ISLETON OFFICIALS VOW TO TAKE FIFTH IN MEDICAL POT FARM CASE

Sacramento County District Attorney Jan Scully's probe into Isleton's
licensing of a medical marijuana farm has hardened into a legal war of
wills as city officials say they'll refuse to testify when called
before a grand jury next week.

Scully subpoenaed City Council members and the city manager of the
Delta hamlet April 13, after declaring in a letter that the city's
agreements with the medical marijuana grower likely "violate state and
federal statutes" and could subject local officials to
prosecution.

Now infuriated, City Manager Bruce Pope said officials plan to assert
their Fifth Amendment rights at scheduled appearances before a grand
jury April 27.

"On the advice of our legal counsel, everyone who has been subpoenaed
will take the Fifth until the district attorney wants to act in a
professional manner," Pope said.

Chief Deputy District Attorney Cindy Besemer called it "disappointing
that public officials would say that." She said they "have the right
to claim their Fifth Amendment rights to freedom from incriminating
themselves if they have a good faith belief that what they say can
hurt them."

The Isleton dispute pits a small, cash-poor town that saw a potential
bonanza in medical marijuana against a district attorney who wasn't
about to stand for a city-endorsed pot plantation in her county.

It also underscores the murkiness of state laws for growing medical
marijuana and efforts by entrepreneurs and revenue-seeking cities to
test the hazy limits.

Businessman Michael Brubeck, nephew of jazz legend Dave Brubeck,
promised the town of 800 residents a lucrative legal revenue stream
at least $25,000 a month if it would allow him to build greenhouses
for medical marijuana.

Isleton officials already had signed an agreement with a medical
marijuana dispensary yet to open with the promise the city would get
a 3 percent share of gross receipts. They said they didn't want any
more pot shops in town.

But Brubeck's Delta Allied Growers venture promised a non-retail
operation, including up to seven buildings and 15,000 square feet of
cultivation, that would produce marijuana for licensed dispensaries
elsewhere in California.

He also pledged a 3 percent share of gross receipts or $25,000 a
month, whichever was greater. The city signed a contract. Officials
predicted $350,000 in revenue the first year more than one-fourth of
the current city budget.

With the greenhouses under construction and $150,000 in fees already
collected, Isleton began making plans to hire four police officers to
bolster its current one-person force.

DA's Estimate Disputed

The District Attorney's Office contends that the marijuana venture
could do $10 million in business annually based on projected payments
to the city and is very likely unlawful.

"The City Council should not rely on opinions offered by you or
representatives of Delta Allied Growers as an accurate interpretation
of state criminal statutes regarding marijuana," Scully and Besemer
stated in a letter to Pope and Isleton City Attorney Dave Larsen.

The Feb. 8 letter added: "Nor should anyone rely on these
representations ... as providing any legal or equitable defense to
criminal prosecution."

Scott Hawkins, a spokesman for Delta Allied Growers, said the district
attorney's $10 million estimate "has no basis in fact," though the
city's revenue projections seem to support the figure.

He said the operation is a nonprofit venture in compliance with
California law that would "provide a direct community benefit" to
Isleton "in job creation, additional business taxes" and needed
revenue for civic improvements.

The Isleton plan appears to be running into troubles similar to
Oakland's high-profile attempt to license massive pot cultivation
warehouses. That plan has drawn warnings of federal raids and
criticism that it also failed to conform with California marijuana
laws.

George Mull, a Sacramento attorney who represents medical marijuana
businesses, said Isleton may have overreached in permitting Delta
Allied Growers to cultivate pot and presumably market it to
unspecified marijuana dispensaries.

Under 2008 guidelines published by then-Attorney General Jerry Brown,
medical marijuana can only be distributed within closed groups of
registered medical users who share the marijuana and production costs.

Mull said that means Delta Growers can't sell marijuana to
dispensaries that aren't part of its own patient network. "When a
corporation sets up in Isleton to grow a bunch of marijuana, there is
no legal way to transfer that marijuana to another collective," he
said.

Hawkins said Delta Allied Growers, which has yet to grow any
marijuana, will lawfully operate "a closed-loop system with qualified
patients within our dispensary relationships."

Versions of Events Clash

Scully has notified Sacramento U.S. Attorney Benjamin Wagner about the
Isleton plan as a potential violation of federal law.

"We also think it's a fair question to ask whether an organization
that anticipates gross revenues of at least $10 million a year can
lawfully operate within the attorney general guidelines and state
law," Besemer said.

Tensions between the city and the District Attorney's Office have
escalated.

Pope charged that Besemer personally told him and other Isleton
officials that the district attorney has "the authority to come down
and arrest you and your City Council."

When Isleton officials in March asked Scully for guidance to ensure
their development agreement with Allied was lawful, according to Pope,
Scully rebuffed them, saying she wasn't going to help the city with
its legal defense.

Besemer said she never told Isleton officials they could face arrest
and said Pope's characterization of Scully's remarks is inaccurate.

But she added: "The DA's Office doesn't go around telling any entity
that might be in violation of the law what they need to do to bring
the conduct within the law."

Pope stood by his version, and said he was taken aback by the district
attorney's refusal to help. "For one government agency to say to
another, 'We're not going to cooperate, the hell with you,' is
disappointing," he said.