no part of the state law is legal." Mr. Ormsby and other prosecutors say they agree that the federal,position has not changed, and they say they have been given no new-directive from the Justice-Depattinent(Mr. Ormsby's and Ms. Durkan's letter to Ms. Gregoire said they had "consulted with the attorney general," Eric H. Holder Jr.). A spokeswomawfor the Justice Department, Jessica Smith; said: "This is not change in policy. It's a reiteration of the guidance that was handed down in 2009 by the deputy attorney general." file://H:\Medical Marijuana StufI\CPCA Information--MedicalMarijuana and the Feds.htm 12/6/2011 • • Ms. Smith noted that the 2009 mema"says,definitively that distribution continues to be a federal offense." Some federal prosecutors say states have,simply let medical marijuana get out of hand. Many supporters of medical marijuana agree. "Seeing storefront dispensaries advertise with neon pot leaves is inconsistent with the idea most people have of medical marijuana," said Ms. Holcomb, of the A.C.L.U. `But until you let states regulate these dispensaries, you have no way to control that." Some people on each side say the issue could quickly be solved if the federal government reclassified marijuana from a Schedule 1 drug, a category that includes heroin,to a Schedule 2 drug, which includes medicines that can be prescribed. "I think the onus is on the federal government," said State Senator Jeanne Kohl-Welles, a Democrat from Seattle who sponsored the bill that Ms. Gregoire vetoed. "Whether the Obama administration is signaling that it's going to be more aggressive or back off from what'§in that Ogden memo, I don't know." • Noting that Ms. Gregoire cited concerns-that state employees could face legal action for licensing growers and dispensaries, and thatprosecutors had insisted that state employees"would not be immune" from prosecution, Ms. Kohl-Wellessaid: "I keep trying to visualizefederal agents going into a state building, the Department of Health, and hauling people off." She continued, "I can't conceptualize that:" • • Link to story: • www.nytimes.com/201 1/05/08/us/08marij uana.html This email was sent to dfish @ci.petaluma.ca.usby mhesby_acaliforniapolicechiefs.org ■ California Police Chiefs Association P.O. Box 255745 I Sacramento, California 95865-5745 I United StateslC DSUnsubscribe I &Update Profile I ®Privacy Policy ■ file://H:\Medical Marijuana Stuff\CPCA Information--MedicalMarijuana and the Feds.htm 12/6/2011 a5 • ATTACHMENT 5 -7, �e4� I,'. 444,' ; Fd � d _.4 W'�t` �- J iE�^" a ''Illl. r �3 t-.- g 1, -ski - Ay:-_ .,,� Y� r�r „ i � ,E.', al�-Y n'�`�. _ _;�°`,�4-`�'--�,.:� �� x 3 JONES &MAYER Attorneys at Law 3777 N.Harbor Blvd. Fullerton,CA 92835 Telephone: (714)446-1400 ** Fax: (714)446-1448 ** Website: www.Jones-Mayer.com CLIENT ALERT MEMORANDUM To: All Police Chiefs and Sheriffs From: Martin J. Mayer, Esq. CITIES MAY BAN MEDICAL MAR1JUANA,DISPENSARIES BUT CANNOT PERMIT THEM On October 4, 2011, the Second District marijuana collectives within the City are Court of Appeal unanimously ruled, in the governed" and, to the extent that the City's case of Pack v. Superior Court of Los ordinance permits collectives, it is Angeles County (City of Long Beach); that preempted by federal law. "the City's ordinance, :which permits and regulates medical marijuana collectives Conflict with Other Court Decisions rather than merely decriminalizing specific acts,is preempted by federal law." The Pack court acknowledged that "we disagree with our colleagues who, in two The Court held that"California's'statutes are other appellate opinions, have implied that not preempted by federal law, as they seek medical marijuana laws might not pose an only to decriminalize certain conduct for the obstacle to the accomplishment of the purposes of state law." The state statute,the purposes of the federal CSA because the Medical Marijuana Program Act (M1vIPA),. purpose of the federal CSA is to combat which codified Proposition 215 the recreational drug use, not regulate a state's Compassionate Use Act (CUA), "simply medical practices." decriminalizes for the-purposes of state law certain conduct related to medical The Court,,however, noted that "Congress marijuana, [and] is not preempted by the has concluded that marijuana has no CSA(Controlled Substances Act)." accepted medical use at all. . . . Thus, to Congress, all use of marijuana is However,the Court noted,the"City of Long recreational drug use, the combating of Beach has enacted a comprehensive which is admittedly the core purpose of the regulatory scheme by which medical federal CSA." Therefore, a city's (OP "ordinance which establishes a permit: jurisdiction's' ;decision to prohibit such scheme for medical marijuana collectives centers [dispensaries], since allowing them stands as an obstacle to the accomplishment , would require"permitting" a venture winch of this purpose." (Emphasis in original.) violates federal law." The Court also finds that Proposition 215 Furthermore, in July, 2007, we published does not,in and of itself,violate federal law. another Alert, after the federal Department "The CUA simply decriminalizes (under of Justice sent letters to property owners state law) the possession and cultivation of informing them that renting to marijuana medical marijuana; it does not attempt to dispensaries could result in the forfeiture of authorize the possession and cultivation of those properties. We noted that"when cities the drug. The City's ordinance, however, issue zoning regulations which permit the goes beyond decriminalization into establishment of.such dispensaries, even authorization."(Emphasis added.) though regulating locations to commercial or industrial areas, such zoning regulations "A law which `authorizes [individuals] to are in violation of California law. engage in conduct that the federal Act Government.Code Section 37100. prohibits forbids . . . `stands as an obstacle to the local governments from promulgating accomplishment and execution of the full ordinances which are in violation of the U.S. purposes and objectives of Congress' and is Constitution or state or federal law." therefore preempted." In:October;'2008, we alerted our clients to HOW THIS AFFECTS YOUR AGENCY the fact that "the California Supreme Court unanimously'denied an application to review Cities, especially those within the 2d District the case of San Diego County`v. San Diego Court of Appeal, must review their NORML, which had held, in part, that ordinances to determine whether they are Proposition :215 was not unconstitutional "permitting" medical marijuana merely because it required,counties to issue , dispensaries: If they are, it appears that this identification cards to individuals who have decision has concluded that such ordinances a doctor's recommendation to use marijuana are in conflict with federal law and the for medical,purposes." dispensaries operating under such ordinances, are prohibited. Ordinances We agreed that Prop 215 was not which ban all such dispensaries are in unconstitutional'. We pointed out that "all compliance with federal law and; therefore, Proposition 215, and its enabling legislation, not preempted. accomplished was to declare that "qualified users" of medical marijuana, and/or their The firm of JONES & MAYER has been "caregivers," would not_ be prosecuted involved in many of the cases dealing with under state law, for the cultivation, medical marijuana and has generated possession,transfer or use of the drug." information for many years as courts rendered decisions. For example, in June, Finally, in May, 2009, we issued an Alert, 2005 we published a Client Alert Memo, after the U.S. Supreme Court denied a following the decision by the U.S. Supreme petition to review the case of San Diego Court in the case of Gonzales v. Raich, and County. v. San Diego NORML, and pointed out that "Raich supports a reiterated what we had stated previously that "cities may not authorize the operation-of As with all legal issues, it is imperative that dispensaries, or even cooperatives, or you confer with your agency's attorney collectives, for the purpose of cultivating or before taking steps based on this court's distributing marijuana for Medical purposes: decision. As always, if you wish to discuss Government Code 37100 states that a city's the case in greater detail, please feel free to `... legislative body may pass ordinances not contact me at (714) 446 -1400 or via e-mail in conflict with the Constitution and laws of at mim @,ions-mayer.com. the State or the United States! The Court of Appeal, in Pack, appears to Information on www Jones-mayer.com is for validate virtually all of the information we general use and is not legal advice. The set forth in the Client Alerts noted above. mailing of this Client Alert Memorandum is not intended to create, and receipt of it does not constitute an attorney-client relationship. Ul V["1 V11\11L r1-1.,1 - ♦•L\ 1LL3.J111 1V 1Jl11\ L1J1'1.11■)111V1iO ragc 1 VI J .� • [A'LIWCANIh 5 CPOA Client Alert November 14, 2011 CITIES WIN RIGHT TO BAN DISPENSARIES View Past Client Alerts Several significant state court decisions have been issued Visit CPOA's careerCENTER by the California Courts of Appeal over the past few weeks dealing with the issues of medical marijuana. On October View CPOA's Calendar 4, 2011, the Second District Court,of Appeal ruled, in the case of Pack v. Superior Court of Los Angeles County (City of Long Beach), that cities:can ban medical marijuana vrwadtnti8mat{ dispensaries but cannot authorize them by issuing business licenses and permits. As we noted in our Client.Alert, Vol. 26, No 23, published ?s< on 10/12/11, the Pack Court found that Proposition 215 does not, in and of itself, violate federal law. "The CUA Written by: Martin J. Mayer, a simply decriminalizes-(under state law) the possession and name partner with the firm of cultivation of medical marijuana; it does not attempt to Jones&,Mayer, has served as authorize the possession and cultivation of the drug. The General counsel to califomia City's ordinance, however, oes beyond decriminalization approximately ely' 5 years.T for Y � 1 9 Y approximately 25 years.The into authorization." The Court noted further that; the "City firm is located in Fullerton, of Long Beach has enacted.a comprehensive regulatory California, and is a public scheme by which medical marijuana collectives within the sector law firm which focuses City governed" and to the extent that the City's its attention o representing ty are 9 and, Y the interests of law ordinance permits collectives, it is preempted by federal enforcement in cities and law counties throughout the State of California. The Pack decision appears to have created concern JONES &MAYER amongst those who still want to-permit and regulate such 3777 North Harbor Blvd. facilities. Despite that concern, the federal Department of Fullerton, CA 92835 Justice is increasing its efforts to shut down dispensaries P: 714.446.1400 F: 714.446.1448 by, among other things, notifying the owners of buildings Website: www.jones_ renting to dispensaries, that they face the potential,of the maver.com federal government seizing those properties since the owners are allowing tenants to engage in.activity prohibited by federal law. Two New Decisions The Fourth District Court of Appeal issued two opinions on November 9, 2011 upholding the right of cities and counties to ban dispensaries, ruling that such action is not prohibited by state law. http://campaign.r20.constantcontact.com/render?Ilr—spr9fteab&v=001aYDP541NfT UFP... 11/17/2011 h p - 1.11.