MEDICAL MARIJUANA DISPENSARIES FIGHT TO DO BUSINESS IN FEDERAL WAY |
LEGISLATORS WORK ON STATE REGULATIONS

Two medical marijuana co-ops are fighting for licenses to do business
in Federal Way after being rejected for the permits by the city.

A public records request revealed that Federal Way turned down just
eight business licenses in the past four years, while in the same time
period approved more than 4,000. Conscious Care Cooperative and
Cascade Medical Center LLC were among the eight rejections.

Federal Way City Clerk Carol McNeilly ultimately signs off on business
licenses. She affirmed that rejections are rare in Federal Way, adding
that "we have few limitations in the (city) code."

City code allows a license to be denied or revoked if it is determined
a business is conducting illegal activity. This premise was used as
basis for rejecting applications by Cascade and Conscious Care. The
businesses would provide qualified medical marijuana patients with a
supply of cannabis in exchange for a donation.

"The business application was denied because it is the belief of the
city that Conscious Care was going to distribute marijuana, which is
an illegal act under state and federal law," assistant city attorney
Peter Beckwith said Wednesday at an appeal hearing for Conscious Care.

Marijuana possession and distribution is still illegal under state and
federal law. Washington's Medical Use of Marijuana Act provides an
affirmative defense for medical marijuana patients and providers.

No criminal charges have been brought against anyone involved with
Conscious Care or Cascade. Conscious Care, however, continues to
operate without a business license. The city sent the business a cease
and desist letter, and city code makes operating a business without a
license a misdemeanor, with penalties reaching $500 for each day the
business remains in violation.

Cascade owner David Madrid said he submitted a business license
application on Feb. 10 under instructions from his attorney. The first
he heard from the city, he said, was the denial letter. His appeal
hearing is scheduled for March 30.

"My attitude is, medical marijuana patients have a right to their
medication," said Madrid, who thinks the city is denying the licenses
"because they don't want (a co-op) there."

McNeilly, when asked, denied that city leaders do not want medical
marijuana co-ops -- or dispensaries as they are also known -- in Federal
Way.

"They just want businesses that are operating legally," she
said.

Medical marijuana business denials

Of the business licenses rejected between Jan. 1, 2007, and March 15,
2011, three were in 2009, and three were in 2007. Conscious Care was
denied in 2010, but notice was not received until January 2011.
Cascade was rejected on Feb. 15.

The non-medical marijuana related businesses rejected were Lumber
Plus, a retail store; El Cambalache, a tool seller; USA-UA
Transportation, a trucking company; Mr. Tow, a towing service; K and G
Enterprises, a contractor; and Taqueria El Cazador, a mobile food truck.

A total of 4,076 businesses were approved between Jan. 1, 2007, and
March 15, 2011.

The medical marijuana co-ops were the only two rejected for criminal
law-related issues.

McNeilly is not the only city official who holds sway over business
licenses. Applications are circulated among officials in different
departments -- typically the planning and building department and
police, who give input on whether a license should be approved.

Under city code, a business license may be rejected or revoked for a
number of reasons, including:

Using a business as cover for illegal activity

If it becomes a nuisance or a threat to public safety

The owner has had a criminal conviction in the 10 years prior to
opening that is related to the nature of the business

Hearing process

Both Conscious Care and Cascade have appealed their business license
denials. Conscious Care's hearing was held March 23 in front of Phil
Olbrechts, a hearing examiner hired by the city.

At the hearing, Beckwith interviewed McNeilly and Federal Way Police
Cmdr. Stan McCall as witnesses. McNeilly testified that the city
received Conscious Care's business license application on Nov. 19 and
mailed out a denial letter on Dec. 9. However, the denial was returned
to the city as undeliverable -- possibly due to a wrong address on the
application -- on Jan. 19. Police later hand delivered the letter,
which McCall testified he did.

Both denial letters cite illegality of the businesses as reasons for
denial. McCall testified that one of Conscious Care's owners had
outstanding warrants from other states, and that a review of the
co-op's website revealed the alleged illegality of its business model.

McCall underscored the suspicion that Conscious Care was distributing
marijuana by saying that he smelled the drug when he hand delivered
the letter.

