How Prop. 19’s Mega Grows are Creating a Federal Backlash Against Medical Marijuana

By Dragonfly de la Luz

When the US Attorney General’s office issued a memo in October 2009 stating that US Attorneys “should not focus federal resources… on individuals whose actions are in clear and unambiguous compliance” with state medical marijuana laws, patients and advocates across the nation exhaled a collective sigh of relief. To many, this was viewed as a policy change that indicated that the Obama administration was relaxing its stance on medical marijuana. But the messages in the Memo were mixed, to say the least.

Known as the Ogden Memo, the briefing laid out a clear distinction between medical marijuana patients/their caregivers—which it tacitly condoned—and commercial enterprises (those which “unlawfully market and sell marijuana for profit”)—which it explicitly condemned. Since in many states medical marijuana is required by law to be non-profit, law-abiding dispensaries believed they were in compliance with the Ogden Memo. But the Memo never actually protected or even mentioned non-profit commercial enterprises, which dispensaries, whose prices are often listed as “donations,” are generally considered to be.

One would be remiss to suggest that the Ogden memo represented a “hands-off” policy on medical marijuana, but it certainly seems that we are now witnessing something akin to a “gloves are off” policy. While federal prosecution of medical marijuana dispensaries never completely ceased even with the release of the Ogden Memo, the Obama administration did tone down the rhetoric. Nevertheless, since February, threats and raids have been dramatically on the rise. If the Ogden Memo reflected the stance of the Attorney General and the Department of Justice in 2009, what’s behind the recent spate of federal raids on medical marijuana dispensaries across the country?

Over the past few months, several US Attorneys have sent threatening letters to officials in at least eight medical marijuana states—Arizona, California, Colorado, Hawaii, Montana, Vermont, Rhode Island, and Washington—prompting at least one of them—Washington’s Governor Chris Gregoire—to veto a voter initiative that would have allowed dispensaries for the first time since the state legalized medicinal use of the plant in 1998. What provoked this new wave of hostility? The answer is shockingly ironic.

The 2009 Ogden Memo came directly from the US Attorney General’s office in the Department of Justice, and was sent to federal attorneys in all 50 states. Although the Memo essentially called for respect of state medical marijuana laws, it could not demand it, because ever since 9/11, US Attorneys have been given the broadest discretion in the exercise of their authority. Still, more than a year passed in relative calm, until February of this year. That’s when a letter that became known as the Haag Memo was released, not directly from the Obama Administration’s Department of Justice as the Ogden Memo was, but from the San Francisco office of Melinda Haag, US Attorney for the Northern California district. Vowing to “enforce the CSA [Controlled Substances Act] 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 Haag Memo was widely, though not necessarily correctly, considered to clarify the Ogden Memo. It has since emboldened US Attorneys across the nation to compose similarly threatening letters directed at state officials in fully half the country’s medical marijuana states, causing many to reconsider or even change their medical marijuana laws.

Only four days after the Memo was released, the DEA raided several dispensaries in California, followed by more than two dozen raids in Montana. But after the long period of the Justice Department’s tacit acceptance of legal medical marijuana, what prompted the Haag Memo? This is where the irony sets in.

The Haag Memo was not an unsolicited threat to a state that was quietly complying with its medical marijuana laws. On the contrary, it was a very directly solicited threat, to a city that was blatantly attempting to contravene state medical marijuana law. A little-publicized fact is that the Haag Memo was issued in response to a letter written by John A. Russo, Esq., Oakland’s City Attorney, on behalf of the Oakland City Council. In his letter, Russo informed the US Attorney that Oakland had approved a licensing scheme that would allow for the creation of four industrial, corporate marijuana “mega grows,” and essentially asked Haag for clarification on the law surrounding this idea. The Haag Memo, which has served as a template for other US Attorneys to send similar pugnacious letters to state officials, is her response.