-.0 WV♦i• nalai 1 1 J ufuv 1/10rftNOttrUr J rage z OI J In cases arising out of the City of Riverside,(involving the Inland Empire Patient's Health and Wellness Center) and the City of Upland (involving the G3 'Holistic collective), the Court reinforced the legal right of cities to ban dispensaries. The'Riversid&case.is'a"publisheddecision, whereas the Upland case is not. It is likely that in one or both:of these cases, the dispensaries will petition the California Supreme Court for review. The City of Long Beach has already petitioned the Court for review since it is the City's position that, as the City Attorney is quoted as saying, "(t)here is no clarity and consistency." In the Riverside case, the Court of Appeal said that "the key issue in determining whether Riverside's zoning ordinance.is legally enforceable is whether state medical marijuana statutes;such as theCUA and MMP, preempt Riverside's zoning ordinance banning MMD's [medical marijuana dispensaries]. If the local ordinance is not preempted by state law, the ordinance is valid and enforceable." The Court then held that such zoning ordinances are not preempted by the state law. The Court notes that the"CUA is narrow in scope. It provides medical marijuana,users and care providers with limited criminal immunity for use, cultivation, and • possession of medical marijuana. The CUA does not create a constitutional right-to obtain marijuana, or allow the sale or nonprofit distribution ofmarijuana by medical marijuana cooperatives." • Furthermore, states the Court, "the CUA and MMP do not expressly mandate that;,MMD's shall be permitted within every city and county, nor do the CUA and MMP prohibit cities and counties from banning MMD's." Additionally, "the MMP does not restrictr..or usurp in any way the police power of local governments to enact zoning and land use ' regulations prohibiting MMD's." HOW',THIS AFFECTS YOUR AGENCY During this past year we have seen much activity involving medical marijuana and, in•particular, dispensaries and industrial size marijuana cultivation. JONES.& MAYER has issued several Client Alert Memos addressing these issues including, "U.S. Attorney Warns Oakland About Allowing Large Scale Cultivation of Marijuana" (2/4/11); "U.S'. Attorney Warns Cities Against Permitting Industrial Marijuana,Cultivation Facilities" (7/26/11); "Court Upholds City's Ban on Dispensaries" (8/22/11); and "Cities May Ban Medical Marijuana Dispensaries But Cannot Permit http://campaign.r20.constantcontact.com/render?llr=spr9fteab&v=001 aYDP541Nff_UFP... 11/17/2011 .;...... .,............... - S.<1:1 N.7 L-1.1w:;., r a8c J va :1 Them" (10/12/11). JONES & MAYER has been involved in successfully prosecuting several cases/fen-titles in which weiserve as the City Attorney„which re§tilted in the shutting of'illegally operated dispensaries. We have also been involved in many of the appellate cases'taken to the California Courts of Appeal, the California Supreme.Court, and the U.S. Supreme Court as counsel to the party or as counsel to associations submitting:amicus curiae briefs supporting the efforts of the various cities to ban such operations. As it stands right now, the Pack decision is unchallenged and clearly.:states thatcities and counties cannot authorize that which is prohibited.by federal law. And now, the Riverside decision reinforces the rights of cities and counties to impose outright bans on dispensaries using their zoning regulations. As always, seeking the advice and guidance of an agency's legal counsel is imperative, Specially when confronted with such a volatile area of the law. If you wish to discuss these cases in greater detail, please feel free to contact me at (714) 446 - 1400 or via e-mail at mjmejones- mayer.com. Information on www.Jones-mayer:com is for general use and is not legal advice. The rriailing of this Client Alert Memorandum is not intended to create, and receipt of it does not constitute an attorney-client relationship. Forward email 4,7S IXtattC.traitr r ;^. Y 'SafeUrsubscribe .o COnStenCOntaCt. by rat f toa.;y This email was sent to dfish @ci.petaluma.ca.us by cpoaralcpoaora 1 Update Profile/Email Address I Instant removal with SafeUnsubscribeTM I Privacy Policy. California Peace Officers'Association 1555Capitol Mall, Suite 1495 I Sacramento I CA 1 95814 http://campaign.r20.constantcontact.com/render?llr=spr9fteab&v=001 aYDP541NfI'_UFP... 11/17/2011 Yo 26 No 20 4. v �e � .m. �� P 'ts , glASt22 2011x• 4.0*:2, * +Wm5 v , T- ..:;yn '. _�'"' S ':-I `y, b 4" ybJ�tt- te: m'w ev ie..p } nbe :.v'�Xw Ya v`m�».. ry y3ir. {GJa. e }.Y.�X��.�.0 :F^ 33n C$SS4+n JONES & MAYER Attorneys at Law 3777 N. Harbor Blvd. Fullerton, CA 92835 Telephone: (714) 446-1400 ** Fax: (714)446-1448 **Website: www.Jones-Mayer.com CLIENT ALERT MEMORANDUM To: All Police Chiefs and Sheriffs From: Martin J. Mayer, Esq. COURT UPHOLDS CITY'S BAN ON DISPENSARIES On August 15, 2011, the City of Anaheim binding only on the parties involved, and was found to have the legal right to ban QPA has already stated that it will appeal medical marijuana dispensaries from the the decision. city. Superior Court Judge David Chaffee ruled, in part, that "it is readily apparent that History of the Case the statute [Medical Marijuana Program Act In 2007, the City adopted Ordinance No. (MMPA)] does not protect mass distribution 6067, which states: "It shall be unlawful for [of medical marijuana] from designation by a local government entity as a nuisance. any person or entity to own, manage, There is nothing in the MMPA that conduct, or operate any Medical Marijuana contradicts Anaheim's ordinance." Dispensary or to participate as an employee, contractor, agent or volunteer, or in any The case, Qualified Patients Association other manner or capacity, in any Medical (QPA) v. City of Anaheim, has gone from Marijuana Dispensary in the City of the Superior Court to the Court of Appeal Anaheim." and back to the Superior,Court over the past After the Ordinance was adopted, QPA sued four years. It has been closely watched by the City claiming, among other things, that cities and counties throughout the state to the ordinance violated the MMPA. The City see if a court would uphold their right to ban demurred to the complaint and the Superior dispensaries from their communities. Many Court granted the City's demurrer. The jurisdictions permit dispensaries, but case then went to the Court of Appeal, regulate them as to number and location. which sent it back to the Superior Court for The issue in QPA v. Anaheim, however, focuses on the total banning of such heal. facilities. It is, obviously, important to note that this decision is at the trial level, it is 5N At the request of Anaheim, the firm of The court; in ,a very detailed and in depth JONES & MAYER submitted an amicus analysis, discusses numerous decisions from curiae brief from the California Police the California Supreme Court, appellate Chiefs' Association (CPCA), the California court decisions, and interpretations of State Sheriffs' Association (CSSA), and the statutes in reaching its conclusions. It California Peace Officers' Association analyzes whether the state has fully (CPOA), supporting the City's right to occupied the field regarding medical establish such a ban. At the City's request, marijuana distribution, and why it has not. we also presented oral argument to the Court of Appeal, focusing on the increased The court notes that the MMPA exempts obligations and burdens on law enforcement qualified patients and/or primary caregivers to deal with problems created by the from criminal prosecution "solely on the proliferation of dispensaries. basis of the fact that they have associated collectively or cooperatively to cultivate Judge Chaffee's Decision marijuana for medical purposes. Anaheim's ordinance targets mass distribution; not Judge Chaffee noted that pursuant to Section communal cultivation." 7 of Article IX of the California Constitution, "[a] county or city may make. The court, however, concludes that one and enforce within its limits all local, police, portion of the city's ordinance does conflict: . sanitary, and other ordinances and with the general laws of California. Since regulations not in conflict with general "the CUA does have the goal of protecting laws" of California. One such permitted qualified patients and primary caregivers ordinance is that which abates a public from being subject to criminal sanctions," nuisance." California law defines a public that part of the ordinance which imposes nuisance as "one which affects at the same criminal sanctions for violating the time an entire community or neighborhood, ordinance, conflicts with that goal. As or a considerable number of persons, such, the court ruled that the criminal although the extent of the annoyance or sanction provision was to be severed from damage inflicted upon individuals may be the ordinance. unequal." HOW THIS AFFECTS YOUR AGENCY The judge then held that "[i]t is clear that Anaheim has the power to enact its As noted above, this is a superior court ordinance abating the nuisance per se of decision and has no precedcntial value. It is "medical marijuana dispensaries," provided not binding on any other persons or entities that it is not preempted by existing beyond those involved in the case. It cannot California law." The court then concludes be relied upon to justify another that there is no state law in place which jurisdiction's ordinance, but it is obviously would preempt a city from establishing this important as persuasive argument. The type of ordinance. analysis by the court can and would be utilized if other jurisdictions adopted It is important to note that the court also ordinances similar to the Anaheim found that "Anaheim's ordinance does not ordinance, and they were legally completely ban medical marijuana challenged. Nonetheless, those cases would distribution; but it does proscribe mass still have to be litigated. distribution of medical marijuana." J9) In addition, thereis no doubt that.this will be legal advice and guidance on how to address addressed by the Court of Appeal and, this situation in your own jurisdiction. As hopefully, the appellate court will follow the always, if you wish to discuss this matter in logic and conclusions set forth by Judge greater detail, please feel free to contact me Chaffee. There are, in addition, other cases at (714) 446 — 1400 or via e-mail at pending before courts at this very-time and mjm@jones-mayer.com. they may or may not reach the same conclusion. What seems to be inevitable is Information on www.lones-maver.com is for that this issue will need to be,decided by the general use and is not legal advice. The California Supreme Court. mailing of this Client Alert memorandum is not intended to create, and receipt of it does As with all legal issues, we urge that you not constitute an attorney-client confer with your agency's attorney and seek ' relationship. 