Late last week US attorneys announced a crackdown on the “large, for-profit medical marijuana industry” in California.

From CNN…

[The attorneys sent] letters of warning to landlords and lien holders of places in which marijuana is being sold illegally, “civil forfeiture lawsuits against properties involved in drug trafficking activity” and numerous criminal cases. The latter refers to arrests in recent weeks related to cases filed in federal courts in Los Angeles, San Diego, Sacramento and Fresno, all part of an effort that [US attorney Benjamin] Wagner claimed has resulted in the seizure of hundreds of pounds of marijuana, tens of thousands of plants and hundreds of thousands in cash.

In 1996, California became the first state in the US to legalize medical marijuana, and since then, dispensaries and growing operations have multiplied and prospered in California. In a domino effect, 15 states– including Arizona– have followed suit and created boutique laws regulating the sale, cultivation, and distribution of medical marijuana, AND cities and counties have created lower tiers of regulations to control where dispensaries and growing operations can be located and who can grow their own marijuana.

Even with layers upon layers of legislation, the bureaucrats and politicians have not been able to really control the spread of marijuana use. According to US government statistics, 16.7 million Americans 12 and older used marijuana at least once in the previous month (2009 data). Marijuana is believed to be the most widely used illegal “drug” in the US.

A poll released in August 2011 revealed that 55% of Americans support full legalization of marijuana– with Democrats (63%-33%)  and Independents (61%-34%) favoring marijuana legalization and most Republicans (46%-56%) oppose the change. An ABC News poll from 2010 showed 81% of Americans support medical marijuana. Many states, counties, and cities have decriminalized possession of small amounts of marijuana.

With such widespread use of marijuana, majority support for legalization, and a burgeoning industry: What’s the big deal? Why are the feds cracking down now, when they have allowed this industry to grow and spread for 15 years? Because they’re making money. Legislation in California, Arizona, and other states dictates that medical marijuana should be a nonprofit industry. (What’s up with that? Aren’t we a country of capitalists?)

From FOX News in LA…

Pot shops around Southern California have been raided, including a growing operations in Riverside County. In Orange County, federal agents moved to seize a property in a forfeiture action on Thursday, and Drug Enforcement Agents raided several shops in San Diego County.

Federal agents announced Friday that medical marijuana shops operating outside of state law must close within 45 days or face civil and/or criminal prosecution.

“While California law permits collective cultivation of marijuana in limited circumstances, it does not allow commercial distribution through the store-front model we see across California,” U.S. Attorney Andre Birotte Jr. said yesterday.

Warning letters have been mailed to dozens of pot shops and landlords that have been targeted.

Marijuana advocates said it was waste of federal resources.

A year or more ago, as many as 1,000 pot shop were in business in and around Los Angeles as confusion reigned over state and local laws regulating marijuana.

Back to my question: Why crack down now? My personal theory is that this is all Governor Jan Brewer’s and Arizona Attorney General Tom Horne’s fault. Arizona voters legalized medical marijuana in 2010– much to the chagrin of our Nanny State government. Since that passage, the state, county, and city governments in Arizona have thrown up dozens of roadblocks to implementation (ie, strict local zoning laws for dispensaries and growers, licensing fees*, a steep $130 annual fee* for medical marijuana cards, physician referrals, etc.)

The biggest roadblock Horne and Brewer could come up with was a full-on legal challenge to the federal government (something Arizona relishes). Horne and Brewer are asking the feds to clarify the question of legality. How can medical marijuana be legal, when marijuana is illegal? Can state employees be arrested for participating in the distribution of marijuana? Even though 1000s of Arizonans have jumped through the hurdles, paid the annual fee, and now hold a medical marijuana cards, Horne has halted implementation of the law until he receives a ruling from the federal government.

The federal government’s stance on medical marijuana is untenable. In some ways, the policy of looking the other way while marijuana use proliferates is like the government’s Don’t Ask Don’t Tell policy. “Hide your sexuality, and we won’t prosecute you.” “Hide that joint, and we’ll pretend you’re not smoking pot.”

