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State to dispensaries: Pay your taxes

OLYMPIA – The state Revenue Department is stepping up efforts to make medical marijuana dispensaries pay their taxes.

After more than two years of “educational outreach” designed teach medical marijuana businesses that they must register with the state and pay taxes, the department says in a memo this week it will go after dispensaries that continue to ignore the law.

Dispensaries owe business and occupation taxes on their gross receipts. They must also collect sales tax on marijuana and “medibles” – the edible products containing the drug – and send it in. . .

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Feds target Calif. medical pot dispensaries

In this Tuesday Jan. 26, 2010 file photo, a pedestrian walks past a marijuana leaf neon sign advertising a medical marijuana provider along a street in the Sherman Oaks section of Los Angeles, Calif. (AP Photo/Richard Vogel)

By LISA LEFF,Associated Press
SAN FRANCISCO (AP) — Federal prosecutors have launched a crackdown on some pot dispensaries in California, warning the stores that they must shut down in 45 days or face criminal charges and confiscation of their property even if they are operating legally under the state's 15-year-old medical marijuana law.

In an escalation of the ongoing conflict between the U.S. government and the nation's burgeoning medical marijuana industry, at least 16 pot shops or their landlords received letters this week stating they are violating federal drug laws, even though medical marijuana is legal in California. The state's four U.S. attorneys were scheduled Friday to announce a broader coordinated crackdown.

Their offices refused Thursday to confirm the closure orders. The Associated Press obtained copies of the letters that a prosecutor sent to at least 12 San Diego dispensaries. They state that federal law “takes precedence over state law and applies regardless of the particular uses for which a dispensary is selling and distributing marijuana.”

“Under United States law, a dispensary's operations involving sales and distribution of marijuana are illegal and subject to criminal prosecution and civil enforcement actions,” according to the letters signed by U.S. Attorney Laura Duffy in San Diego. “Real and personal property involved in such operations are subject to seizure by and forfeiture to the United States … regardless of the purported purpose of the dispensary.”

The move comes a little more than two months after the Obama administration toughened its stand on medical marijuana. For two years before that, federal officials had indicated they would not move aggressively against dispensaries in compliance with laws in the 16 states where pot is legal for people with doctors' recommendations.

The Department of Justice issued a policy memo to federal prosecutors in late June stating that marijuana dispensaries and licensed growers in states with medical marijuana laws could face prosecution for violating federal drug and money-laundering laws. The effort to shutter California dispensaries appeared to be the most far-reaching effort so far to put that guidance into action.

“This really shouldn't come as a surprise to anyone. The administration is simply making good on multiple threats issued since President Obama took office,” said Kevin Sabet, a former adviser to the president's drug czar and a fellow at the University of Pennsylvania's Center for Substance Abuse Solutions. “The challenge is to balance the scarcity of law enforcement resources and the sanctity of this country's medication approval process. It seems like the administration is simply making good on multiple statements made previously to appropriately strike that balance.”

Greg Anton, a lawyer who represents dispensary Marin Alliance for Medical Marijuana, said its landlord received an “extremely threatening” letter Wednesday invoking a federal law that imposes additional penalties for selling drugs within 1,000 feet of schools, parks and playgrounds.

The landlord was ordered to evict the 14-year-old pot club or risk imprisonment, plus forfeiture of the property and all the rent he has collected while the dispensary has been in business, Anton said.

Marin Alliance's founder “has been paying state and federal taxes for 14 years, and they have cashed all the checks,” he said. “All I hear from Obama is whining about his budget, but he has money to do this which will actually reduce revenues.”

Kris Hermes, a spokesman for the medical marijuana advocacy group Americans for Safe Access, said the warnings are part of what appears to be an attempt by the Obama administration to curb medical marijuana on multiple fronts and through multiple agencies. A series of dispensary raids in Montana, for example, involved agents from not only the FBI and U.S. Drug Enforcement Agency, but the Internal Revenue Service and Environmental Protection Agency.

Going after property owners is not a new tactic though, Hermes said. Five years ago, the Department of Justice under President George W. Bush made similar threats to about 300 Los Angeles-area landlords who were renting space to medical marijuana outlets, some of whom were eventually evicted or closed their doors voluntarily, he said.