3`� � f iT eY-3*�` 777#.7, h q' 'x' ;w" z'. '�"d't :s ,g 4 a#'+ ce st 'w.+�em =,,;.a Vol. Z5 No9¢ � �, . Maylr7 2010 ."ula:W'. * 7 �.3�aq"l,� .. �#� �,Q .:„ .ao,�s' ._Io s JONES & MAYER Attorneys at Law 3777 N. Harbor Blvd. Fullerton, CA 92835 Telephone: (714) 446-1400 ** Fax: (714) 446-1448 ** Website: www.Jones-Mayer.com CLIENT ALERT MEMORANDUM To: All Police Chiefs and Sheriffs From: Martin J. Mayer, Esq. COURTS UPHOLD CLOSURE OF MEDICAL MARIJUANA DISPENSARIES In three separate matters, judges in both On April 30, 2010, Judge Andrew J. state and federal courts have recently upheld Guilford, of the U.S. District Court for the the rights of cities to prohibit medical Central District of California, issued an marijuana dispensaries, on several legal order denying the plaintiffs' motion for a theories. The most novel approach taken so preliminary injunction. The Court noted far was the claim that a person with a that the "plaintiffs argue that the Americans disability had the "right" to use marijuana with Disabilities Act (ADA) gives disabled for medical purposes, if it was done under citizens a federally protected right to use state law and with a doctor's medical marijuana if such use is legal under recommendation. The other cases focus on state law and done with appropriate a city's right to control land use through its supervision. They then argue that they will own zoning ordinances and in accordance suffer irreparable harm absent a preliminary with state law (G.C. 37100). injunction, and that the balance of equities and the public interest weigh in favor of a Ada And Medical Marijuana preliminary injunction." (Emphasis added.) In the case of James v. City of Costa Mesa, Plaintiffs are members of marijuana et al, several plaintiffs sued the cities of "collectives" in Costa Mesa and Lake Costa Mesa and Lake Forrest for the actions Forest. (In fact, the law does not refer to taken by the cities to ban the distribution of "collectives" or "cooperatives," as entities. marijuana for medical use in their It merely states that qualified patients can communities. Four individuals who suffered associate together collectively or from various illnesses, and who had cooperatively to cultivate medical recommendations from their doctors to use marijuana. Those terms are used as adverbs, marijuana, filed a motion for a preliminary not nouns.) The cities had prohibited the injunction to stop the cities from interfering distribution of medical marijuana within with their accessing medical marijuana. their limits and Costa Mesa adopted an ordinance which zoned out all marijuana authorized uses .under the Controlled dispensaries. Lake Forest, on the ,other Substances Actor other Federal laws." hand, filed several lawsuits against dispensaries arguing that "marijuana Land Use And Medical Marijuana collectives are a nuisance per se." In their lawsuit, the plaintiffs, claiming violations Two. other matters were heard in the under the ADA, "seek a reasonable Superior Court of California, in the County accommodation from Defendants' zoning of Orange. In each of those cases, the issue laws and policies to obtain access to medical presented was whether or not cities could marijuana to treat their disabilities." ban medical marijuana dispensaries as part of their zoning:codes and under other laws? The City of Costa Mesa was represented by Although the cases were heard separately, James Touchstone, a partner-with the firm of and involved two-different cities, the issues Jones & Mayer, which serves as the city were similar and the judge in both cases was attorney for Costa Mesa. Touchstone the Honorable David Chaffee. argued, among other things, that although the plaintiffs have disabilities, they are not The first case was the City of Lake Forest v. "qualified individuals" under the ADA. Moen which involved an application for a Furthermore, an individual with a disability, preliminary injunction against Lake. Forest who might be protected under the ADA, by the owner of a medical marijuana "does not include an individual who is dispensary (Moen). Plaintiffs argument currently engaging in the:illegafuse of drugs was, primarily, that the dispensaries were ...." In the instant case, "plaintiffs seek as a authorized under California's reasonable accommodation access to the Compassionate Use Act (CUA) as a way to drug marijuana to treat their disabilities, provide medical marijuana to qualified despite marijuana being • a controlled patients. Lake Forest's Municipal Code, substance under the (Federal) Controlled however, prohibited "any use of land, Substances Act." operation, or business that is in violation of State and/or' Federal laws" from "all Plaintiffs claim that because they had planning areas, districts, or zones with the recommendations from doctors, pursuant to City." The Court noted that distribution of the Compassionate Use Act (CUA) of . marijuana, even for medical use, is a crime California, there is an exception within the under federal law. ADA which allows "the use of a'drug taken under supervision by a licensed health care The Court also noted that California • professional," and which would permit them Government Code 37100 "provides that a to use marijuana. Touchstone argued that city's `legislative body may pass ordinances since marijuana cannot be legally prescribed not in conflict with the Constitution and by a doctor under the CUA, the exception laws of the State or the United States.' could, not apply - the. Court agreed. The Stated in the negative, Section 37100 serves Court noted that although "some illegal as a bar to local government's enacting drugs, such as opium, may be prescribed ordinances that would serve to allow under the Controlled Substances Act, residents or businesses to violate state or marijuana cannot be prescribed because it is federal law." a Schedule 1 drug." Finally, the Court held that "the exception applies only to • The Court held that "the Controlled In issuing the `preliminary injunction the Substances Act (CSA) classifies marijuana Court referenced,as itdid"in the Lake Forest as a Schedule I `controlled substance' and case, a city's zoning authority, as well as prohibits the use of this drug for any Government Code section 37100. The purpose. The United States 'Supreme Court Court stated that "the City of.Westminster has clearly stated that the use of marijuana is has not, and cannot promulgate code or illegal; thereby affirming that there is no zoning regulations allowing the use, sale or • exception for medicinal use under California distribution of marijuana Illegal activities law; Furthermore, "our Supreme Court has under the state or federal law are necessarily recognized this principle in' Ross v. precluded from inclusion in the City's Ragingwire Telecommunications, Inc. Municipal Code pursuant to WMC (2008) 42 Cal.4`h 920 when it stated that (Westminster Municipal Code) Sections despite the passage of California's 5.08.040(A) and 17.06.060, and Gov. Code Compassionate Use Act (CUA), 'marijuana Sec. 37100." • was not a legal prescription drug ...." As with Lake Forest, Westminster did not The Court held that "neither the CUA nor include dispensaries as an identified the Medical Marijuana Program Act ... permissible use or business. "Defendants restricts a city's power to enact land use or urge that any direct or indirect Municipal zoning laws affecting medi cal marijuana Code proscription of medical marijuana dispensaries, nor do they limit a city's dispensaries is preempted by state law." ability to enforce existing looal laws against However, once again, the Court cited to such businesses." Citing to the Court of appellate court decisions which held that the Appeal decision in City of Claremont v. CUA was not "intended to address local Kruse, "nothing in the text or history of the land use determinations or business CUA, suggests it was intended to address licensing issues." local land use determinations or business licensing issues." Since Lake Forest did not What made this case even more interesting include dispensaries in their applicable was the fact that the defendants had falsified zoning regulations, "like the dispensaries in their application for a business license. The Kruse, the operation of these dispensaries application "merely stated that they were must be enjoined." engaged in wholesale medical supply." But the Court notes that, based on evidence False Statements On Applications presented by the City, "the application was false as it appears that Defendants were The second case was City of Westminster v. using the premises solely for retail sales of Madhat, and was very similar to the Lake medical marijuana." In citing to an Forest case regarding land use. The City of appellate court decision, the Court in the Westminster, like the City of Costa Mesa, is instant case held "that the.failure to honestly also served by the°firm of Jones & Mayer as get a business permit was sufficient grounds its city attorney. Elena Gerli and Krista for voiding the license." McNevin Jee represented the City in this matter and petitioned the court to issue a The Court concluded that the City preliminary injunction against the established "that the Defendants defendants to prevent them from operating a misrepresented the nature of their business dispensary within the City's limits. on the application for the business license; • the license is void based on the The reality is that a serious conflict exists misrepresentation. Additionally, the WMC between state and federal law on this only allows for uses specifically permitted. subject. It is up to each "community to Medical marijuana dispensaries are not decide how to proceed. It is also of the listed as permitted. Since Defendants never utmost importance that legal advice and obtained a permit to conduct the business at guidance is obtained from your agency's issue, it is an unlicensed business operation; legal counsel. This is an area of the law a nuisance per se. For nuisance per se `no fraught with difficulties and conflict. Ask proof is required, beyond the actual fact of before proceeding. their existence, to establish the nuisance. No ill effects need be proved.' As always, if you wish to discuss these matters in greater detail, please feel free to How This Affects Your Agency contact me at (714) 446— 1400 or via e-mail at mim(aI,iOnes-mayer.com. These three cases support the efforts,to resist the proliferation of medical marijuana dispensaries by banning