ACTIVIST CAN SELL POT FOR MEDICINAL USE

Ventura County prosecutors reached a settlement Monday with the former
owner of a Thousand Oaks cannabis club that allows limited
distribution of medicinal marijuana to qualified patients.

Under terms of the agreement, activist Andrea Nagy is prohibited from
selling marijuana or distributing the substance from her former office.

But the agreement does allow Nagy to possess or cultivate marijuana
for other people under certain strict circumstances.

Specifically, a patient must be seriously ill and have a doctor's
recommendation. And Nagy must have assumed responsibility for the
patient's health, housing or safety--as set out in the state health
code--prior to the start of any marijuana cultivation on the person's
behalf.

Under terms of the settlement, Nagy cannot accept money in exchange
for cultivating marijuana for a patient unless it constitutes "bona
fide reimbursement" for her actual expenses, which she must account
for in written records.

Although Nagy has no plans to reopen her distribution center, her San
Francisco-based attorney called the settlement a victory.

"We really believe that this is a vindication," attorney J. David Nick
said. "It allows for a form of distribution and it allows for this
substance to be used like any other medicine."

Nagy opened her Rainbow Country Ventura County Medical Cannabis Center
in Thousand Oaks about a year after California voters approved a
medical marijuana initiative, Proposition 215, in November 1996.

But the center's operation was shut down four months later after the
district attorney filed a civil suit contending that the business was
a threat to public health.

Prosecutors also alleged Nagy engaged in "anti-competitive, unfair,
fraudulent and unlawful business practices." A restraining order was
issued against the center, preventing Nagy and business partner Robert
Carson from serving the center's nearly 60 patients suffering from
AIDS, cancer and other serious ailments.

Superior Court Judge William Peck later expanded the order with a
preliminary injunction that forbade Nagy and Carson from selling or
distributing marijuana until the issue was settled at trial.

Nagy appealed the decision, but it was denied. She has been allowed to
continue cultivating marijuana for her own personal medicinal use. She
uses marijuana to treat chronic migraine headaches.

The settlement reached Monday averts a trial and establishes a
permanent injunction against Nagy and Carson from unlawful
distribution of marijuana. Her lawyers were also ordered to pay $825
in sanctions for not providing documents in a timely manner.

Deputy Dist. Atty. Mitch Disney said the agreement meets the
prosecution's ultimate goal: compliance with the law. "We didn't feel
the need to tie up a courtroom for four days over [sanctions]," Disney
said. "This case has never been about money. It's always been about an
injunction."

Disney said the language of the settlement "follows this emerging law
as we understand it today. It recognizes what the law permits for
legitimate, seriously ill patients but enforces the illegality of
marijuana sales and distribution."