“It did have an impact. However, the federal government never acted on its threats, never prosecuted anybody, never even went to court to begin prosecutions,” Hermes said. “By and large, they were empty threats, but they relied on them and the cost of postage to shut down as many facilities as they could without having to engage in criminal enforcement activity.”

Besides the dozen dispensaries in San Diego and the one in Marin County, at least three shops in San Francisco already have received closure notices, said Dale Gieringer, director of the California chapter of the National Organization for the Reform of Marijuana Laws.

The San Diego medical marijuana outlets put on notice were the same 12 that city officials sued last month for operating illegally, after activists there threatened to force an election on a zoning plan adopted to regulate the city's fast-growing medical marijuana industry, City Attorney Jan Goldsmith said. A judge on Wednesday ordered nine of the targeted shops to close, while the other three shut down voluntarily, Goldsmith said.

Duffy, the U.S. attorney for far Southern California, planned to issue warning letters to property owners and all of the 180 or so dispensaries that have proliferated in San Diego in the absence of compromise regulations, according to Goldsmith.

“The real power is with the federal government,” he said. “They have the asset forfeiture, and that means either the federal government will own a lot of property or these landlords will evict a lot of dispensaries.”

Sunday Spin: Medical marijuana laws growing hodge podge

OLYMPIA – Whether she realized it or not last spring when wielding her “partial veto” pen, Gov. Chris Gregoire has prompted a hodge podge of pot laws around the state and a fair amount of confusion among the cities.

In Seattle, where possession of a small amount of marijuana is less likely to bring public condemnation than drinking mediocre coffee, medical marijuana dispensaries are being told to register as businesses, pay their taxes, meet building codes and comply with the Americans with Disabilities Act. But be advised: No smoking laws apply to smoking medical marijuana, too.

In Spokane, dispensaries are being raided by federal agents. There is a city ballot initiative supporting medical marijuana on file with the City Clerk, although sponsors managed to miss all deadlines for making this year’s ballot.

In Ellensburg, people who want medical marijuana are told to get a permit, grow it in an indoor collective garden that can’t be observed from public places and not within 300 feet of schools and other “youth oriented facilities.”

Castle Rock and Shoreline have some temporary rules for collective gardens while Issaquah, Kent, Kirkland, Maple Valley, Snohomish and Tukwila have temporary moratoria on such operations. Pullman might go the moratorium route this week….
  

Gov. says she won’t sign medical pot bill

SEATTLE (AP) — Gov. Chris Gregoire says she won't sign legislation to create licensed medical marijuana dispensaries in Washington state after the Justice Department warned it could result in a federal crackdown.

The two U.S. attorneys in the state told Gregoire in a letter Thursday that bills passed by the Washington House and Senate would permit large-scale marijuana growing and distribution systems in violation of federal law. They warned that growers, sellers, landlords and even state employees who license such operations could face prosecution.

Gregoire says there's no way she can sign a law that would open state employees to federal prosecution. But she says there are problems with the state's medical marijuana law that make it difficult for sick people to get the drug, and she'll cooperate with lawmakers to address those problems.

Past coverage:

April 7: Spokane medical marijuana dispenaries on federal notice

Medical pot bill passes w/o pizza clause

OLYMPIA – Rules for growing, processing and selling medical marijuana passed the Washington state House of Representatives after heated debate Monday on whether the proposed law has enough safeguards to prevent sales to children.

Read the rest of Jim Camden's story here.

The bill passed the House without an amendment proposed as a joke by Rep. Glenn Anderson, R-Fall City (pictured).

 The amendment would require the state to reimburse medical marijuana patients for the cost of pizza they ate while high on legal pot.

The Department of Health would reimburse the patient “no later than five business days after the patient submits a receipt for the pizza,” according to the amendment, which Anderson withdrew on Monday.

The department would not reimburse for delivery charges, tips or more than three toppings.

“For purposes of this section, “pizza” means a pie with a bread crust topped with tomato sauce, cheese, and various toppings,” according to the amendment. “”Pizza” includes Chicago style deep dish, New York style thin crust, and stuffed crust.”