them based on current law. Individual cities have the right to establish zoning ordinances which exclude certain types of businesses, such as medical marijuana dispensaries. Additionally, as the court noted in the Lake Forest and Westminster cases, California's Government Code section 37100 only allows municipalities to promulgate ordinances which are not in conflict with state OR federal laws. If a city generates a zoning ordinance which "permits" the sale or distribution of marijuana, for any purpose, that ordinance is in conflict with federal law and, therefore, in violation of Government Code sec. 37100. Additionally, it is important to note that novel and/or unique arguments Can be presented iman effort to overcome resistance to the permitting of dispensaries in a community. The suit against Costa Mesa, claiming its prohibition was a violation of . the ADA, is just such an example. It is up to each jurisdiction to decide whether or not to allow or resist the opening of such establishments but these cases certainly reinforce prior appellate court decisions which give cities the tools to resist, if they so wish. Sfti California Police Chiefs Association P.O. Box 255745, Sacramento, California 95865-5745 E-mail: Imcgill a(�californiapolicechiefs.orq Web site: www:californiapolicechiefs.orq PRESS RELEASE Date of Release: October 22, 2011 Contact: Leslie McGill, 916-804-3527 Police Chiefs Applaud RAND's Retraction of Marijuana Report The California Police Chiefs.Association applauded the Rand Corporation today for retracting its flawed report, "Medical Marijuana Dispensaries and Crime," which inaccurately said crime increased in Los Angeles when dispensaries closed. "Dispensaries do impact crime rates and quality of life issues in our neighborhoods, as our `2009 White Paper on Marijuana Dispensaries' showed. Quality of life and crime problems are often common to areas where dispensaries are located. As leaders responsible for providing law enforcement services to 78% of California, we have a keen perspective on this issue," says Chief David L. Maggard Jr., president of the California Police Chiefs Association. "We appreciate RAND's acknowledgement that the data and research were insufficient to reach the conclusions it did and agree with their decision to retract-the paper." California.Police Chiefs Association a w P.O. Box 255745, Sacramento, California 95865-5745 ' ' 7t' E-mail:lmcgdl @californiapolicechiefs:orq. � 4uFU@Ntpc, Web site www:californiaoolicechiefs.orq PRESS RELEASE Date of Release: October 17, 2011 Contact: Leslie McGill, 916-481-8000 Police Chiefs Strongly Oppose Medical Association's Position on Marijuana • The California Police•Chiefs Association said today it "strongly opposes" the California Medical Association's recent announcement advocating the legalization of marijuana. It released the following statement from Chief David L. Maggard, Jr., president of the association's board: "We are concerned and surprised by CMA's recommendation to legalize marijuana. There isn't even close to enough medical data illustrating the medicinal benefits to warrant legalization of this drug, especially when you consider the public safety and health risks associated with its use. It's easy to see why legalizing marijuana is a bad idea. "Police officers witness the negative impact of marijuana usage on a daily basis in our communities and on our roads. There's been a rise in the number of juveniles who are seeking treatment for addiction to the drug. We don't see any positive outcomes from legalizing marijuana. "The federal government agrees. We applaud the recent decision to step up federal enforcement of illegal marijuana dispensaries." The California Police Chiefs Association represents the state's 336 municipal police chiefs whose agencies protect over 78 percent of the citizens of California. # # # ' 1° ATTACHMENT 6 'CNE AT Top 4 •F••• C CI,~ � , • liberty 14. 'and justice A 4 '∎ - under law r 7 ti.t.K 4 aePARTM>:N. r. , GUIDELINES FOR THE SECURITY AND:NON-DIVERSION €.nx OF MARIJUANA GROWN FOR MEDICAL USE t [DISCUSSION DRAFT— April, 2011 J x)A T,ik #� a } as> KAMALA D. HARRIS DEPARTMENT OF JUSTICE Attorney General State of California TABLE OF CONTENTS • L SUMMARY OF APPLICABLE LAW.... A. California Penal Provisions Relating To Marijuana.. 1 B. Proposition 215: The Compassionate Use Act of 1996 1 C. Senate Bill 420: The Medical Marijuana Program Act 2 D. The Federal Controlled Substances Act 2 E. Taxability of Medical Marijuana TransactionsI `• 3 cm,:; F. Medical Standards Applicable to Physician Recommendations 3 II. DEFINITIONS -- °- 4 gym: A. Physician's Recommendation: �° '�' ' 4 B. Primary Caregiver 4 C. Qualified Patient 5 D. Recommending Physician 5 III. GUIDELINES REGARDING INDIVIDUAL QUALIFIED PATIENTS AND PRIMARY CAREGIVERS -"' 5 A. State Law,Compliance Guidelines 5 15?" Physician Recommendation 5 2 State of California Medical Marijuana Identification Card 5 i,. f ar S ` 3.ri 'Proof Of Qualified Patient Status 6 4t, Compensation for Primary Caregivers 6 5 ' ,Possessro nLimits 6 . ks a,,b` MMPA cardholders 6 • iLocal MMPA possession limits 6 ? c. Proposition 215 patients 6 B ''Use and Enforcement Guidelines 7 41. Location of Use 7 2. Use of Medical Marijuana in the Workplace or at Correctional Facilities 7 3. Criminal Defendants, Probationers, and Parolees 7 4. State Medical Marijuana Identification Cardholders 7 5. Non-Cardholders 8 6. Exceeding Possession Limits 9 7. ProbableiCause 9 8. Return ofSeized Medidal Marijuana 9 IV. GUIDELINES REGARDING COLLECTIVES AND COOPERATIVES 9 A. Dispensary 10 B. Business Forms 10 1. Statutory Cooperatives 10 2. Collectives - 10 C. Edible:and Mislabeled Medical Marijuana Products 11 D. Guidelines for the Lawful Operation of a Cooperative or Collective 11 1. Non-Profit Operation '• 12 2. Sales and Reimbursement 12 3. Location of Collectives and Cooperatives 12 4. Business Licenses, Sales Tax, and Seller '1 s Permits ,; 12 5. Membership Application and Uerifcation 13 6. Collectives+and Cooperatives Should Possess and Distribute Only, Lawfully Cultivated Marijuana k• r 13 ' 7. Membership in Multiple Collectives and Cooperatives 14 8 Collectives and Cooperatives Are Not Primary Caregivers 14 9.;:e Dial-amnion and Sales to Non-Members are Prohibited 14 crivat, Penn ssible Reimbursements and Allocations 14 1 I. `Posseslon;•Transportation, and Cultivation Limits 14 E n'Criminal`Enforcement`Gui'delines 15 'Oh,Dispensar les : 15 2 ,Indicia of Unlawful Operation 15 V. t 'GUIDELINES FOR,LOCAL.]URISDICPIONS IN REGULA'I ING COOPERATIVES AND COLLECTIVES 16 A. 'Prohibition 16 • B. Operating Requirements 16 C. Clinics and Care Facilities. 18 ii kh In 1996, California voters approved an initiative that exempted certain.patients and their primary caregivers from state laws that criminalize the�possession and cultivation of marijuana. In 2003, the Legislature enacted additional legislation relating to medical marijuana. One of those statutes directed the Attorney General to adopt "guidelines to ensure the security and nondiversion of marijuana grown for medical use." (Health &.Safety Code, § 11362.81(d).1) The guidelines that follow are designed to (1):ensure that marijuana grown for medical purposes remains secure and does not find its way to non-patients or illicit markets, (2) help law enforcement agencies perform their duties effectively and in accordance with California law, (3) help patients and primary caregivers understand how they may lawfully cultivate, transport; possess, and use marijuana, and (4) provide guidance to state and local lawmakers regarding issues that`may appropriately be addressed through statutes, ordinances, regulations, and rules. .,� � r I. SUMMARY OF APPLICABLE LAW A. California Penal Provisions Relating to Marijuana. The possession, sale, cultivation, distribution 'and transportation of marijuanaare generally crimes under California law. (See, e g § 1I3574possession of marijuana is a misdemeanor]; § 11358 [cultivation of marijuana'is ajelony] Veh. Code, § 23222 [possession of less than 1 oz. of marijuana while drroing is a misdemeanor]; § 11359 [possession with intent sell anyamount of marijuana is,a.felony]; § 11360 [transporting, selling, or giving away marijuana in California is a felony;under28.5 grams is a misdemeanor]; § 11361 [selling or dtstributingfmarijuana to Minors, or using a minor to transport, sell, or give away marijuana,=is a felony] ) B. Proposition 215 TheCompassionate Use Act o`f 1996. 1 , On November 5 1996;'Califo'rnia voters passed Proposition 215, which decriminalized the cultivation and possession of marijuana by seriously ill individuals and their primary caregivers upon a phys clan's verbalior written recommendation. (§ 11362.5(d)) Proposition 215 was enacted",to "ensureThat seriously ill Californians have the right to obtain and use marijuana for medical purposes where that medical use is deemed appropiate and has been recornnend r ed by a physician who has determined that the persons health would`benefit from the use of marijuana," and to "ensure that patients and their primary caregiver`s ho obtain and use marijuana for medical purposes upon the recommendation of a physician are not subject to criminal prosecution or sanction. (§ 11362.5'(.0P Courts have found an implied defense under Proposition 215 to the transportation of medical marijuana when the "quantity transported and the method, timing and distance of the transportation are reasonably related to the patient's current medical needs." (People v. Trippet(1997) 56 Cal.App.4th 1532, 1551.) There is, however, no "unfettered right" for qualified patients or caregivers "to take their marijuana with them wherever they go, regardless of their current medical needs." (People v Wayman (2010) 189 Cal.App.4th 215, 223.) Unless otherwise noted, all statutory references are to California's Health and Safety Code. Proposition 215 does not giant irnmunity from arrest; it merely provides an affirmative defense to charges of milawful;cultivatibri or possession ofmiarijuana. (See generally People v. Mower (2002)28`Cal.4th 457, 474.) And finally, because Proposition 215 was adopted as an initiative statute,article 11, section 10,subdivision (c) of the California Constitution prohibits the Legislature(or local governments) from amending its terms, or changing its scope and effect, without voter approval. C. Senate Bill 420 - The Medical Marijuana Program Act. On January 1, 2004, Senate Bill 420, the Medical Marijuana Program Act(MMPA), became law. (§§ 11362.7-11362.83) The MMPA, among.other e things, requires the California Department;of Public Health (DPH) to maintain aerogram for the voluntary registration of qualified medical marijuana patients and their pnmary caregivers through a statewide identification card system. State medical marijuana identification cards are intended to help law enforcement officers identify,andkvefifythat cardholders are able to cultivate, possess; and transport certain amounts1of marijuana.without tieing subject to arrest under specified conditions. (§§ 1136271,(e), 11362.78) The MMPAalso°fixes possession limits for cardholders, and recognizes a qualified exemption from criminal liability for the collective or cooperative cultivationyofinedreal marijuana. °(§§ 11362.7, 11362.77, 11362.775.) It is mandatory that all counties participate in the idcntificahoon,card program by (a) providing applications upon request to=individuals seekmgto join the identification card program; (b) processing.completed apphcations;;.