"We could smell marijuana, and in my experience as a police officer
(31 years), I'm familiar with what marijuana smells like," he said.
"It wasn't burning, it was growing or a green marijuana smell."

Conscious Care's attorneys, Abe Ritter and Aaron Pelley, argued that
the business license denial was not done in a timely manner. Pelley
said that the city is presuming that the co-op is operating illegally,
even though no one has been convicted of a crime.

"The important point, as it seems to be missed by the city, is that to
be arrested or accused does not make one guilty of a crime," Pelley
said. "To accuse someone of a crime is simply that, an accusation. So
is it illegal to possess marijuana? Yes, it is true that it can be
found to be illegal to possess marijuana. It is a jury who's going to
decide who's convicted and who is guilty of criminal conduct."

Beckwith, when asked after the hearing if there's evidence of a crime,
said that the point is moot because no one is denying that Conscious
Care distributes marijuana.

"There's the smell, the website," he said. "I don't think you can
dispute that they're selling marijuana."

"It is their biz plan," McCall said. "It's specifically spelled out on
their website. The nature of the highs are described (on the website),
not the medical effects -- the high associated with the different types
of marijuana they sell. That's pretty clear. It's spelled out in black
and white."

Brad Ecklund, a principle manager at the Federal Way Conscious Care
location, said that he will operate the co-op whether he has a
business license or not.

Olbrechts said he has 10 days to make a decision; however, the record
of the case is open until Tuesday to receive documents from the city
and the appellant.

Co-ops exist elsewhere; regulation possible

According to newspaper advertisements, medical marijuana dispensaries,
co-ops and patient referral services operate in Tukwila, Burien,
Spokane and Seattle. Tacoma had allowed medical marijuana businesses,
but recently revoked the licenses of 19 such businesses.

When asked, neither McCall nor Beckwith could explain why other cities
allow medical marijuana businesses.

"Those are good questions -- we work for the city of Federal Way,"
McCall said.

There is no state or federal law that explicitly speaks to medical
marijuana dispensaries. When McNeilly was asked which state law
outlaws dispensaries, she pointed to the state's overarching drug law
on the sale, possession and use of marijuana. The Medical Use of
Marijuana Act -- a medical marijuana law passed by voters in 1998 --
only states that no marijuana is allowed for use or display in public.

The legality of medical marijuana businesses is a gray area to some.
Olbrechts questioned both sides at the Conscious Care hearing on how a
medical marijuana co-op functions under state law. The state's medical
marijuana law allows an affirmative defense for caregivers, as long as
they serve only one patient. It is not clear whether that is meant as
one patient in the entire world, or one patient at a time.

Proprietors say that medical marijuana co-ops and dispensaries operate
much like a doctor's office. A patient enters the business and waits
in a lobby area to see a caregiver. There is a security barrier
between the lobby and where the medical marijuana is kept. Only one
patient at a time is allowed to see the caregiver. A donation is
exchanged for the medical marijuana, though some patients can qualify
for free medicine. Ecklund said that prices are kept at a rate to
discourage resale -- that a donation for the cannabis is more than one
could get on the street.

"I understand I can't just open up and dispense medicine," Ecklund
said. "This is a co-op. It's a club. You have to sign codes of
conduct, you have to be a medical marijuana patient. We check to make
sure documentation is valid. There are all these steps that go into
it."

A new law is working its way through the Legislature that would
clarify the issue. State Sen. Jeanne Kohl-Welles' law -- which has
passed in the Senate -- establishes a regulatory system for producing
and dispensing medical marijuana; establishes arrest protections for
patients, providers and dispensers; and sets up a voluntary state
registry system for all involved in medical marijuana. The bill on
Thursday was voted out of the state House to the floor with the
recommendation of a "yes" vote.

Both Ecklund and Madrid are determined to see their businesses
through. They contend that a well-run co-op is safer for medical
marijuana patients.

"The city will be much better served by working with us to zone and
regulate (medical marijuana businesses)," Ecklund said. "This is what
we've been pressing them to do from the beginning, instead of ignore
the elephant in the room and say, 'no we're not going to have this
here.'"