US attorneys are challenging and shutting down a well-established, wide-spread, successful industry in because distributors are making money– not unlike the German brewers who were targeted by the temperance movement. Except for the temporary prohibition of alcohol– which led to widespread illegal use– what other product or industry has been persecuted like this?  The sale of other mood-altering and sometimes-addictive drugs– pharmaceuticals, alcohol, and tobacco– is legal in the US and those industries do not have nonprofit status forced upon them. Why marijuana?

Maybe the time has come for legalization. I believe that the US attorneys are forcing a lawsuit (or multiple lawsuits) by cracking down on the country’s largest medical marijuana businesses. The patchwork of marijuana laws across the US is silly and inefficient, and the nonprofit requirements for medical marijuana are contrary to the country’s pro-business, for-profit underpinnings.

Many progressives have been disgruntled with President Obama’s conciliatory behavior toward Congressional conservatives; they feel that he has too often given in or compromised too early. Obama’s administration is not without progressive milestones. He increased the minimum wage, passed landmark healthcare reform, passed banking reform, repealed Don’t Ask Don’t Tell, extended unemployment benefits, funded 1000s of teacher salaries and other public jobs when the states went broke, caught Osama bin Laden, tried to pass the DREAM Act, and continues to try to protect social safety net programs from Republican raids. What if he brought home the big kahuna– legalization of marijuana?

One of the reasons President Roosevelt and progressives repealed the prohibition was that the country needed that tax revenue from the sale of alcohol; our country could use the tax revenue from the sale of legal marijuana now. For this reason, some economists have predicted that legalization of marijuana is inevitable.  Tom Horne and Jan Brewer may have pushed this issue forward.

*P.S. The 1000s of medical marijuana cardholders who have paid $130 for a card and the dozens of businesses who have rented space and paid state fees and have been prohibited from conducting legal business by Horne’s political lawsuit should sue the state.

Wednesday evening, I posted a story about the proposed 300% tax on medical marijuana, which blew up in the Citizen comments section and on state representatives’ facebook pages over night.

The story in today’s Arizona Daily Star corroborated my story and offered more details.

Basically, Attorney General Tom Horne is using a loophole in Prop 203 (the medical marijuana law that voters passed in 2010) on which to base his sales tax ruling. The law says would-be medical marijuana patients can get a “doctors’ recommendation” for the drug– not a prescription. Prescriptions are not taxable; doctors’ recommendations are. (This is like saying your doctor recommended aspirin or multi-vitamins; when you go to buy the aspirin or multi-vitamins, they are subject to sales tax.)

Horne estimates that applying Arizona’s base sales tax + any applicable city sales taxes could bring in $40 million, a figure he extrapolates from sales in Colorado.

OK, fine, charge regular sales tax. My real issue is with Democratic State Representative Steve Farley’s proposal for a 300% sales tax on medical marijuana. Farley justifies this rate because it is the same rate as the state charges for cigarettes. There are several disconnects here.

• Tobacco is highly addictive and kills more people in the US than all other substances combined. Public health advocates have pushed for ever-high tobacco taxes to encourage people to quit; cost is a research-based strategy. Originally, in Arizona and elsewhere, these tobacco tax revenues were used to prevent teens from starting to smoke, to help people quit smoking, and to treat the indigent with tobacco-related diseases. Arizona and other states have just about wiped clean all those public health programs.
• Medical marijuana is a medicinal plant which provides palliative care to seriously ill patients, and its use by patients will be guided by a physician. It is not a life-threatening drug like tobacco. (Seriously, if the government took an honest look at the death and costs associated with tobacco-smoking, IT would be illegal.)
• Why would you apply a tax rate that is designed to discourage use of a dangerous product to a plant that helps cancer and AIDS patients with their treatment?

I agree with Andrew Myers, who managed the Prop 203 campaign, when he says the 300% tax would put medical marijuana pricing out of reach of most people– thus killing the goose that laid the multi-million-dollar golden egg– and when he disputes Farley’s $40/ounce base price for medical marijuana. Myers calls $40/ounce a “myth”; I’d call it 1975 pricing. My sources near the university say marijuana is sold for $40-60 for 1/8 ounce.  Let’s do the math for the low end price…

$40 (per 1/8 oz) x 8 = $320/oz x 2.5 oz (the amount people are allowed to buy every 2 weeks) = $800 x 300% sales tax = $2400 every 2 weeks.

