MEDICAL POT BUSINESS POISED FOR HUGE GROWTH

The number of Washington patients qualifying for medical marijuana --
and businesses catering to them -- is likely to swell even more in
the next few years thanks to a new state law.

After a recent shootout at the home of medical-marijuana activist
Steve Sarich, police found 375 pot plants, $10,700 in cash and a
stack of credit-card receipts showing Sarich's business had collected
hundreds of thousands of dollars from pot-related sales and services
in just a few weeks.

Sarich now is waiting to find out if the King County Prosecuting
Attorney's Office will charge him with drug dealing.

The case is being watched closely in the medical-marijuana community,
in part because the number of patients qualifying to use pot for
medical purposes is expected to swell in the next few years, thanks
to a new state law. To cater to those patients, a number of
for-profit companies are staking claims in territory once dominated
by nonprofits.

By most accounts, Sarich is one of the most aggressive players. He
says he grows marijuana, dispenses it in exchange for a "donation" at
a dispensary called CannaCare, and hires doctors to write medical
authorizations for patients at $200 a pop under a business called
Sentry Medical Group. The entire operation is housed in two buildings
at his Kirkland residence.

His model has thrived, in part, because of a complicated state law
that makes it legal to possess and use pot for medical purposes, but
illegal to buy or sell it.

Sarich's one-stop shop became so popular that he employed parking
attendants and shuttle buses to handle as many as 800 patients a
month who flocked to his address, according to a sheriff's
search-warrant affidavit.

To supply those patients, Sarich kept hundreds of plants in his
basement, a number that far exceeds the 15 plants allowed each
patient under state rules. Sarich, however, argues that the law
allows him to have many more as long as he's serving as the
"designated provider" for other patients.

Sarich, who says his business isn't profitable, said he wants
prosecutors to charge him.

He said nothing in the law prevents him from directly providing pot
to many patients.

"They [prosecutors] haven't challenged that because, if they lose,
dispensaries will be legal."

Surge Could Be Ahead

The King County sheriff's investigation comes at a time when the
number of medical-pot patients -- and businesses that help those
patients obtain it -- seems guaranteed to explode.

A new law effective June 10 will expand the authority to write
medical-marijuana authorizations from doctors to a variety of
health-care professionals, including naturopaths and nurse practitioners.

"It will dramatically increase the number of people who receive
authorizations and lower the cost, which will make it more affordable
for patients to qualify," said Paul Stanford, executive director of
THCF, The Hemp and Cannabis Foundation.

The new law also likely will mean a lot more competition for
companies, such as THCF, that connect patients seeking pot
authorizations with doctors willing to write them.

THCF runs for-profit clinics in nine states, charging patients up to
$180 for a first-time pot authorization.

The company, which started as a nonprofit with Stanford working at
home, grossed $4.7 million last year and now has 100 employees,
Stanford said. He said THCF is seeking investment capital to expand
into 20 new cities.

CBR Medical, a Spokane-based for-profit, sees about 600 patients a
month at 11 clinics across the state. Kent Myles, a consultant for
CBR, says the 2-year-old business "grew 300 percent last year" and
could hit $1 million in revenue this year.

Smaller competitors are cropping up in the area, advertising in
publications such as the Little Nickel.

Many Doctors Reluctant

Businesses such as CBR and THCF thrive, in part, because many doctors
won't provide pot authorizations out of fear of losing their federal
license to write prescriptions.

Unlike Sarich's Sentry operation, CBR and THCF do not provide pot to patients.

At their clinics, patients typically pay around $200 for a doctor's
authorization that must be renewed annually.

"It's big money out there for the doctors," said Mark Healy, manager
of Green Hope Patient Network.

And although doctors in Washington state can authorize marijuana for
medical use, they can't tell patients where to get it.

As a result, Washington patients navigate a legal netherworld, where
finding medical pot can mean joining a co-op or making a donation to
a provider.

Green Hope, a family-run co-op in Shoreline, focuses solely on
obtaining marijuana for patients already authorized to use it.

The co-op makes a slight profit by selling memberships for $40 a year
and offering clones -- plant clippings off larger plants provided by
other patients who grow their pot -- for $20 donations, Healy said.
Being a co-op allows Healy's organization to collectively provide pot
to more patients than one caregiver could supply.

"We make OK money," he added. "As a caregiver, I can only [provide]
for one patient. Steve Sarich is doing that for all his patients."

