STATES STRUGGLE TO REGULATE BUDDING INDUSTRY

Montana is hardly alone among the states that have legalized medical
marijuana and now are struggling over how to regulate a rapidly
growing industry.

The most common point of regulatory efforts, officials say, is those
who provide the drug to approved patients.

Moves are afoot in Oregon and Colorado to regulate marijuana
"dispensaries," which are largely unregulated in Montana.

"Since the Obama administration changed federal policy, there's been a
real drive in states with medical marijuana laws to actually regulate
their industry at a state level, especially the providers of medical
marijuana," said Mike Meno, spokesman for the Marijuana Policy Project
in Washington, D.C., a group advocating for lesser state penalties for
the medical and nonmedical use of marijuana.

California blazed the medical-marijuana trail in 1996, and 13 more
states and the District of Columbia have legalized medical marijuana,
most of them through voter-passed initiatives that bypassed state
legislatures.

A turning point in the industry occurred last October when the Obama
administration directed federal prosecutors to back off from pursuing
cases against medical marijuana patients in states that had legalized
it.

In an April report, the National Conference of State Legislatures said
some states without dispensary regulations are seeing a boom in these
businesses, perhaps to get going before stricter regulations occur.

Montana's law is silent on the issue of dispensaries or stores, said
Tom Daubert of Helena, founder of Patients & Families United, a
medical-marijuana patients' support group.

"But I think under ordinary business law and circumstances of life, it
makes sense for a caregiver with patients to have a location where the
patient can come in for their medicine," he said.

Stores cropping up now in Montana can supply it only to patients
registered to obtain the drug from a caregiver, and aren't open to
anyone, Daubert noted.

A Montana legislative committee is starting to examine whether new
regulations are needed here.

In Colorado, Gov. Bill Ritter is expected to sign two bills soon
affecting doctors who recommend medical marijuana and tightening how
the drug is regulated.

According to the Denver Post, the legislation would require all
dispensaries to be licensed by the state and local governments, with
fees to cover costs. The annual fees set by the state are expected to
cost thousands of dollars per dispensary; some have predicted they may
reach $15,000 annually.

Dispensary owners will be required to have been Colorado residents for
two years, with some exceptions. People with past drug felonies
couldn't operate dispensaries.

Local governments or voters could forbid dispensaries in their
respective communities, but not caregivers serving five or fewer patients.

Brian Vicente, executive director of Sensible Colorado, said his
medical marijuana advocacy group likely will sue over some provisions,
including the residency requirements.

"We tried to convince the bill sponsors to focus on what's best for
patients," Vicente said. "I think we came out with a heavy
law-enforcement focus, rather than a patient focus. Law enforcement,
district attorneys and the governor, a former D.A., wanted to crack
down and shut down a lot of these places, and I think they've probably
accomplished it."

Vicente said he wouldn't be surprised if half of the existing 400
dispensaries end up closing because of high licensing fees. At least
30,000 Coloradoans have medical marijuana cards.

Colorado state Sen. Pat Steadman, D-Denver, said he voted for both
bills, but had reservations about parts of the regulatory bill that he
considered too "heavy-handed." Yet he said he felt it was important
for the Legislature to "rein in what many in Colorado saw as an
out-of-control situation."

"I also anticipate that many dispensaries will fail to survive in the
emerging medical marijuana marketplace," he added. It "will certainly
hasten the demise of some dispensaries, but many would have failed on
their own once the market stabilized."

In Oregon, which already has approved medical marijuana, supporters of
a new initiative to create state-licensed dispensaries have turned in
112,000 signatures or nearly 83,000 more than required to put their
measure on the fall ballot, the Eugene Register-Guard reported recently.

The initiative would create a series of private, nonprofit,
state-regulated dispensaries, which would sell marijuana raised by
licensed growers to the state's 36,000 medical marijuana cardholders.
Both dispensaries and growers would face state regulation, background
checks, inspections and audits, and be subject to health and zoning
regulations, the newspaper said.

Oregon cardholders now have to grow their own pot supply, find a
caregiver or grower to supply it for them, or buy it on the street,
the Register-Guard said.

The proposal also is expected to raise $1 billion over a decade for
Oregon's health department by imposing 10 percent taxes on
dispensaries and pot farmers and annual licensing fees, said John
Sajo, executive director of Voter Power, a leading advocate of the
initiative.

Under the initiative, any patient can go to any dispensary to buy
medical marijuana, just like any patient can go to any pharmacy to
fill a prescription, he said.

Then there is California, where voters in November will vote whether
to legalize marijuana. Supporters submitted nearly 700,000 signatures,
with about 523,000 deemed valid to qualify the measure for the ballot.
A state study says the legalization might generate $1.3 billion in
desperately needed state revenue for California.

As the Associated Press reported, ". full legalization could turn
medical marijuana dispensaries into all-purpose pot stores, and the
open sale of joints could become commonplace on mom-and-pop liquor
store counters in liberal locales like Santa Cruz."