This pricing would encourage the continuation of street sales. I think medical marijuana should be taxed the same as other herbal remedies (ie, ginkgo biloba, echenichia, St. John’s Wart, garlic, etc.)– 6.6% + applicable city taxes. (I can’t believe I just sided with Tom Horne.)

From the Star article…

“We’re not wild about the idea of increasing the cost of what essentially is medication for seriously ill people,” he said, but no challenge is planned.

But Myers said what Farley wants would be challenged as illegal.

He said it’s one thing to tax marijuana like other products. A special tax, Myers said, runs afoul of a constitutional provision barring lawmakers from altering voter-approved measures.

Farley, however, said the tax is justified. He said a 300 percent levy puts the tax on marijuana at the same general level as the tax on cigarettes, which are subject to a $2-per-pack levy.

“People use cigarettes as an over-the-counter medication for various types of things,” he said. He also doubts imposing the tax alters what voters approved.

Anyway, Farley said, those who really need the marijuana won’t mind paying the extra fee. He figures marijuana sells for $40 an ounce, meaning the sales price, tax and all, would be $160.

Myers said $40 marijuana is a “myth,” and the actual price at dispensaries will be 10 times that, putting medical marijuana out of reach of many in need, particularly since the drug is not covered by health insurance.

Arizona Attorney General Tom Horne announced today on the John C. Scott Show that it would be legal in Arizona to impose sales tax on medical marijuana. Although drug prescriptions are not subject to sales tax in Arizona, Horne said the medical marijuana law does not label the medical marijuana prescriptions specifically as a “prescription.”

At first I was annoyed but not surprised by this political maneuver from Horne. In my opinion, if medical marijuana is provided to a patient to alleviate symptoms of disease or symptoms of treatment– which is how the law is written– then it should be considered a drug and, therefore, not taxable. If marijuana were legalized and considered a recreational drug like alcohol or tobacco, it should be taxed at the same rate as other consumer goods (6.6%), which is the tax rate that I thought Horne was suggesting.

But no, that is not the case. In the Arizona Legislature today, several representatives– including southern Arizona Democrats Steve Farley, Bruce Wheeler, Olivia Cajero-Bedford, and Paula Aboud and others– sponsored a bill to charge 300% sales tax on medical marijuana– not the normal 6.6% base state sales tax. (How can this be legal?)

All I can say is WTF are you thinking? Do you have any idea how expensive cancer treatment is? Why would you think it appropriate to add 300% sales tax on one of the few (hopefully) affordable drugs available to these poor people? This is unconscionable.

Loyal readers, it’s time to contact the Arizona Legislature. Here is contact information for the Arizona House of Representatives (where Farley and Wheeler are) and the state Senate (where Aboud, Cajero-Bedford and Kyrsten Sinema [from Phoenix] are). For a full list of sponsors, check out the bill here.

I agree with the Phoenix Chapter of NORML, HB2557 should be called the Drug Cartel Empowerment Act because all it will do is promote the marijuana black market, supplied by violent cartels.

UPDATE: Since this article was published, both Wheeler and Sinema have told me they no longer support HB2557. For further details, check out this follow-up story.

Televangelist Pat Robertson (Photo Credit: Beliefnet.com)

On a recent 700 Club show, televangelist and standard bearer for the Christian right, Pat Robertson, mused about the folly of criminalizing pot use and mandatory sentencing. (No, this is not a joke.)

Robertson has a history of crazy talk– like when he said Haitians had made a “pack with the devil” and that is why their country was destroyed by an earthquake early in 2010.

Here is what Robertson has to say about tough-on-crime laws that turn youth into hardened criminals– because they were caught taking “a couple of puffs of marijuana.”

“It got to be a big deal in campaigns: ‘He’s tough on crime,’ and ‘lock ‘em up!’” the Christian Coalition founder said. “That’s the way these guys ran and, uh, they got elected. But, that wasn’t the answer.”