Mega grows came into public consciousness with last year’s Prop. 19 initiative to tax and regulate recreational cannabis. Jeff Wilcox, retired businessman who sat on the steering committee for the failed initiative, had a very ambitious plan to supply a large segment of the California population with recreational and medical marijuana if Prop. 19 were to pass. Whereas the state’s medical marijuana industry is mandated to be non-profit, Wilcox was repeatedly quoted in major media sources as acknowledging that he intended to bring some “corporate structure” to the marijuana industry, and that his mega grow’s expected profit margin was “extremely high.” Furthermore, this venture into the corporatization of cannabis was projected to make $59 million a year off producing a mind-boggling 58 pounds of marijuana per day. This was a clear departure from medical marijuana’s non-profit—and thus, tolerated—roots, and, as we will see later, it was also a flagrant violation of the Ogden Memo’s fragile truce.

According to Wilcox, he landed a seat on the Prop. 19 steering committee when he approached Richard Lee, bankroller and mastermind behind the initiative, with “a check for $10,000 and said, ‘I want in on anything I can do.’” (Some news sources say he later doubled that donation.) He hired a lobbyist, made some strategic political donations, and won over City Council in spite of strong resistance from state-compliant medical marijuana growers whose livelihood depended on supplying the Oakland market, and intense opposition from some marijuana activists who perceived the ordinance—which prohibited any other collective indoor grows over 96 square feet and was adopted alongside a resolution that demanded a crackdown on “unregulated” (not “illegal”) small grows—as creating a monopoly. The entire Prop. 19 team—which mostly consisted of millionaire Richard Lee (co-author), Jeff Jones (co-author), and Dale Sky Claire Jones (official spokesperson and Jones’s wife)—loudly endorsed for-profit mega grows, with Jeff Jones telling the New York Times, “It’s big business; you’re talking about manufacturing gold.”

Four months before Prop. 19 would fail, when City Council approved his mega grow scheme, a cocksure Wilcox boasted, “In essence, you could say big business is here… Look at me. The only thing I was, was a fan of the plant, really, a year and a half ago. And now I’m probably one of the top ten guys in California in this business. And you know why? Because I know how to move a little policy.” But he wasn’t able to move enough people to vote for Prop. 19, many of whom were leery about the prospect of corporatizing cannabis.

Although Oakland approved the plan for mega grows when the city was at the epicenter of a legalization effort that they assumed would succeed, even after Prop. 19 was defeated, City Council was still seeing the dollar signs they had hoped taxing recreational marijuana would bring. So instead of put the idea of corporate mega grows to rest along with the failed initiative, the city persisted in its efforts to create a corporate licensing scheme, now under the guise of medical marijuana, from which they still intended to gain millions in tax revenue. The ordinance was altered to require that Wilcox open a medical marijuana dispensary in order to operate his mega grow, and he re-registered his corporation as a non-profit. But all of his media appearances flaunting his projected earnings and corporate aspirations had already revealed his for-profit intentions.

Oakland City Attorney John Russo himself acknowledged that the venture was intended to be for-profit in his post-Prop. 19 statement to the City Council: “Because Proposition 19 failed, you can’t do things that you might have done. And that is certainly the case with for-profit licensing of the production of cannabis.” He also reportedly advised them that their proposal was incompatible with California medical marijuana law. Still, City Council insisted that Russo write a letter detailing Oakland’s plans to California US Attorney Haag, asking for guidance on how to proceed with what was very obviously a plan to industrialize, corporatize, and capitalize on cannabis under the false pretext of a non-profit medical marijuana model. And they roused a sleeping dragon.

The letter that Haag wrote in response was in some ways a definite departure from the Ogden Memo. But, as regards for-profit grow operations masquerading as non-profit medical organizations, it actually echoed what the Ogden Memo said in 2009: “[N]othing herein precludes investigation or prosecution where there is a reasonable basis to believe that compliance with state law is being invoked as a pretext for the production or distribution of marijuana for purposes not authorized by state law.” Since California does not authorize for-profit marijuana manufacture and distribution, and since Oakland’s mega grow scheme was clearly intended to be a for-profit venture, Haag’s response on that point was not inconsistent with the Ogden Memo.

