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Feds Locking In On California’s Marijuana Industry

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by Michael Montgomery, California Report

With demand for medical marijuana surging around the country, some cities and states are looking to license commercial growing, including in California. Local officials say regulating the industry protects public safety and is a good source of tax revenue. But now the Obama administration is pushing back.

Last October business and city leaders gathered with medical marijuana growers and activists in a gritty industrial compound in east Oakland.

With DJs on hand, the crowd was inaugurating a super-store for pot growing supplies — and celebrating plans to open four industrial-scale medical pot farms under a new city ordinance.

Oakland Mayor Jean Quan spoke at the event, welcoming the potential tax windfall.

“When these cultivation facilities come online, we’re estimating in the first few years five to eight million dollars. Now that’s a sizeable chunk of change and it’s going to be an important part of this city’s economy,” said Quan.

Eight months later, Oakland’s plans are in tatters following stern warnings from the U.S. Justice Department that licensing of commercial marijuana growing, even for medical use, violates federal law.

At a large industrial park just off the Oakland’s 880 Freeway, developer Jeff Wilcox walks into a giant concrete and glass warehouse. It’s empty.

“This building was dubbed the football field of cannabis during our heyday. We were going to have 380 employees, and the average pay was about $52,000 [a year] per person,” said Wilcox.

Wilcox thought the facility would be safe from the feds as long as the operation closely complied with the city’s regulations and state laws. But today he sees things differently.

“The industry is scared that there’s a big push back coming against us,” said Wilcox.

obama pot

The push back isn’t just against Oakland. Recently, the Justice Department warned officials in eight other states that they would be violating federal law if they allowed commercial production of medical marijuana.

“That, in very simple terms, is what drug traffickers do. That is drug trafficking period,” said Tommy LaNier, director of the National Marijuana Initiative, a program funded by the White House Office on Drug Control Policy.

LaNier says the tripwire for the Feds’ tough new posture came last year after Californians narrowly rejected Proposition 19, a measure to legalize recreational pot use. He says officials then zeroed in on local medical marijuana schemes like Oakland’s, and decided to threaten prosecution.

“They’re not going to go after someone who’s standing on the corner or in their home using marijuana. This is going to be targeting those individuals who are facilitating production, trafficking, engaged in the distribution,” La Nier said.

LaNier says the Justice Department letters state pointedly that even local officials could face criminal charges. But Jay Rorty, an ACLU attorney, says those warnings violate previous assurances from the Feds.

“It’s important that the DOJ makes clear that people who are complying with valid state law do not fear federal prosecution,” Rorty said.

Rorty and others insist that was the promise made in a 2009 Justice Department memo, which essentially stated: comply with state law and the feds won’t prosecute you. But Justice Department officials are saying the exemption only applies to seriously-ill people, not commercial growers and not medical marijuana distribution outlets.

Benjamin Wagner, the US Attorney for California’s Eastern District, says the Justice Department will enforce federal law.

“We’ve met with the DEA in this regard. People from Washington have been out to California to coordinate a statewide enforcement strategy,” Wagner said.

It’s unclear whether the Feds will target the state’s most established medical marijuana operators, like Harborside Health Center in Oakland.

Medical Marijuana

On a recent afternoon at Harborside, dozens of customers were eagerly inspecting gleaming glass cases displaying well-manicured marijuana buds. Despite a grueling audit battle with the IRS, owner Steve Deangelo says Harborside is turning over millions of dollars in sales each month. Still, he says, medical marijuana remains a risky business.

“Until federal law changes, this is not an industry, it’s a movement. And anybody who gets involved in distributing medical cannabis has to be prepared to be arrested and have a monumental challenge on your hands,” said Deangelo.

Oakland city officials say they haven’t given up on plans to license marijuana cultivation. But for his part, developer Jeff Wilcox says the Feds’ warnings have scared off people who wanted to invest in a legitimately regulated business.

“You want to try to start an industry and then you have the IRS working against you, the federal government working against you — you’ve got a real problem,” said Wilcox. “So the problem is if you don’t grow this industry what happens is that it remains a black-market industry, and it’s always going to be that way.”

Medical-marijuana supporters are calling on the Obama administration to clarify the recent warnings. Sources close to the Justice Department say Attorney General Eric Holder is planning to do just that, in a letter that will be released soon.