His co-host added that the success of religious-run dormitories for drug and alcohol cessation therapy present an “opportunity” for faith-based communities to lead the way on drug law reforms.

“We’re locking up people that have taken a couple puffs of marijuana and next thing you know they’ve got 10 years with mandatory sentences,” Robertson continued. “These judges just say, they throw up their hands and say nothing we can do with these mandatory sentences. We’ve got to take a look at what we’re considering crimes and that’s one of ‘em.

“I’m … I’m not exactly for the use of drugs, don’t get me wrong, but I just believe that criminalizing marijuana, criminalizing the possession of a few ounces of pot, that kinda thing it’s just, it’s costing us a fortune and it’s ruining young people. Young people go into prisons, they go in as youths and come out as hardened criminals. That’s not a good thing.”

Robertson’s comments about mandatory sentencing for pot use ruining young lies is refreshingly Christian. What would Jesus do? Of course, Jesus would forgive. Merry Christmas, Mr. Robertson.

Back in the early 1980s, I interviewed an old rancher who lived in Dragoon, Arizona for a feature story about rural Cochise County.

His 1800s stone ranch house was decorated with rustic furniture, a smattering of family heirlooms, and a large collection of old glass bottles. Being somewhat of an antique buff myself, I remarked at the variety of old bottles he had collected. As I photographed him, his house, and the bottle collection, I asked where he had gotten them all.

“This house is on the Mormon Trail,” he explained. “I found them all on my property.”

“The Mormon Trail?” I inquired– thinking it was a migration route like the Oregon Trail or Cornado’s Trail.

The grizzled old rancher chuckled, “The Mormon Trail is the route the Mormons took from St. David to the bars in Willcox. They didn’t want their family members or church elders in St. David to know they had been drinking in Willcox, so they dropped the evidence– the alcohol bottles– along the Mormon Trail as they rode their horses back home.”

I was reminded of the old rancher’s story this morning when I read Mesa seeks to seclude shops selling medical pot in today’s Arizona Daily Star.

In an attempt to legislate morality and control the temptation of the evil weed– even though it has been approved only for medical purposes– Mesa’s city council is considering highly restrictive zoning laws. Here is an excerpt from the Star (with emphasis added).

Mesa won’t let medical-marijuana shops open in most of its commercial districts, with city leaders saying they don’t want the substance sold near neighborhoods or in prominent locations.

Instead, the shops will be forced to industrial areas and just one kind of commercial use.
The city is taking a different approach from most other Arizona cities, which so far have been restricting the shops to commercial zones. The city staff had proposed that kind of regulation, but members of the City Council feared that would put the stores at the corner of major intersections.

The stores will be restricted from most areas in the city, as they must be at least a mile from each other, 2,400 feet from rehab facilities, 1,200 feet from churches and schools, and 500 feet from day-care facilities or preschools.

A map prepared by the city shows only slivers of land where the shops could open.

This is folly, and obviously another example of Arizona’s nanny state leanings. Once the Arizona Department of Health Services sets up the system for licensing dispensaries, caregivers, and medical providers, medical marijuana sales will begin in Arizona. It will be legal– even for Mesans– to purchase medical marijuana with a doctor’s recommendation.

The Mesa city fathers should learn a lesson from the Mormon Trail story. If people want or need drugs– legal or otherwise– they will find a way to obtain then, even if it means driving to an industrial district of their lily-white city or (heaven forbid) driving into Phoenix.

Arizona Dispensary University storefront (Photo credit: Phoenix New Times)

While the Arizona Bar Association diddles around trying to decide whether or not they will represent would-be medical marijuana businesses and while bureaucrats cook up regulatory roadblocks, at least one entrepreneurial marketer has jumped into the void to help medical marijuana dispensaries get off the ground in our state.

With the passage of medical marijuana in Arizona, people in the know (like me) predicted the creation of new businesses– besides dispensaries and growing operations– around this new industry.