(c) maintaining certain records; (d) following state implementation protocols; and (e)issuing DPH identification cards to approved applicants%nd designated primary caregiversj:(§ 11362.71(b), County of San Diego v. San Dre'go NORML't(2008) 165 Cal.App.4th 798, 825-828.) Participation by patients,and primary caregivers in the identification card program is voluntary, However,rb cause id ntificatton cards offer the holder protection from arrest, are.issuedionly after ven � fication of the'caidholders status as a qualified patient or primary caregiver, and areummediatelyverifiable, they. represent one,of the best ways to ensure the rti security and non diversion of medial marijuana. information about the identification card program, as well as many useful links, may be found on DPI-Ps website: www,cdph.ca.gov/programs/MMP/Pages/Medical Marijuana Program.aspx. D. The Federal Controlled Substances Act. Adopted in 197014 heControlled Substances Act(CSA) established a federal regulatory system designed to combat recreational drug abuse'by.making it unlawful to manufacture, distribute, dispense, or possess any contrdlled:substance: (21 U.S.C. § 801, et seq.; Goniales v. Oregon,(2006) 546 U.S. 243, 271-273.) The CSA reflects the federal government's view that marijuana isSa drug with"no currently accepted medical use." (21 U.S.C. § 812(b)(1);) Accordingly, the manufacture, distribution, or possession of marijuana is a federal,criminaloffense. (Id.,.§§'841(a)(1), 844(a).) *6 • The differences between federal,and:state law have given rise to understandable uncertainty, but no legal'conflict-exists merely because state law and federal law treat marijuana differently:. Congress has provided that states are free to regulate in the area of controlled substances, including marijuana, provided that state law does not positively conflict with the CSA. (21 U.S.C. § 903.) Indeed, California's medical marijuana laws have been upheld against federal preemption challenges. (County of San Diego, supra, 165 Cal.App.4th at pp. 826-827; Qualified Patients Ass'n v. City of Anaheim (2010) 187 Cal.App.4th 734, 759-760, 763.) Neither Proposition 215, nor the MMPA, conflict with the CSA because, in.adopting'these laws, California did not attempt to legalize marijuana under federal law,but instead exercised the state's reserved powersto exempt certain marijuana offenses froth punishment under state law when a,pliysician has recommended its use to treat a serious medical condition. (See City of Garden,Grove v. Superior Court (Kha) (2007) 157 Cal;App:4th 355, 371-373, 381-382 )381-382.)J4Tile federal government has the power to adopt and enforce its own standards, but undeKthe Tenth Amendment to the United States Constitution, it cannot force a state to,nnplement a feder'ahregulatory program. r m In light of California's decision to remove certainndividua i ls,groups and activities from the sweep of the state's drug laws, this Office recommends that state and 1oca1-law s artj enforcement officers not arrest individuals or seize mcguana-under federal law when the officer determines from the facts a*ailable that the cultivation, possession, or transportation is permitted under California's medical marijuana laws. This recommendation is not meant to change this Oice's policy regarding the participation by state or local law enforcement agencies on joint state-federal drug task forces or operations. E. Taxability of Medical Marijuana Transactions. The California State Board of Equalization (BOE) has adopted a policy of taxing medical marijuana transactions and requiring that businesses engaging in such transactions hold a Seller's'Permit (www boe ca.go,v/nevi's/pdf/medseller2007.pd£) According to BOE, the Seller's Permit7does not allow:individuals to make unlawful sales, it merely provides a way to remit any sales;and usectaxes due. BOE clarified its policy in a June 2007 Special Notice,(www.boe catgou/news/pdf/173.pdt), and again in a January 2010 Special Notice that focuses on payment4of tax liabilities. (www.boe.ca.gov/news/pd['/1245.pd£) In February 2011 BOE ruled that the sale of medical marijuana,is not exempt from sales tax as exemptmedtcine •(vuww.hoe.ca.gov/news/2011/32-11-H.pd£) "tile yy, F. Medical Standards Applicable to Physician Recommendations. The Medical Board of California licenses; investigates, and disciplines physicians. (See Bus. &Prof. Code, §§ 2000-2521.) Although state law prohibits punishing physicians simply for recommending marijuana for treatment of a serious medical condition (§ 11362.5(c)), the Board can and,does take disciplinary action against physicians who fail to.adhere to accepted medical standards when evaluating patients and recommending marijuana, or who'violate rules against the corporate practice of medicine. 4-'Y The Medical Board has clarified that the standards,+that a physician must follow when recommending marijuana to a patient are the same ones that-a reasonable and prudent physician would follow when recommending or approving-any medication. According to the Board,' a medical marijuana consultation should involve: 1. Taking a history and conducting a good faith examination of the patient; 2. Developing a treatment plan with objectives; 3. Providing informed consent, including discussion of side effects; 4. Periodically reviewing the treatment's efficacy;m,7 ' 5. Consultations, as necessary; and a� .w 6. Keeping proper records supporting the decision to recommend the use of medical marijuana. • Complaints about physicians may be lodged with the Medical Board by calling (800) 633- 2322, or by visiting www:mbc.ca.gov/consurner/complaint_info.html. r,e IL DEFINITIONS i ,tPo VT-4T A. Physician's Recommendation Physicians may not prescribe marijuana because the U.S. Food and Drug Adm inistration regulates,prescription drugs, and marijuana is not a prescription drug: Physicians may, however, lawfully issue a verbal or written recommendation under3Califoriiia law indicating that marijuana would beta beneficial treatment for a serious:medical condition. (§ 11362.5(cly,d nantiv. Walters (9th:Cir. 2002) 309 Fad 629, 632.) B. Primary Caregiver Aprimary caregi er.:is a person who is designated by a qualified-patient and `has consistently assumed responsibility for the housing, health or safety )of the patient (§ 1142.5(e).) The owner or operator of a hcens"ed c`linic health care facility, residential care facility, or a hospice or home t ' health agencyalso may be designated as a primary caregiver. (§ 11362.7(d)(I).) we person does not Become a primary caregiver merely by having a patient 'designate him or her as such California courts have emphasized the need for a substantive patient#caregiver relationship. Although a "primary caregiver who consistently grows-and supplies . . . medicinal marijuana for a section 11362.5 s 4.7 patient is` erving a health need of the patient," someone who merely maintains a source of marijuana does not automatically become the party "who has consistently assumed responsibility for the housing, health,,or safety" of that purchaser. (People ex rel. Lungren v. Pet-on (1997) 59 Cal.App.4th 1383, 1390, 1400.) • 2 Seewww.mbc.ca.gov/board/nedia/releases_2004_05-13_marijuana.html To qualify as apr�iiiiary caregiver, an individual must show that"he or she (1) consistently provided caregiving,.(2) independent of any assistance in taking medical marijuana, (3) ator.before the time he or she assumed responsibility for assisting with medical marijuana." (People v. Menich (2008) 45 Cal:4th 274, 283.) In short,the person must show "a caretaking relationship directed at the core survival needs of a seriously ill patient, not just one single pharmaceutical need." (Id at p. 286.) A person may serve as primary caregiver to "more than one"patient if the patients and caregiver all reside in the same city or county_,but.may only serve as primary caregiver to one patient outside his or her own city or`county of residence. (§ 11362.7(d)(2)-(3).) f,u z, C. Qualified Patient A qualified patient is a person whose'physician has recommended the use of marijuana to treat a serious illness, including cancer, anorexia, AIDS,,chronic pain, spasticity, glaucoma, arthritis, migraine,.or any other illness for which,marijuana prov destrelief. ( %l 1362.5(b)(1)(A):") D. Recommending`Physician: A recommending physician is,a person who (I) possesses,a license in good standing to practice;medicine in California;. (2) has taken responsibility for some aspect of the`medical care, treatment, diagnosis, counseling, or refeirarA a patient; and (3) has complied with accepted medical standards that a reasonable and=':prudent physician-would follow when recommending::or approving marijuana for the treatment of his or her patient (see discussion in Section I.P. above) M. GUIDELINES REGARDINGG'INDIVIDUAL QUALIFIED PATIENTS AND PRIMARY Mns CAREGIVERS, ""°9 A. State Lan Conipliance°Guidelines ' aw { h . :„ Physician Recominendation: To qualify for protection under Proposition,215 or the MMPA, patients must obtain a written or verbal a recommendation formarijuana from a licensed h sician. 11362.5 d fr.. J P y (§ O.) tygt,State of California Medical Marijuana Identification Card: Undcr the . ,MMPA, qualified patients and their primary caregivers may voluntarily apply through their county health department(or the-designated county agency)°;for a card issued by DPH identifying them as a person who is authorized to cultivate, possess, and transport certain quantities of marijuana for medical purposes. To help law enforcement officers verify the cardholder's identity, each card bears a unique identification number, and a verification'database is available online at www.calmmp.ca.gov. In addition,-the cards contain the name of the county health department that appi-ovedtheapplication, andan-expirationdate. (§§ 11362.71(a); 11362.7350)(3)-(4); 113623453 3. Proof of Qualified Patient Status: Although verbal recommendations are technically'permitted,ulder Proposition 215, this Office strongly recommends that patients obtain and carry written proof of their physician recommendations to help them avoid arrest. A state identification card is the best form of proof, because it is easily verifiable and provides statutory immunity from arrest.if certain conditions are met(see Section I11.B.4, below.) Other identification or membership cards, such as those issued by collectives and cooperatives, should generally not be relied upon by qualified patients or law enforcement. 