Some advocates criticized the amendment has insensitive to medical cannabis patients; others found it humorous.

Feds warn local marijuana dispensaries

Medical marijuana dispensaries in Spokane face federal prosecution if they do not end their operations immediately, the U.S. Attorney’s Office announced Wednesday.

Federal authorities hope for voluntary compliance but are prepared “for quick and direct action against the operators of the stores,” according to a statement by Mike Ormsby, U.S. attorney for the Eastern District of Washington.

Federal authorities will target both the operators of the stores and the owners of the properties where the stores are located, he said.

“We intend to use the full extent of our legal remedies to enforce the law,” Ormsby said. Depending on the amount of marijuana, some federal crimes carry mandatory minimum sentences of 10 years or more.

Read the rest of my story here.

Pot advocates speak to City Council

Medical marijuana supporters on Monday urged the Spokane City Council to support local dispensaries after a jury convicted an owner last week of felony drug charges.

 Representatives from Spokane Indicare and other dispensaries said they fear being shut down after Scott Shupe was found guilty last Thursday.

Indicare co-owner Surisa Arispe said the dispensary has paid $10,000 in sales taxes in the six months it’s been open.

City Council President Joe Shogan said he has no control over the state’s medical marijuana law.

“You want us to do something we have no power to do,” Shogan said. “Really, you should be contacting your legislator.”

Though the Spokane County Prosecutor’s Office has said dispensaries are illegal, authorities say more than 40 are operating in the area. No law enforcement actions against dispensaries have been reported since Shupe was convicted.

Lawyer Pat Stiley, who works with dispensaries, said Monday that he’s hoping Senate Bill 5073, which addresses dispensaries, will proceed in the Washington Legislature this week and give amnesty to current operations.

Stiley compared the fear from dispensary supporters after the Shupe verdict to the fear gripping Japan in the wake of a tsunami, earthquake and potential nuclear catastrophe.

“As you can imagine after that verdict, there was a lot of terror and fear in the community,” Stiley said. “The dispensary community in Spokane sounded a lot like the northern Japanese communities to me.”

Verdict a blow to booming pot shops

Local marijuana dispensaries hoping to earn Spokane the nickname 'Spokansterdam' may be considering a vacation.

Jurors on Thursday convicted dispensary owner Scott Q. Shupe (pictured) of possession, delivery and manufacture of a controlled substance for his work at Change, the first commercial dispensary raided in Spokane.

Marijuana advocates and law enforcement were awaiting the outcome of the trial as the number of dispensaries has skyrocketed since Shupe's arrest. 

Shupe's lawyer, Frank Cikutovich, had said he “kind of” hoped Shupe lost so he could take the case to the Court of Appeals “to get a ruling on what the law means.”

Change co-owner Christopher P. Stevens was called as a witness for the prosecution but testified that Shupe never sold marijuana to more than one patient at a time and always kept receipts.

To avoid the debate over the meaning of the “at any one time” law, some dispensaries requires patients to sign a form appointing the dispensary as caregiver, then sign a form relinquishing them from caregiver duties after they receive the product because the law doesn't specify how long someone can be a caretaker.

Spokane police testified that Shupe was extremely upset when he was arrested in September 2009.

“He basically started yelling that he wasn't a criminal,” said Detective Larry Bowman. “He yelled that the President of the United States smokes marijuana, that the U.S. Attorney General doesn't prosecute marijuana cases. He also stated that we were all stupid, stupid bastards; using the f-word a lot…It was very difficult to calm him down.”

Soon, Shupe “again began yelling that the president smokes marijuana, and he was going to sue all of us,” Bowman said. Cikutovich pointed out that while Shupe was upset, he did not resist arrest.

Cikutovich's law partner, Pat Stiley, said any prospective jurors who indicated they supported the legalization of marijuana were eliminated from the pool at Shupe's trial.

Shupe is to be sentenced April 12. He still faces felony drug charges in Oregon after he was arrested during a traffic stop with 4 pounds of marijuana and more than $18,000.