CANNABIS CLUB LEADER RESIGNS IN AN EFFORT TO KEEP SHOP OPEN

SAN FRANCISCO--A day after a Superior Court judge ordered him to
immediately cease operations, Dennis Peron said he has stepped down as head
of the state's largest cannabis club in a bid to keep it open.

The resignation came shortly after San Francisco Sheriff Michael Hennessey
said Thursday that he will evict the staff and patrons and close the club
Monday or Tuesday, in compliance with San Francisco Superior Court Judge
David A. Garcia's order.

"I realized that either my department was going to do it or the state
Bureau of Narcotics Enforcement would," Hennessey said. "I was afraid that
if the state came into our county, things would be much more tense, things
could escalate out of control."

Peron said he had promised Hennessey that the club's patrons will not
resist deputies who come to padlock the doors. But by turning over the club
to new owners and giving it a new name, he contended, he could comply with
the judge's ruling.

Peron had begun the day defiantly, opening the club's doors to a throng of
anxious clients at 11 a.m. and vowing to stay open despite the court order.

"We have done nothing wrong," Peron told reporters the morning after Garcia
ruled that he was illegally selling drugs from his four-story Market Street
club. "We will not be moved. We are going to be like Martin Luther King and
like Gandhi. We will go absolutely limp if they try to drag us away."

But by late afternoon, Peron said, it had become clear to him that the
club's only hope for survival lay in a drastic reorganization.

"It is a sad day for me," Peron said after announcing that he will no
longer direct the 9,000 member Cannabis Cultivators Club.

"I have folded the club. I am giving up my lease. The landlord has
negotiated with a new group of people, and they will reopen here as the
Cannabis Healing Center after Hennessey closes it down." The group, Peron
said, would include current staff members and clients who he said would
operate the club as a cooperative.

Peron said he plans to work full time on his campaign for the Republican
gubernatorial nomination. He has been running that campaign from his office
at the club and said he will negotiate with the new owners to rent space
from them.

Asked whether the resignation and reorganization is merely a legal
maneuver, Peron replied: "This whole thing has been technicalities upon
technicalities."

Hennessey said Thursday that his obligation ends once the club is shut down
and the keys are turned over to the landlord. "What the landlord does then
is up to him. You only get one shutdown per order," he said.

Within minutes of the Cannabis Cultivators Club's 11 a.m. opening Thursday,
the sales counter was doing its usual brisk business, serving dozens of
customers various grades of pot. The sweet smell of marijuana began wafting
through the third-floor lounge as clients smoked joints or puffed pipes at
the small tables scattered across the brightly painted room.

John Lassiter, 24, said he rushed to the club fearing that "it might be the
last chance to say goodbye to everybody." Lassiter, who said he is
HIV-positive, started coming to the club in December, shortly after moving
here from Washington. He said that daily use of marijuana keeps his
appetite healthy and helps him keep his weight stable.

"This place also offers intangibles that would never be admissible in a
court of law," he said. "It is a place for really ill people, people with
terminal diseases, to escape their loneliness. They come here for a few
hours to visit people."

Club operators across the state weighed the implications of Garcia's order
Thursday. The broad consensus: another serious setback for a movement that
has had little to rejoice about since 56% of California voters approved
Proposition 215 in 1996. The law says that patients suffering from serious
illnesses who obtain a doctor's recommendation may grow and use marijuana
for medicinal purposes.

The number of marijuana clubs and their operators facing civil and criminal
legal charges is such that some in the medical marijuana movement are
convinced it is only a matter of time before all the clubs are forced to
close.

"The state government does not want to implement this law," said Jeff
Jones, director of the Oakland Cannabis Buyers' Cooperative, whose club is
one of four named in a federal civil suit against Northern California
clubs. "They are squelching the will of the people."

Peter Baez, director of the Santa Clara cannabis club that many looked to
as a model of a well-run club, is facing eight felony counts in the alleged
sale of marijuana to someone who had no doctor's recommendation. Baez says
that he will close his club by the end of the month. Other clubs or their
operators are also in trouble. District attorneys in Orange, Ventura and
San Diego counties have moved to close clubs or charge operators with
criminal violations of drug laws.

"Last October, there were 28 clubs and start-ups," said Scott Imler,
director of the Los Angeles Cannabis Resource Center. "Now, 14 of them are
still open and only three of those--the club in Arcata, the Women's
Alliance for Medical Marijuana in Santa Cruz and us, are not either
indicted or served with orders by federal, state or local officials."

Some blame politics for their troubles--President Clinton, club operators
say, needs to appear to be tough on drugs, and state Atty. Gen. Dan Lungren
is campaigning for governor. But others blame mistakes made by the medical
marijuana movement's leaders and club operators.

"The problem is Dennis Peron," said Imler, a longtime critic of Peron
within the movement. "He became the Daddy Warbucks and the Godfather, at
least of the Northern California medical marijuana movement. He was
exciting and charismatic and he has been a disaster."

Peron is fighting criminal and civil suits brought against him by Lungren.
The federal government has also filed a civil suit against Peron, his club
and three others in Northern California.

"I am a full-time defendant who sometimes sells marijuana," Peron gloomily
said Thursday, as he sat surrounded by "Peron for Governor" banners in his
office at the club, hours before announcing his resignation.

Although Peron and his club have been Lungren's primary targets in the war
on cannabis clubs, the attorney general's office insists that a December
appellate court ruling that Proposition 215 did not legalize the clubs
means that they all must close. But Lungren has moved only against Peron's
club. Other club operators said Thursday that if Lungren wants to close
their operations, he will have to sue them.

"The state will have to take every dispensary into court to take us all
out," Jones said in Oakland. "We have had some major setbacks, but we are
not going to quit because they say we are operating illegally. We've done
everything in our ability to meet the law. We've incorporated; we pay
local, state and federal taxes."

In fact, Jones said, he expects a huge surge of business if Peron's club is
closed. "It will be pandemonium. It is going to be a circus over here for a
few weeks," he said. "Our phones already are ringing off the hook."

Whatever relief Jones may be able to offer Peron's clients may be
short-lived. This month, U.S. District Judge Charles Breyer is expected to
rule on the federal Justice Department's request to close the four Northern
California clubs, including the Oakland club and Peron's operation.

The Justice Department says that no matter what law California voters
passed, marijuana remains an illegal drug under federal law, and its
sale--by clubs or individuals--is illegal.

Undercover drug agents allegedly purchased marijuana in each of the clubs
the federal government has named in its civil suit, apparently by
presenting bogus doctor recommendations that the clubs failed to detect.

Imler said he was not surprised that agents were able to slip by the intake
procedures of the Northern California clubs.

"There are problems with how these clubs are run," he said.

Authors of Proposition 215 envisioned the clubs as a stopgap measure
pending action by the state legislature to regulate the pharmaceutical
dispensing of medical marijuana, Imler said. Instead, the Legislature has
done nothing and clubs--some operated by less-than-rigorous staffs--have
sprung up across the state.

"The Legislature has left patients and their families in the lurch," he
said. "We're praying for the day when we can close our club. But the only
way is if the government provides for prescriptive access. Then these clubs
will be a moot point."