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Monday, April 9, 2012

Medical Marijuana Dispensaries Stay Open Despite Federal Deadline

Posted By on Mon, Apr 9, 2012 at 7:35 AM

click to enlarge Here today. And probably tomorrow.
  • Here today. And probably tomorrow.

On the day the federal government wished HopeNet to close, the operators of San Francisco's oldest licensed and taxpaying medical marijuana dispensary prepared accordingly: They grilled hot dogs.

"We made about 220," said Catherine Smith, whose Ninth Street medical cannabis dispensary is in line to be shut down by the federal Justice Department.

But for now, it's chow down -- and dispense medical marijuana. The wieners went to some of the people who were getting cannabis in flower, concentrate, and edible form until the dispensary closed at 9 p.m.

HopeNet was one of three dispensaries -- along with 208 Valencia Caregivers and Shambhala Healing Center on Mission Street -- whose landlords received warning letters from Melinda Haag, the United States Attorney for Northern California. Dated Feb. 21, the letters gave the landlords 45 days -- or until Friday, April 6 -- to shut the dispensaries down or face stiff prison terms and property forfeitures.

Thus far, Haag's office had been batting a perfect five-for-five in San Francisco. But while both HopeNet and Shambhala remained open on Friday (and 208 Valencia, we were told), the Justice Department's perfect streak might be coming to an end.

The letters sent to the landlords of Shambhala, 208 Valencia, and HopeNet -- private property-owners in Beverley Hills and San Francisco -- advise that the properties are housing pot clubs that are operating too close to schools or parks.

The fact that the pot clubs follow state and local medical marijuana law and zoning codes are irrelevant. Marijuana is illegal under federal law, the letters advise, and the proximity to areas where children play trigger stiff penalty enhancements.

Similar letters forced other dispensaries to shut down, including two in the Tenderloin, two in the Mission District, and one on Market Street, all since November. Similar actions by Haag's counterparts in Sacramento, Los Angeles, and San Diego have shut down hundreds of California medical marijuana dispensaries since a statewide crackdown was announced Oct. 7, 2011. In her office's sole interview since the crackdown began, Haag told California Watch's Michael Montgomery that she's "drawn a line" against dispensaries that operate near children.

But while both HopeNet and Shambhala remained open on the deadline date given in the letters, there may not be much reason to celebrate. Shambhala's landlord received a one-month extension from Haag's office so that the owner, Ebrahim Poura of Beverly Hills, can work out a deal to terminate the dispensary's "15-year lease," according to dispensary manager Al Shawa.

No such extensions were granted to the landlords of Medithrive, Divinity Tree Cooperative, Mr. Nice Guy, Sanctuary, or Market Street Cooperative. Then again, they might not have asked.

In HopeNet's case, landlord Clay Investments, LLC -- which is connected to a Marina District realty firm -- served its tenant eviction papers on Thursday, April 5, Smith said. The dispensary is held in a tenancy-in-common, and is trickier to evict than a property held by a sole owner. There's that, and there's also the possibility that the dispensary could win an eviction case.

While HopeNet and other San Francisco medical marijuana dispensaries were raided in the Bush era, the Justice Department's offensive has, to date, been raid-free. Last Monday's raid of Oaksterdam University in Oakland was led by agents from the Internal Revenue Service, which seized records, computers, and marijuana plants.

The IRS audited Oaksterdam founder Richard Lee and used a section of tax code called 280e -- which prevents businesses that sell illegal substances from claiming certain expenses on their federal taxes -- to put the de facto leader of the marijuana legalization movement out of business.

By contrast, eviction proceedings are held in state court, which recognizes California medical marijuana law. As long as the dispensary is not in violation of its lease, a Superior Court judge or jury may not be able to find a legal a reason to evict the dispensary.

That's the theory anyway. And since the dispensaries swear up and down that they're complying with every law except for the federal Controlled Substances Act, the theory is plausible.

Those keeping score at home may know that it's a legal loophole that didn't work in Marin County. Fairfax-based Marin Alliance for Medical Marijuana briefly attempted to fight eviction proceedings filed by its landlord -- following the first steps for property forfeiture filed by Haag's office -- before shutting down and vacating.

So while a legal loophole may not be much, the lights are still on, marijuana's still being sold, and about 20 jobs are still intact. And that, at least, is something.

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About The Author

Chris Roberts

Chris Roberts has spent most of his adult life working in San Francisco news media, which is to say he's still a teenager in Middle American years. He has covered marijuana, drug policy, and politics for SF Weekly since 2009.


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