4. Primary, Caregiver Liability: Under the MMPA,primary caregivers cannot he held criminally liable for certain acts,jrieluding including the receipt of reasonable compensation for their services. Specifical]y, it provides that a "designated primary caregiver who transports;processe0dministers, delivers, or gives away" certain amountssof;marijuana to his or her patient is not subject,;on that sole basis, to criminal liability for marijuana v vH J possession, transportation, cultivation, distribution, or sales.' (§ 11362.765(a), (b).) It further provides that ylrimary caregivers who receive '`compensation for actual expenses,.including-reasonable' compensation incurred for services providedtto enable [a patient] to use marijuana," or"payment for out-of-pocket expenses incurred in providing those services," are not on that sole.basis subjecttoe criminal liability for marijuana distribution or sales.;(§,11362.765(c) ),t kL a 9,,x. 5. Possession Limits: P N a. MMPA Cardholders Unless a physician recommends a larger • 0_ quantity,.qual fled patients and primary caregivers who obtain a state- issued,jdentification card (see"Sections,I.0 & 111.A.2) may possess 8 oz"of drtedmarijuana, andrmay maintain no more than 6 mature or i. 12 immature'plants per qualified patient, without being subject to ''arrest. (§§14362.71(e), 11362:77(a)-(b).) Only the dried mature processed flowerssior buds of the female cannabis plant should be considered when°determining allowable quantities of medical marijuana for purposes of the MMPA. (§ 11362:77(d).) 4- r.; b 1 Local MMPA Possession Limits: Counties and cities may adopt iguidehnes that allow qualified patients or primary caregivers with state identification cards to possess medical marijuana in amounts that exceed the MMPA's possession limits. (§ 11362.77(c).) c. Proposition 215: Qualified patients.or primary caregivers clairning protection under Proposition 215 may possess and transport an amount of marijuana that is "reasonably related to [the patient's] current medical needs." (Trippet, supra, 56 CaI_App.4th at p. 1549.) The MMPA's possession limits do not apply to individuals asserting a defense under Proposition 215. (People v. Kelly (2010) 47 Cal.4th 1008, 1043.) ikck B. Use and Enforcement'Guidelines: 1. Location of Use: Medical marijuana may not be smoked (a) where smoking is prohibited by law, (b) at or within 1000 feet of a school, recreation center, or youth center (unless the medical use occurs within a residence), (c) on a.school bus, or(d) in a moving,motor vehicle or boat. (§ 11362.79.) 2. Useof Medical Marijuana in the Workplace or at Correctional Facilities: The medicinal use of marijuana need,not be accommodated in the workplace, during work hours, or at any jail, correctional facility, or other penal institution. (§ 11362.785(a).) Furthermore, an employer may terminate an employee who tests positive for medicahmarijuana without violating,the Fair Employment and Housing"Act Or subjecting itself to a cause of action for termination in violationrof public policy: (Ross v. Raging Wire-Telecomms., Inc. (2008)';42 Cal.4th 920, 929, 933:), 3. Criminal Defendants, Probationers;,and Parolees: Criminal n F` defendants and probationers may requestcourt approval to use medical marijuana while they are released on bail[oriprobation. The court's decision and reasoning'must be stated on'he record and in the minutes of the court. (§ 11362.795(a)(1) (2) ) Likewise,'parolees,who are eligible to use medical marijuana may °request that they be allowed to continue such use during the period of parole. The written conditions of parole must reflect whether the request was granted or'denied. (§ 11362.795(b)(1)-(2); see alsoPeople i. Brooks (2010)182 Cal.App.4th 1348, 1352-1353 [trial c court could ondition probation'on non-pos"session of medical marijuana as; o ,,cndition was related to crime of possession of marijuana for sale]; People Voret (2010) 180 Cal.App44th 836, 856-857 [court may condition'probatioh on non use of'medical marijuana].) 7'12 "541 f:'4 StatelMedical Marijuana Identification Cardholders: When a person invokes the protections.of Proposition 215 or the MMPA and he or she possesses a:state medical marijuana identification card, officers should: .,. a. Review=the identification card and verify its validity by accessing DPH s';card verification website (www.calmmp.ca.gov); and 5o b. If the'card,is valid and hot being used fraudulently, there are no other indicia of illegal activity(weapons, illicit drugs, or excessive amounts of cash), and the person is within the state or local possession limits, the individual must be released and the marijuana should not be seized. Under the MMPA, "no person or designated primary.caregiver in possession of a valid state medical marijuana identification card shall be subject to arrest for possession, transportation, delivery, or cultivation of medical marijuana." (§ 11362.71(e).) Furthermore, a "state or local law enforcement agency or officer shall not refuse to accept an identification card issued by [DPI-] unless the state or local law enforcement agency or officer has reasonable cause to believe tharik,information contained in the card is false or fraudulent, of the,card is being used fraudulently." (§ 11362.78.) ' ` c. 3 5. Non-Cardholders: When a person claims protection under Proposition 215 or the MMPA,but only hasa written (or verbal) recommendation, from a licensed,physician, officers should use their sound professional judgment to assess the validity of the person s'medical-use claim: a. Officers need not;abandon their search or investigation, Standard search and seizure rules apply to potentialviolationsof medical marijuana laws. Reasonable suspicion is required for detention, while probable cause'is required for rarch seizure, and arrest. C i"se b. Officers should review and if possible, validate any written documentation. It may contain the recommending physician's s name; telephone number, address, and license number. c. If the,bfficer reasonably believes.that the,medical-use claim is valid based upon the totality'of'the circumstances, and the person is � wrthin state or local possession'limitsor possesses an amount that appears to be:consistent with their current-medical needs, the person shouldtbe released and the marijuana should not be seized. }., II d Alternatively, ifthe officer has probable cause to doubt the validity of a person's medical marijuana claim based upon the facts and i , y circumstances (including the quantity of marijuana, packaging for �e„Y� Y•YjP sale, weapons, illicit drugs, pay-owe sheets, or large amounts of cc,r,cash), the person may be arrested and the marijuana may be seized. It will then be up to the person to establish his or her medical marijuana defense in court if the district attorney elects to prosecute the case. e. Officers are_not obligated to accept a person's claim of having a verbal physician's recommendatiomlthat cannot be readily verified with the physician at the'time ofdetention. 6. Exceeding•Possession Limits: If a person has what appears to be valid medical,marijuana,documentation,but exceeds the applicable possession limits identified above, all "marijuana may be seized. 7. Probable Cause: Law enforcement officers must have probable cause before they lawfully may arrest a person for any crime. In the medical marijuana context,probable cause is required before searching or arresting an individual suspected of possessing, cultivating, or transporting marijuana for a purpose unrelated to the individual's.personal medical needs. (See, e.g., County of Butte v. Superior Court(2009) 175 Cal.App.4th 729, 737-738 [state law enforcement officers May not order a qualified patient to destroy marijuana plants without,,probable cause to believe they are contraband].) A probable cause determination may be based upon an officer's experience in narcotics'.investigation and his or her knowledge of medical marijuana laws- (See People v Hochanadel (2009) 176 Cal.App.4th 997, 1019; see also People v. Dowl(2010) 183 Cal.App.4th 702, 711 [a law enforcement officer is not required'mto qualify as a medical marijuana expert to testify that a qualified patient possessed marijuana for sale].) 8. Return of Seized Medical Marijuana: If a person whose,marijuana is „,;47,4„,e- seized by law enforcement establishes a medical marijuana defense in court, or the case is not prosecuted he or she may file'a motion for return of the marijuana. If the motion is granted„the individual or entity subject to the order-must return the property. State ilaw:enforcement officers who handle controlled substances i iLthe course of their official duties are sr immunefrom�ltability under the;CSA. (21 U.S.C. § 885(d)) Once the manluana is returned, federal authorities are free to exercise jurisdiction over tt' 21 U S C.,§§812(c)(10), 844(a); City of Garden Grove, supra, 157 Cal App':4th at pp X369 386;391.) a IV. GUIDELINES REGARDING COLLECTIVES AND COOPERATIVES vfY$] i it The gives patients and caregivers a limited right to collectively and cooperatively cultiv to marijuana Section 11362.775 provides that lag Qualified patients,persons with valid identification cards, and the Qualified pary caregivers of_qualified patients and persons with identification cards, who associate within.the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes, shall not solely on the basis of that fact be subject to state criminal sanctions under Section 11357, 11358, 11359, 11360, 11366, 11366.5, or 11570 The MMPA does not define the terms collective or cooperative, but it is the opinion of this Office that any group,that is-collectively or cooperatively cultivating and distributing medical marijuana to its members should be organized and operated in a manner that ensures the security of the crop and safeguards against diversion for non-medical purposes. A. Dispensary: The term "dispensary" is.not found in Proposition 215 or defined in the MMPA, but it is commonly used in relation to the cultivation and distribution of medical marijuana. Dispensary generally refers to any individual or group that is dispensing or otherwise distributing medical marijuana grown by one or more of its members to the other members of the enterprise. The types of dispensaries currently operating in California include commercial businesses, such as those that dispense from storefronts, offices, agricultural lands, and through delivery services; and non-commercial individuals or groups that dispense from residences, agricultural land, and other physical locations. No matter the form of the enterprise, it should be organized as a collective or cooperative and may not make a profit. at B. Business Forms 1. Statutory Cooperatives: No business may call itself a"cooperative," (or co-op") unless it is properly organized and registered as such under thetorporations or Food ancfAgricultural Code. (Corp. Code, § 12311(b)) A cooperative,must file articles of incorporation with the state,and conduct;its business for the mutual benefit of