The Ogden Memo further reinforces its stance against for-profit marijuana dispensaries in its principle statement: “[P]rosecution of individuals with cancer or other serious illnesses who use marijuana as part of a recommended treatment regimen consistent with applicable state law, or those caregivers in clear and unambiguous compliance with existing state law who provide such individuals with marijuana, is unlikely to be an efficient use of limited federal resources. On the other hand, prosecution of commercial enterprises that unlawfully market and sell marijuana for profit continues to be an enforcement priority of the Department” (italics added). The Ogden Memo even clarifies that one characteristic of conduct that is not in clear and unambiguous compliance with state law would be “financial gains or excessive amounts of cash inconsistent with purported compliance with state or local law”—a category that Wilcox’s proposed $59 million mega grow unquestionably falls under.

The City of Oakland presenting Haag with such a proposition might well have been interpreted as a deliberate act of dishonesty that undermined the federal government’s tenuous truce with medical marijuana. Russo seems to have been sensitive to this; just days after the Haag Memo was released, when the City Council insisted on redrafting the initiative to allay federal concerns, he abruptly withdrew his legal advice and told the them to find a new attorney. Although Russo did not specify which section of Rule 3-700 he was using to terminate his relationship with the City Council, section C (1) states that an attorney may withdraw legal representation if “the client seeks to pursue an illegal course of conduct.”

The effects of the Haag Memo reverberated swiftly into the halls of the Department of Justice. Shortly after the Haag Memo was released, Justice Department spokeswoman Tracy Schmaler said in a statement that prosecutors will not look the other way while “drug-traffickers” try to shield their illegal activities through the pretext that they are medical dispensaries. And what would make the DOJ think that organizations might be trying to illegally profit from cannabis under the pretense that they are medical dispensaries? How about a mega grow originally conceived of to provide recreational cannabis, that plans to pocket $59 million a year off of 58 pounds a day? If anyone doubts that Oakland’s Prop. 19-inspired mega grow concept is entirely to blame for this federal backlash, the Haag Memo states very plainly that it is:

“The Department is concerned about the Oakland 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, individuals who elect to operate ‘industrial cannabis cultivation and 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 injunctive actions 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.”

Now, due entirely to Oakland’s mega-grow attempt to cultivate illegal for-profit marijuana under the pretext of non-profit medical marijuana, the lines have been blurred with regard to which dispensaries are genuinely operating as legal medical marijuana collectives and which are merely pretending to be. The Ogden Memo sought to stop prosecution of individuals operating in “clear and unambiguous compliance” with state law. But an industrial-scale corporate mega grow with projected earnings of $59 million annually is not so obviously compliant, and is causing the legitimacy of medical marijuana dispensaries everywhere to be called into question. State US Attorneys have therefore been roused like never before to crack down on medical marijuana dispensaries.

It is worth pointing out that the Haag Memo was never intended to be construed as setting federal policy, like the Ogden Memo—to the extent that it was sent down from a federal department to all US Attorneys beneath it—was. The Haag Memo was CC’d to no one outside of California, and was written in response to a question of the legality of a city ordinance, not state law—and an ordinance that flies in the face of state law and is in clear violation of the Ogden Memo’s conditions, at that. Nevertheless, since its release in February, Haag’s response has set off an ominous trend among US Attorneys in medical marijuana states. Colorado’s US Attorney sent out a similar memo saying that the DOJ maintains “full authority to vigorously enforce federal law against individuals and organizations that participate in unlawful manufacturing and distribution activity involving marijuana, regardless of state law”—and the italics, it should be noted, are in the original letter; not added by me for emphasis, but added by the Colorado State Attorney to highlight the fact that it is a direct quote from Haag. The letters from US Attorneys in Hawai’i, Montana, Rhode Island, and Washington also directly quote large segments of the Haag Memo. In fact, every single letter that followed the Haag Memo is not only similar, but virtually identical to the Haag Memo, excerpting and repeating entire paragraphs. And they have culminated in an unprecedented attack on medical marijuana dispensaries throughout the country.