Obama Still Targeting Medical Marijuana Dispensaries

In 2009, the Obama Administration announced a new federal policy regarding marijuana in states in which medical marijuana has been legalized. The policy statement instructed federal prosecutors not to devote federal resources to prosecuting those who use or supply medical marijuana in strict compliance with state law. At the time, Ilya and I praised the new policy, though Ilya was quite skeptical it would make much difference.

Since the policy it was announced, it appears the policy has been difficult to maintain, and prosecutions of medical marijuana distributors has continued, largely because the federal government fears that some marijuana distributors are serving more than the medicinal marijuana market. As the NYT reports, federal prosecutors appear to be escalating efforts to go after marijuana distributors in medical marijuana states.

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. . . .

Letters so far have gone out to governors in 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 for guidance from the state’s two United States attorneys, Mike Ormsby and Jenny Durkan. In a 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 has not technically changed its position.

The Justice Department claims there has been no change in policy. Marijuana has remained illegal under federal law, and prosecutors have continued to pursue larger and more conspicuous dispensaries without much regard for state law, prompting increasing conflict with state officials. In the meantime, state level efforts to decriminalize medical marijuana continue apace. There’s now talk of a ballot initiative here in Ohio. So the federal state tension will continue.

Is there a better way? Yes, but it would be difficult to implement without legislation. Here’s what I suggested in 2009:

The Justice Department has to set prosecutorial priorities, as there are more federal crimes on the books than federal prosecutors can ever hope to prosecute. The aim should be to focus federal resources in those areas where there is a distinct federal interest, or where the federal government has a comparative advantage of state and local law enforcement. Where federal law conflicts with state law, prohibiting activities state laws allowed, federal efforts should still focus on those instances of alleged lawbreaking where there is a distinct federal interest, including spillover effects on neighboring jurisdictions.

The federal government has a legitimate interest in controlling interstate drug trafficking, but no particular interest in prosecuting those who seek to provide medical marijuana to local residents pursuant to state law. So it only makes sense for the Justice Department to tell federal prosecutors to focus their efforts on those who are not in compliance with state law, such as those who use medical marijuana distribution as a cover for other illegal activities, interstate drug trafficking in particular. California should be free to set its own marijuana policy, but the federal government retains an interest in preventing California’s choice from adversely affecting neighboring states.

Ideally, the federal government would treat marijuana like alcohol, retaining a federal role in controlling illegal interstate trafficking but leaving each state entirely free to set its own marijuana policy, whether it be prohibition, decriminalization, or somewhere in between.

Using Marijuana for Pain With No Possible High: Study

A new U.S. study has paved the way for cannabis that relieves pain but doesn’t get you high.

“The psychoactive effects of marijuana is the major issue that limits, across the country, the use of medical marijuana in the treatment of different diseases,” said Li Zhang, who headed up the research at the National Institute on Alcohol Abuse and Alcoholism in Bethesda, Maryland.

The study, published in the journal Nature Chemical Biology, claims to debunk the long-held belief that the therapeutic and psychoactive effects of pot are mutually exclusive.

Tetrahydrocannabinol (TCH) is the key ingredient in marijuana that makes people high, said Zhang. It works by binding to molecular anchors on cells called cannaboid type-1 receptors.

It was thought that this process also relieved pain, but Zhang says marijuana has over 400 chemical compounds that provide therapeutic relief for a number of disorders, such as chronic pain, seizures, depression and muscle spasms from multiple sclerosis.

These compounds, he says, could target different receptors in the brain. Figuring out what compounds target which receptors is the key to crafting cannabis-based medicine for different disorders, but without the usual side-effects associated with recreational pot smoking.

The study found the glycine receptor might be the primary target for pot’s painkilling effects. When Zhang’s team blocked glycine receptors on mice dosed with cannabis, the animals still felt pain.

The next step is to test his theories on different animals using different strains of marijuana. The goal is to find the strain that has the strongest pain-relieving component.

“That may support my prediction that different strains of marijuana, some might be more potent in reducing pain but less so in causing psychoactive effects,” Zhang said.

Zhang said if other research teams pick up where he left off, they could narrow down the targets for marijuana’s other therapeutic effects, leading to the creation of all sorts of cannabis-based therapeutic medicine.

“The effects of medical marijuana can be separated if the target can be located,” he said. “Find the target, and based on the target, you can develop new medicines.”

Vale Tudo says: Well there goes all of the fun in smoking weed 😦 Please don’t be true!

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