its members. (Id., §§ 12201, 12300) Cooperati e corporations are "democratically controlled and are not organized to make a profit forwthemselves as"such, or for their members, as such, but primarily for their nfembers as¢patrons (Id § 12201.) The earnings of the business must be used for the,geoeral welfare of its:members or equitably distributed to members in the foriniof cash,property, credits, or services. (Ibid.) Cooperatives must,follow strict rules on organization, articles, elections, and distribution of earnings , and must report individual transactions from members each year k(See d, § 12200, et seq.),.Agricultural cooperatives are likewise nonprofit corporate entities since they are not organized to make profit for Y therrise"Ives, ass ch or for their members, as such, but only for their members as producers ",^(Food &Agric. Code, §54033.) Agricultural cooperatives share many characteristics with,consumer cooperatives. (See, e.g., id., § 54002, et seq.) Cooperatives should not acquire marijuana from, nor distribute it to non-members. n 2 Collectives „ •ii ''_.: As noted the MMPA does not define collectives, but the dictionary defines them as "a business, farm, etc.,jointly owned and operated by the members of a group." (Random House Dictionary; Random House, Inc. ©2010.) As such, a collective should not be owned by any one person or limited group of persons, only by the membership as a-whole—a membership limited to qualified patients and primary caregivers. A collective•also should not acquire marijuana from, nor distribute to, • non-members; instead, itshould be an organization that merely facilitates the collaborative efforts of patient and caregiver members —including the allocation of work, costs, and revenues. Even though a collective is not a statutory entity, as a practical matter it should organize as some form of business to carry out any commercial activities it may conduct. 616 C. Edible and Mislabeled Medical Marijuana Products: Many medical marijuana collectives and cooperatives offer food products to their members that contain marijuana or marijuana derivatives. These edible cannabis products, which include cookies, brownies, butter, oil, fudge, lollipops, ice cream, and cupcakes, are not monitored and regulated like commercially distributed food products or pharmaceuticals. Furthermore, some dispensaries promote the efficacy of certain strains of marijuana to treat particular ailments, or fail to label marijuana or marijuana-based food products offered to members with manufacturing or source information, accurate weight, or instructions for proper dosage or use. `' :u'-a - The manufacture, sale, labeling, advertising, and dispensingzofyfood and drugs are extensively regulated in California under the Sherman Food, Drug, and Cosmetic Law, which is codified in sections 109875-111915 of the Health & SafetY1Code (the "Sherman Law"). The advertising, labeling, and delivery oftma ij a a via foodtproducts is not addressed in Proposition 215 or the MMPA, nor do these laws specifically:exempt medical marijuana and related food products from nth etreach of thee,Sherman Law.'[ ocdingly, state and local authorities have begun focusmg(on+the safety, labeling, and advertising of medical marijuana, and the adulteration and distrtbution)of food products with marijuana trc�,r or TI-IC, through the lens of the Sherman Law Although California's appellate courts have yet to apply the Sherman Law in the medical marij`Uannaa context, cooperatives and collectives that manufacture or offeuediblemarijuana products to/their members, sell it to dispensaries, cooperatives, or collectrves,-o'r.,offer loose, unlabeled marijuana for sale, do so at their own risk, and should ensuretthat theey,are complying with applicable state and local food and drug safety and labeling laws?'as well as`iP position 215 and the MMPA. p D. Guidelines for the Lawful Operationtof a Cooperative or Collective: 74'? Collectives and cdop�erativd [should be organized with sufficient structure to ensure the security and non dtve(s on.of a v�ana totillicit markets, and compliance with all state and local laws low !6The foling are some suggested guidelines and practices for operating collectives and'cooperatives;toahelp ensure lawful operation. Irea VA" etWe 'w4 1 Non-Profit Operation: 4i #The MMPA confirms that for-profit sales are forbidden. (§ 11362.765(a) ["nor shalltanythingin this section authorize any individual or group to cultivate or mow, distribute marijuana for profit"].) Thus, distribution and sales for profit of marijuana medical or otherwise—remain criminal under California law. This Office is`of the opinion that any monetary payment, or any provision of goods or services, in exchange for medical marijuana, be it a fixed membership fee or reimbursement for medical marijuana received, should be documented and be carefully calculated to provide no more in value than the actual cost of cultivating . and providing medical marijuana to members and that there be no profit for any person in the supply chain from cultivator to patient. If a dispensary, cultivator, delivery service, or other collective or cooperative enterprise is profiting from its activities, its members may be subject to prosecution under California's marijuana laws. (See Section l.A, above.) 'dk It also IS the,opinion of this Office.that any compensation paid by a collective or cooperative to`memberswho perform work for dispensary (including marijuana cultivation), or who operate the;dispensary, should not be excessive nor calculated to artificially diminish or hide profits. Generally, "reasonable compensation" is defined as reasonable wages and benefits paid to persons with similar job descriptions and duties, levels of education and experience, prior individual earnings histories, and number of hours worked. The payment of large bonuses should not be considered part of"reasonable compensation." 2. Sales and Reimbursement: The MMPA provides that certain persons who 'associate collectively or cooperativelytoeultivate marijuana for medical purposes„shall not solely on the basis of that fact be subject to state criminal sanctions” for a,variety of otherwise prohibited conduct; including distribution and sales: (§ 1162.-7.75.) The extent to which reimbursement by members to a collective;or cooperatwexconstitutes distribution or sales that are exempted from criminal liability by sectiono11362.775 is an unresolved legal question, and some local juriSdictions contend:that all such transactions,are:criminal. Whether monetaryztransactions between (collective and its members are criminal or not local jurisdietionsmay have the power to place limitations onthem as an exercise of local zoning;"permitting, and licensing authority. (See Section V,below.) 3. Location of Collectives and Cooperatives: The MM.MPA`piouides, with certain exceptions,ithat"[n]o medical marijuana cooperative, collective; dispensaryf,operator, establishment, or provider who possesses;cultivategterdistributes medical marijuana . . . shall be, located within a 600-foot radius of(School." (§ 1 1362x768.) As explained in Section V below, local jurisdictions Mayplace additional restrictions on the location of collectives y,, , and cooperatives'because the 1v1MPA "does not confer on qualified patients and their caregi ers the unfettered right to cultivate or dispense marijuana anywhere they choose k(Hill n County of Los Angeles(20,11) 192 Cal.App.4th 861 at p. *4.) 4:24 lry "'4 Business Licenses, Sales Tax, and Seller's Permits: a. As ekplained in Section LE of these Guidelines, those engaging in medical marijuana transactions must obtain a Seller's Permit=and remit state sales tax. Some cities and counties also require dispensing:collectives and cooperatives to obtain appropriate permits and business-licenses. 5. Membership Application and Verification: When`a 'patient or primary caregiver wishestojoin a collective or cooperative, the group,can help prevent the diversion of marijuana for non-medical use by having potential members complete a written membership application. The following application guidelines should be followed to help ensure that marijuana grown for medical use is not diverted to illicit markets: • a. Verify the individual's status as a qualified patient or primary caregiver. Unless he or she has a valid state medical marijuana identification card, this•should involve personal contact with the recommending physician (or his or her agent), verification of the physician's identity, as well as his or her state licensing status. Verification of primary caregiver status should include contact with the qualified patient, as well as validation of the patient's recommendation. Copies should be made of the physician's recommendation or identification card, if any, ;,'- ;„•; b. Have the individual agree not to distribute marijuana to non- members, AEI>' c. Have the individual agree not to use theimarijuana for other than medical purposes; � _.:•,. d. Maintain membership records on-site•or have them reasonably' available; 5'h An, e. Track when members' medical marijuana recommendation and/or identification cards expire; f. Have•the individual identify anytmemberships in other collectives • and state the necessity for such multiple:memberships, and g. Enforce conditions of membership by excluding members whose identification card or physician recommendation are invalid or have ' expired, orwho are caught diverting marijuana for non-medical use 6 Collectnesetandt Coopera4v1Should Possess and Distribute Only Lawfully Cultivated Marijuana: Collectives and cooperatives should cultivate their own marijuana, because only marijuana grown.by a qualified patient(or a primary caregiver to a qualified patient) may lawfully be transported by or distributed to, other members of that 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 or otherwise acquired from outside the collective or cooperative for distribution to its members. Instead, the cycle should be a closed- circuit of marijuana cultivation and consumption with no purchases or sales to or from non-members. To help prevent diversion of medical marijuana to non- medical 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. 