According to the search-warrant affidavit on Sarich's house, Sarich's
girlfriend was the designated caregiver for about 138 patients.

No Clear Guidelines

Advocates and law-enforcement agencies in King County met twice last
year to develop guidelines for co-ops that grow and distribute pot,
but no agreement was reached, said Alison Holcomb, drug-policy
director for the American Civil Liberties Union (ACLU) of Washington.

The shootout at Sarich's house underscores the need for guidelines
and could bolster support for legal dispensaries in Washington state, she said.

"When people stretch the envelope of what law enforcement intended,
and engage in practices that put their neighborhoods at risk of
violence, maybe it's time to look at amending the law," Holcomb said.

The ACLU says it will pursue legislation to legalize medical
dispensaries for pot. At least one state senator has announced she
will introduce such legislation in 2011, Holcomb said.

Under the state's 1998 medical-marijuana law, patients can grow their
marijuana -- a long, labor-intensive and expensive process that
advocates say often isn't feasible for sicker people -- or designate
a "caregiver" to do it for them. They also can obtain pot from
caregivers or other patients.

Finding the line between lawful and unlawful use can be difficult,
even for law enforcement, said Sgt. Carlos Rodriguez, a State Patrol
officer assigned to WestNET, a drug task force that includes agencies
from Pierce, Kitsap and Mason counties.

"It would be nice if there was more clarity," he said. "There are
people who use the authorization to hide behind for illegal purposes,
and true believers who use it as medicine. It's not our intention to
go after sick people."

California and Colorado allow the sale of medical pot through
storefront dispensaries that are not licensed by the state. Four
other states passed laws allowing licensed dispensaries, said Allen
St. Pierre, executive director of the National Organization for the
Reform of Marijuana Laws.

Locally, the Internet has made finding a supply a little easier. Web
sites such as thclist.comand FindMyMeds.com list organizations and
people willing to serve as caregivers for the 15 minutes or so it
takes to conduct a transaction.

Tom Ewing -- a medical-marijuana patient listed as "Dr. Feelgood" on
thclist.com -- became a provider for other patients in Walla Walla
about three months ago after being ripped off repeatedly by what he
called "black-market dealers."

Ewing said he screens clients carefully, checking to see they live in
Washington and have medical authorization before meeting them at
their homes. Clients sign a contract that designates him as their
caregiver for the time it takes to conduct the interaction.

A Bad Example?

Meanwhile, some patients and providers claim the size of Sarich's
operation and his willingness to push the boundaries of the law are
setting back the medical-marijuana movement.

"I think he hurts the cause," said Stanford of THCF, noting that
teenagers formerly employed by Sarich were shot after breaking into
Sarich's house in March.

"These kind of shootouts and being involved with teenagers in
distributing [pot] and cultivating it, it makes us all look bad."

Sarich acknowledges he's a polarizing figure.

But he said the challenge to his business ultimately could help
patients obtain marijuana more easily.

"They don't want things to change," he said of his competitors.
"They've told me that if medical marijuana were legal tomorrow,
they'd be out of business. I want to put myself out of business."

[sidebar]

WASHINGTON'S MEDICAL-MARIJUANA LAW

Possession: Marijuana possession is illegal in Washington. But the
law provides an "affirmative defense" for qualified medical-marijuana
patients and designated caregivers -- meaning they still can be
arrested and charged but can use their authorizations as defense in
court. Supply: Qualifying patients and designated providers can have
a 60-day supply -- defined as 24 ounces and 15 plants (any plant at
any stage of growth counting as a plant). But a patient may exceed
these limits with proven medical need.

Qualifying: To qualify for medical marijuana, the Department of
Health says, patients must suffer from a "terminal or debilitating
medical condition" such as cancer, HIV, multiple sclerosis, epilepsy,
intractable pain, Crohn's disease, hepatitis C, anorexia or others
approved by the state Medical Quality Assurance Commission.
Depression and anxiety don't qualify.

Doctor: You need a written recommendation from a doctor for medical
marijuana -- not a prescription. Effective June 1, a new law will
allow some other health-care professionals, including naturopaths, to
write authorizations.

Provider: A designated provider can provide pot for only one patient
at any one time.

Dispensaries: Marijuana dispensaries, where medical pot can be
purchased, are not legal in Washington.

Federal law: Medical marijuana is illegal under federal law, but the
Justice Department has said it won't target users if they are in
strict compliance with state law.

Source: State Department of Health