Arizona Dispensary University, in Phoenix, is one such business. Lucky for me, I didn’t have to drive to Phoenix to check it out because the Phoenix New Times already did. Here is an excerpt:

We attended a class at Arizona Dispensary University, the new medical marijuana “college,” on Friday. The foremost thing we learned is that people can make a lot of money selling public information and “expert” advice about our impending medical marijuana industry. People want to know how to get patient cards, how to open dispensaries, and how to operate grow sites. And they’ll pay hundreds of dollars for a guide.

For more information about marketing a medical marijuana dispensary, navigating the application process, and the cost of classes, check out their article: Arizona Dispensary University Class Offers Expensive Education on the Medical Marijuana Business.

As an aside, for a business that is selling marketing advice, Arizona Dispensary University has a horrible website. Hey, buddy, do yourself a favor and use some of your profits from the classes to hire a web designer!

Over the weekend, the Arizona Bar Association issued a press release reiterating that they really haven’t made up their minds what to do about legal representation for would-be medical marijuana businesses.

Although some reports may have created the perception that the State Bar of Arizona has taken an official position regarding this matter, the Bar has yet to do so.

As has been widely reported, this new law has created many unsettled issues across the legal landscape.  The impact of this law on the ethical rules is equally unsettled.  The State Bar of Arizona will review the new law and provide guidance in advance of the law’s implementation, currently scheduled for late March 2011.

In the interim, the State Bar will not take regulatory action against attorneys for counseling or assisting clients in the implementation of the medical marijuana law during this period.”

Apparently, this release is in response to media articles (like mine ) that reported Patricia Sallen’s “preliminary” opinion on the ethics of representing medical marijuana businesses. In it, she strongly implied that Arizona attorneys may not be able to legally represent medical marijuana businesses– thus leaving them to sift through multiple levels of regulations and laws without representation.

Arizona bureaucrats are wringing their hands over the implementation of Prop 203– the medical marijuana law that voters approved in November 2010.

The roadblocks that bureaucrats like Pima County Attorney Barbara LaWall, Arizona Bar official Patricia Sallen, and now Arizona Department of Health Services Director Will Humble have erected bring me question one of this state’s core Republican values– free-market capitalism.

Is Arizona a nanny state that wants to protect its citizens from legal marijuana distribution? Or is Arizona a business-friendly, capitalist state that will allow the free market decide which marijuana dispensaries survive? So far, Arizona’s approach to the medical marijuana business is out-of-step with its generally laissez-faire, no-holds-barred business attitude.

The latest example of the state’s schizophrenic behavior appeared in an Associated Press story in today’s Arizona Daily Star. The story features hand-wringing Humble brainstorming about ways to hamper the medical marijuana industry with fees and over-regulation before it even gets off the ground. [Emphasis added.]

“Most other states, you hang out a shingle and you’re a dispensary,” said Will Humble, director of the Arizona Department of Health Services, which will regulate the medical marijuana industry. “I want to avoid those kinds of abuses.”

Humble sees limiting the number of dispensaries and putting stringent requirements in place as a way to avoid such issues.

Dispensary hopefuls will have to pay up to $5,000 to apply for a license. In their application, they’ll need to include addresses for their pot shops and off-site cultivation facilities; detailed security plans to prevent break-ins; procedures for accurate record-keeping; information about employees for background checks; a sworn statement that they’re meeting zoning requirements; and a statement pledging they won’t sell pot to unregistered patients.

The department hopes to post a draft of proposed requirements on Dec. 17 and finalize rules by late March.

If a business owner has the proper business licenses and has complied with local zoning, why shouldn’t they be able to “hang out a shingle” and become a medical marijuana dispensary? How is that an “abuse”? Isn’t that called capitalism? Seriously, folks, how is this different from setting up a pharmacy or a shop that sells nutritional supplements?

So, Governor Jan Brewer wants to give huge tax cuts to businesses that will re-locate to Arizona, but would-be marijuana dispensary businesses get hefty fees + mountains of procedures + a patchwork of city and county zoning regulations + the requirement to be non-profit + a limit on growth + no legal help? That doesn’t seem business friendly to me.

UPDATE: Check out this link for the update on this story.

The Arizona Bar Association recently announced that Arizona lawyers may not be able to assist would-be clients who have a legal problem related to the state’s new medical marijuana law.