7r 7. Membership in Multiple Collectives and.Cooperatives: The MMPA provides certain individuals the right to act collectively or cooperatively to cultivate medical marijuana, but it does not specifically address whether individuals may be members of multiple collectives or cooperatives. Patients and,primary caregivers who merely cultivate large quantities of marijuana and supply it to more than one collective or cooperative create security risks and increase the chance of diversion for non-medical purposes. Accordingly, this Office is of the opinion that collectives and cooperatives should not (1) permit members to have memberships in other collectives or cooperatives without identifying such memberships and stating the need formult ple memberships, nor (2) acquire medical marijuana or edible products from"any member or entity that supplies marijuana to other collectives or cooperatives s. V't st ,.a. 8. Collectives and Cooperatives Are Not�PrimaryCaregiters: A collective or cooperative that suppl ms marijuana to a qualified P tient.does not ri: qualify as a primary caregiver on that basis alone (See People v. Me�iztch (2008) 45 Cal.4th 274, 283-286.) vx, 9. Distribution and Sale"sito Non-Members aretProhibited: A collective or cooperative may ndt distribute d me cal marijuana to any person who is not a member in good standing+ofthe.organization. ,45/ 10. Permissible'Reimbursements°and Allocations: Marijuana grown at a:Collective or cooperative for medical purposes may be ‘114:41h. a. Provided free to qualified patients and primary caregivers who are w a r e members of theccollectrve:or cooperative; b. ''♦Provided m exchange for goods provided or services rendered to the 0,A entity; , „lia JO ^9; ,= c. Allocated based on fees that are directly calculated to cover actual ZC91 , costs including overhead costs and operating expenses (see uk� Sections IV.D.1-2); or Naive' d. \IA;ny combination of the above. 11. Possession, Transportation, and Cultivation Limits: If a person is acting as primary caregiver to more than one patient under section 1 I362.7(d)(2), he or she may aggregate the possession and cultivation limits for each patient. For example, applying the MMPA's basic possession limits, if a primary caregiver with a state issued identification card is responsible for three patients, he or she may possess up to 24 oz. of marijuana (8 oz. per patient) and may grow up to 18 mature or 36 immature plants. Similarly, collectives and cooperatives may cultivate and transport.marijuana in aggregate amounts tied to their membership,numbets. To document the legitimacy of large quantities of marijuana, collectives or cooperatives should have supporting records readily available when: a. Operating a location for cultivation; b. Transporting the group's marijuana; or c. Operating a location for distribution to members of the collective or cooperative. E. Criminal Enforcement Guidelines: Depending upon the facts and circumstances, indicia that marijuana is not being grown, transported, or distributed for medical use may give rise to probable cause for search, seizure, and arrest. (See People v Hochanadel,supra, 176 Cal.App:4th at pp. 1017-1018 [probable cause required to establish that a cooperative,or'collective iscnot operating within the law].) A law enforcement officer s,experience in narcotics investigation, coupled with his or her knowledge of state medical marijuana laws, is suffcient.to r� establish competence to_author a search warrant affidavit.(7d. at p. 1019.) The following are additional guidelines.tahelp identify medical marijuana collectives and cooperatives that are operating outside of state law. 1. Dispensaries: k• ,,. As noted above,"the only statutorily-recognized,group`cultivation entities are cooperatives and t• collectives (§x,11362 775 )'=It isrthe`opinion of this Office that a : properly organik zed'and operated collective or cooperative that dispenses medical marijuana through a'storefront or through other means as identified in Sections IV.A.4'd B above, may be lawful under California law, but that dispensaries that >vti do not substantially?comply with the guidelines'.set forth above, are likely operating outside the protectionCof!.Proposition 215 and the MMPA, and that the individuals . operating such entities may be subject to arrest and criminal prosecution under California"law. (See e.g_, People v. Hochanadel, supra, 176 Cal.App.4th 997, 1018-1019 1di'spensary operators were properly arrested where there was no evidence that purchasers were actual members of a cooperative or collective and u. same of the marijuana offered for sale was purchased from an outside source]; Peron, 59 Cal.App.4th at p. 1400 [dispensary owner was not the primary caregiver to thousands of patients].) 2 Indicia°of Unlawful Operation; When investigating collectives or cooperatives,,law enforcement officers also should be alert for signs of mass production or illegal sales, including(a) financial records suggesting thata profit is being made, (b) excessive amounts of marijuana, (c) excessive amounts of cash, (d) 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,(e)weapons,(f) illicit drugs, (g) purchases from, or sales or distribution to; non-members, or (h) distribution outside of California. ]�D V. GUIDELINES FOR LOCAL JURISDICTIONS IN REGULATING COOPERATIVES AND COLLECTIVES California law provides two basic mechanisms for local jurisdictions to ensure that marijuana grown for medical purposes remains secure and does not find its way to non- patients or illicit markets: (1) criminal enforcement, and (2) the establishment and enforcement of zoning, land use; licensing, and related ordinances. It is this Office's opinion that criminal enforcement is justified when individuals:are operating outside the protections of Proposition 215 and the MMPA (see, e:g.,People v. Hochanadel, supra, 176 Cal.App.4th at pp. 1016-1919), and that local ordinances and codeenforcement are an efficient means to regulate the cultivation and distribution of medical marijuana by collectives and cooperatives. The following are examples ofnon-criminal restrictions that local jurisdictions may want to consider in regulating collectives`and cooperatives: A. Prohibition: i As discussed below;cities and counties have broad authority under their"zoning„licensing, and permitting powers to regulate, and in many instances;prohibit, various activities and enterprises. Some cities and counties have even prohibited collectives and cooperatives, however it is an unresolved legal question whether lopal,jurisdictions have the power to enact such prohibitions.' B. Operating Requirements: �,� Cities and counties have broad powers to adopt and enfotce ordinances and regulations pertaining to medical marijuana collectivesf'and cooperatives. (Hill v. County of Los Angeles,supra, 192 Cal.App.4th at p. *3 [unlicensed dispensary found to be a nuisance; county zoning permitting, and licensing restrictions upheld against state law preemption challenge]; City ofCIaremont v Kruse (2009);=177 Cal.App.4th 1153, 1175-1176 [holding that neither Propositigkittt8i:ihel,MMPAiirohibit cities from using their zoning and licensing powers to regulate dispensaries]; City of Coronae. Naulls(2008) 166 Cal:App.4th 418,433 [failu to comply with the city's procedural requirements before �,:.r operating a medical m re anluana digpensary created a nuisance per se pursuant to the municipal code, couit'upheld issuance of preliminary injunction].) fa The following are requirements that local jurisdictions may depending on local circumstances and the`nature of the enterprise, consider imposing as requirements for operation to enure security and non-diversion of marijuana for non-medical use Although court9 A'e evaluated and upheld some of the following restrictions, the extent to which such limitations are'permissible under Proposition 215 or the MMPA, and other applicable laws, could raise,unresolved legal questions and will depend upon the circumstances in which the restrictions are applied: The issue of whether the State's medical marijuana laws preempt:local ordinances banning collectives and cooperatives was raised in Qualified Patients Ass'n v. City ofAnaheim,supra, 187 Cal.App.4th 734, but the Court of Appeal found that the issue was not yet ready for review and returned the case to the superior court for further proceedings. (Id at pp. 755-756.) 6G\ 1. Provisions for adequate security, such as security guards, security procedures, security-monitoring equipment, alarm systems, and adequate exterior lighting; 2. Capping the number of collectives and cooperatives permitted to operate commercially; 3. Background checks and suitability determinations for employees; 4. Limiting or otherwise restricting on-site cash transactions; 5. Limiting the amount of cash kept on-site and precludiiig;cash machines from being present ° 6. Zoning restrictions; 7. Limitations designed to ensure non-profit operation suchas reasonable and allowable compensation paid to employeesvand reimbursements to members for goods and services provided to the collective or cooperative; 1* 8. Prohibit members from having memi`berships in more than one collective or cooperative without identifying such memberships and stating a`%°Y medical need for such multiple memberships 9. Prohibit acquisition of marijuana from any°member who supplies medical marijuana to any other collective or cooperati'Vei 10. Requirements for provision of subsidized medical marijuana to income- eligible patients; 431AlE i.‘ 11. Precluding=medical marihuana recc emendations from being issued by the .mot collective or cooperative e.g.,\astaff physician or other physician located on[theipremises 4 , 12. Prohibrtmg,on site sales of alcohoIlor tobacco; tom f. 13 Requiring permits andliusifPnicenses; wy ix a- 14 Restricting the hours of operations; *,15. Maintaining ta community-relations staff person, and providing that y_ persons contact information to law enforcement and neighbors in the �`� immediate vicinity of the operation, to notify if there are operational prroblems with the establishment; 16. Limitations s regarding on-site cultivation, including those imposed on other,a"gncultural operations; 17. Rights of access for officials of the jurisdiction to ensure compliance with state law and local requirements; 18. Laboratory testing of marijuana to ensure patient safety regarding pesticides, contaminates, and cannabinoid levels; 19. Preparation of audit reports verifying compliance with state and local laws; 20. Requiring maintenance and audit of records that establish compliance with state and local laws; 21. Restrictions on locations, such as distances from other collectives and cooperatives, substance-abuse centers, playgrounds, parks, schools, libraries, and certain community-gathering places; 22. Compliance with state and local safety and health codes; 23. Compliance with all local ordinances applicable to businesses distributing any restricted product such as prescription medications and alcohol; and 24. Compliance with all of the guidelines set forth in the Attorney General's Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Purposes. >p C. Clinics and Care Facilities: . Under the MMPA, the definition of primary caregi ek ver presslyincludes the owner or operator, and up to three employees designated by,atlie=owner or operator,aof certain clinics, health care facilities, residential care facilities,!hospices, and home health agencies. (C 11362.7(d)(I).) Because such operationska`rreexpresslylegal under the MMPA, when crafting ordinances, local jurisdictions should avoid sweeping such facilitiesiinto the description of prohibited uses or operations. ` N " 4 A C - �, *n. ri y Q�p pp a ' ta174, IJ' v a N NI , yr . ty w ;F ;phi, �, '. X3.7 t§'i h IA 1'0.tm 10 yh ;f1 • 1