Oakland’s actions blatantly opposed the Ogden Memo, which encouraged federal law enforcement to go after groups like the ones Oakland was trying to create, because such groups claim compliance with state law although their operations are actually inconsistent with the terms of those laws. A corporate, industrial mega grow designed for massive profits operating under the guise of the non-profit medical marijuana model is a clear example of a “claim of compliance” that actually “mask[s] operations inconsistent with” state law. And the Oakland City Council essentially wrote a letter to Northern California’s US Attorney to tell her so. Now Haag’s response, which was never intended to set federal policy, has been misconstrued as doing just that, giving US Attorneys a fresh excuse to come down hard on medical marijuana states.

While much of the Haag Memo is in fact not a departure from the Ogden Memo, there is one critical phrase which Haag introduces that effectively disavows the one morsel of perceived protection that medical marijuana patients and dispensaries had been relying on since 2009. Whereas the Ogden Memo states: “As a general matter, pursuit of these priorities should not focus federal resources in your States on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana”(italics added)—which could include the use, cultivation, and distribution of state-compliant, non-profit medical marijuana—the Haag Memo makes a very different and distressing declaration: “[W]hile 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 (italics added).”

This distinction—“even if such activities are permitted under state law”—is a critical one, and is the single phrase that is seen to reverse the Ogden Memo. While Ogden deliberately made an effort to acknowledge and respect state marijuana laws, Haag patently ignores them where cultivation and distribution are concerned. It appears that the disregard for state law initiated by the Haag Memo is a direct attempt to undercut Oakland’s enacting legislation that itself undermined state law and clearly contradicted the Ogden Memo.

Never mind that Haag herself apparently does not grasp the fact that it is a contradiction to condone the “use” of marijuana medicinally while simultaneously condemning the manufacture and distribution of it, when in reality the three components are inextricably linked. Her lack of faith in the notion that medical marijuana dispensaries can distribute medicine while still complying with state law has only been reinforced by Oakland’s insistence that a $59 million a year corporate industrial grow intended for recreational use is actually non-profit and for medical use.

Now that it is understood how the medical marijuana movement landed in this quandary, it is crucial to notice the stark difference in the way the feds respond to medical marijuana versus perceived recreational commercial activity. Though life for patients has never been worry-free since medical marijuana has been legal, the Department of Justice at least encouraged that state laws be respected and federal resources be directed away from innocent patients and those who supply them, toward groups out to illegally get rich off cannabis. In light of these contradictory Memos, what is needed now is unambiguous clarification from the Department of Justice itself. The ACLU has demanded this, but no response has yet been given. So far, the only piece of this puzzle that truly is “clear and unambiguous” is that mega grows were never intended to be for medical marijuana—the idea was conceived based on their failed hope that Prop. 19 would pass. Now their corporate aspirations have gone up in flames, and patients in all medical marijuana states are getting burned.

onward to FULL LEGALIZATION IN 2012!

http://dragonflydelaluz.blogspot.com/

prop. 19 was a tragically flawed initiative that ultimately defeated itself by being so poorly written as to be a pandora's box of unintended consequences. still, we can learn from its mistakes to draft a better initiative for 2012. we are already working to get the California Cannabis Hemp and Health Initiative (also known as the Jack Herer Initiative) on the ballot. support it here: http://www.youthfederation.com/cchhi2012.html

let us not forget that WE ARE ALL FOR LEGALIZATION! our differences in opinion about the best route to achieve legalization must not get in the way of our working in unity to develop a new plan--one that favors people over corporations.

we are grateful that SB 1449 has made possession of 1 oz--the same amount prop. 19 would have allowed--a civil infraction, with the same non-criminal status as speeding. that means no one in california will go to jail for possession of 1 oz or less--including young adults age 18-21 (who made up 49% of marijuana possession arrests in 2008). we are also grateful that we have not ignited the ire of the federal government, which threatened to impinge upon our rights if prop. 19 had passed. now we are free to come together united to achieve FULL LEGALIZATION IN 2012.

thank you to all who saw prop. 19 for what it was and stood up against it, even in the face of ostracism from some members of the cannabis movement. i look forward to working with all cannabis activists and enthusiasts to bring TRUE LEGALIZATION IN 2012!

KEEP POT FOR THE PEOPLE ~ and ~ CORPORATIONS OUT OF CANNABIS

puff, puff, pass,
dragonfly

http://dragonflydelaluz.blogspot.com/