Patricia Sallen, ethics counsel for the Arizona Bar Association, said that Arizona lawyers are not allowed to help clients break the law.

Since medical marijuana is now legal in Arizona and since the federal government said it would not prosecute marijuana cases in states where medical marijuana is legal, what’s the big deal? From the NY Daily News:

Federal drug agents won’t pursue pot-smoking patients or their sanctioned suppliers in states that allow medical marijuana, under new legal guidelines to be issued Monday by the Obama administration.

Two Justice Department officials described the new policy to The Associated Press, saying prosecutors will be told it is not a good use of their time to arrest people who use or provide medical marijuana in strict compliance with state law.

The big deal, according to Sallen, is that even though the new law allows patients with a doctor’s recommendation are allowed to buy 2.5 ounces of marijuana every 2 weeks, marijuana possession is still illegal under federal law.

Sallen said that [illegality of marijuana possession at the federal level] could keep attorneys from helping Arizona corporations set up a dispensary. And it also could mean no help going to court for any company that believes it was unfairly or unlawfully denied a dispensary license — or even for an individual who claims to be entitled to a medical marijuana card.

This disconnect between state and federal law could leave medical marijuana patients, caregivers, and business owners who want to dispense or grow medical marijuana in the lurch for legal assistance. Sallen says she is basing her preliminary opinion on a similar situation in the state of Maine. OK, that’s Maine’s opinion, but what about the 14 other states and the District of Columbia? They also have medical marijuana laws. What is their stance?

In my opinion, this is just another legal roadblock in Arizona’s medical marijuana saga. Arizona voters passed medical marijuana twice before, but the Arizona Legislature stopped implementation. This year, Pima County Attorney Barbara LaWall vehemently (and some say inappropriately) campaigned (1, 2) against medical marijuana before the 2010 election. After Prop 203 passed, she and her minons heavily lobbied the Pima County Board of Supervisors and the Tucson City Council for highly restrictive zoning laws. In the end, neither body adopted all of LaWall’s recommendations, but the county now has more restrictive zoning for dispensaries and growing operations than the city does.

So, let’s focus here– there are 4 different levels of laws governing medical marijuana– federal, state, county, and city– and citizens who want to benefit from this new industry and businesses that want to participate in its creation can’t hire a lawyer in Arizona? What sense does that make?

It only makes sense if you are part of the legal establishment that has benefited from prohibition and you want to set this industry up for failure– or at least inhibit growth– by denying legal counsel.

Given this paranoia by local legal officials, it’s no surprise that the state bar association has tossed out yet another barrier to progress.

UPDATE: Check out this link for the update on this story.

If Prop 203 eventually passes, people with a medical marijuana card will be able to purchase pot in multiple forms, and new businesses will spring up like weeds across the state.

Today– Nov. 12– is the deadline for county election officials to finalize the election that was held 10 days ago. Some races– like the governorship– were decided on Nov. 2.

But others remained close for days, due to mailed paper ballots that were delivered to a poling place on election day; provisional ballots (ie, those with a problem such as an address that didn’t match a person’s identification); and ballots that can’t be read by the optical scanner because they have write-in names or stray marks.

All of the candidate races have been called. Most notably, Southern Arizona Congressional Representatives Raul Grijalva (CD7) and Gabrielle Giffords (CD8), whose races were tight, were declared winners last week.

The three initiatives that remain undecided are Prop 112 which would change the deadlines for citizen initiative petitions, Prop 110 which would change the rules for state land swaps, and Prop 203 which would legalize medical marijuana in Arizona.

On Nov. 3, 350,000 votes were yet to be counted– mostly in Maricopa County. Today, Maricopa is the only hold-out, according to the Arizona Daily Star.

With tens of thousands of ballots to count in Maricopa County, Props 110 and 203 are losing by about 3000 votes, while Prop 112 is winning by less than 2000 votes, according to the Star. All three propositions have gained ground in the past week.

Arizona’s pot smokers will just have to find a way to de-stress while they wait until next week for a decision. Maybe some of them shouldn’t write in Micky Mouse for governor next time.