San Jose, Calif., grappling with medical-pot law

City sees big increase in number of shops, with many accused of illegally profiting
2010-12-19T00:00:00Z San Jose, Calif., grappling with medical-pot law Arizona Daily Star
December 19, 2010 12:00 am

SAN JOSE, Calif. - As marijuana goes mainstream in communities across California, the state's third-largest city has become the next big battleground over the drug's future.

Medical-marijuana retailers this fall have faced raids and stings by narcotics agents who accuse them of old-fashioned drug trafficking, even as the San Jose City Council debated regulations for pot dispensaries and voters approved a cannabis tax to fill depleted city coffers.

The crackdown highlights a stubborn legal reality that persists despite a growing sense that storefront pot shops have become a permanent part of the California landscape: The law around medical marijuana is vague, and you can still get busted.

"They're trying to make money off it, and that's ridiculous," Bob Cooke, the state Bureau of Narcotics Enforcement agent overseeing the raids, said of the dispensary owners who have been targeted.

Medical-marijuana advocates say the raids have undermined efforts by dispensaries to comply with the law and to act as good neighbors who have much to contribute to the city's hard-hit economy.

Dispensaries shut down by law enforcement include members of the city's Medical Cannabis Collectives Coalition, a group that lobbies the City Council on behalf of dispensaries, said MC3 spokesman Paul Stewart. Dispensary owners in the group were acting in good faith and feel tricked by the raids, he said.

"We're stepping back saying we're the ones trying to work with you to come up with sensible regulations," Stewart said. "Now you're hitting the same collectives trying to help you and will ultimately generate revenue for you?"

Much of the confusion over the state law hinges on a provision that prohibits making a profit from medical marijuana. Dispensaries get around this by describing themselves as collectives or cooperatives and requiring patients to designate the dispensary a "primary caregiver."

Under the state's medical-marijuana law passed by voters in 1996, only a patient with a doctor's recommendation or that patient's primary caregiver can grow or obtain pot.

Raids decline elsewhere

Law enforcement critics complain that dispensaries - some with tens of thousands of members - are no more primary caregivers to their customers than are liquor store owners.

Still, raids on dispensaries have become increasingly rare, especially in other Bay Area cities such as San Francisco, Oakland and Berkeley, which have passed ordinances regulating pot shops like other small businesses.

San Jose officials by contrast have had difficulty reaching agreement on how to regulate dispensaries. This city of 1 million has seen an explosion in the number of pot shops in the two years since the Obama administration declared a hands-off approach in states where the drug is approved for medical use.

Santa Clara County prosecutor Frank Carrubba, who heads the narcotics enforcement division of the District Attorney's Office, estimates that San Jose has nearly 90 medical-marijuana dispensaries and the county more than 100 in all.

San Francisco, with a slightly smaller population, has about 30 dispensaries. Oakland, a city a little less than half the size of San Jose, has four.

"We're weeding out the people who are selling drugs. The ones who are providing medicine are allowed to exist," Carrubba said.

How police and prosecutors decide who is a drug dealer and who is a caregiver has become the main point of contention between investigators and the dispensaries in the San Jose cases.

Pot bought at street prices

County investigators spelled out their standards in a search warrant affidavit for a recent raid on the Angel's Care Collective in Santa Clara, a city of 100,000 neighboring San Jose.

District Attorney Investigator Dean Ackermann, an undercover officer, stated that he bought marijuana at Angel's Care multiple times without ever receiving any kind of health-care advice. The officer said he was charged $12 to $13 per gram of pot. He said that's more than 10 times the cost of cultivating a gram of marijuana.

If the dispensary was truly a collective, the affidavit said the undercover officer was never told how to participate.

The officer's "only involvement in the collective was to purchase marijuana at street-level prices," the affidavit said.

According to the affidavit, Angel's Care's operators told investigators they do not run the dispensary as a business and that all the money goes to cover utilities, wages for 15 employees and "donations" to collective members who supply the dispensary with marijuana.

The operators also told investigators that patients are not purchasing marijuana from the dispensary but are making donations.

At no point in the affidavit is Angel's Care accused of providing pot to anyone who does not have a physician's recommendation.

San Jose attorney Jim Roberts, who represents Angel's Care and two other raided dispensaries, said all were operating as nonprofits in full compliance with California law.

State law allows law enforcement agencies to take a cut of the assets seized in any bust involving illegal drugs.

Roberts is fighting the county's effort to confiscate the cash agents found at the dispensaries and in dispensary bank accounts frozen following the raids. The cash and other assets sought by the county total more than $200,000, Roberts said.

"What they're really after is money," he said.

Carrubba, the deputy district attorney, said his office's sole interest is prosecuting crimes.

Up to now, county prosecutors have charged 22 operators of medical-marijuana delivery services busted in a Craigslist sting with illegally selling marijuana. The owners of just one of the four dispensaries raided have been formally charged so far. Carrubba says that's because of the complexity of the financial records involved, but Roberts questions the strength of the cases against the dispensaries.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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