ARIZONA TO SUE OVER MEDICAL-MARIJUANA LAW

Arizona will ask a federal court today to clarify whether its
voter-approved medical-marijuana law conflicts with federal drug
statutes, launching what probably will be a lengthy legal battle that
could cripple the state's fledging industry and spark more legal action.

Gov. Jan Brewer also will put a temporary halt to the state's permit
process for marijuana dispensaries, set to begin Wednesday, with an
executive order issued by Tuesday, her office said. She does not plan
to stop issuance of medical-marijuana user-ID cards.

The motion for declaratory judgment, to be filed in U.S. District
Court in Phoenix, pits Brewer and two state agency directors against
voters and patients who supported Proposition 203, as well as
potential dispensary owners who could face federal prosecution.

It also names U.S. Attorney General Eric Holder and U.S. Attorney
Dennis Burke as defendants, and will argue that their policies have
spawned uncertainty and confusion.

Brewer and Attorney General Tom Horne say the suit was prompted by a
May 2 letter from Burke to state Health Director Will Humble, warning
that prospective pot growers and sellers could be prosecuted under
federal drug-trafficking laws.

Arizona and 15 other states have medical-marijuana laws that conflict
with federal law, which outlaws the cultivation, sale or use of marijuana.

Although Burke said his office would not go after people who use
medical marijuana "in clear and unambiguous compliance" with state
law, Horne and Brewer maintain that his letter, along with a raft of
memos from federal prosecutors in other states, signaled a
harder-line policy and the threat that state workers could be prosecuted.

"This is obviously a change in policy," Horne said. "We are not
taking a position against the will of the voters. We are simply
bringing it to court and asking the court to decide."

Burke said there has been no policy change, and he chided Horne and
Brewer for having a news conference earlier this week to announce a
lawsuit they hadn't yet filed. He said it's unclear what they are
expecting a federal judge to decide, since the laws are in clear conflict.

"They're a moving target," Burke said. "I'm not really sure what it's
about. I don't know how to add it up."

He said his office will continue to enforce federal drug laws,
focusing its efforts on major trafficking cases and drug cartels.

"We have no intention of targeting or going after people who are
implementing or who are in compliance with state law," Burke said.
"But at the same time, they can't be under the impression that they
have immunity, amnesty or safe haven."

Brewer said this week that she was particularly concerned about state
employees, including those processing patient-ID cards and state law
officers who may be asked to overlook a federal crime under state law.

Both the Departments of Health Services and Public Safety are
plaintiffs in the lawsuit.

But Burke's two-page letter made no mention of Arizona employees, who
have been processing ID cards for thousands of medical-marijuana
users since mid-April and are preparing to license dispensaries and
cultivation sites this summer. And he said Thursday he has no
intention of prosecuting them.

Attorney Lisa Hauser, who authored the state's medical-marijuana law
and represents potential dispensary owners, said Brewer and Horne
both opposed Proposition 203 and likely have another motive.

"They can say what they want, but it does appear intended to thwart
the will of the voters," Hauser said. "They don't want to take a
position because they don't want to upset the voters."

The lawsuit will ask the court to decide whether compliance with
Arizona's law provides a shield from federal prosecution and whether
the state law is enforceable since it conflicts with federal law.

While the legal wrangling continues, among the impacts:

- - No permits, no dispensaries, more lawsuits.

Potential dispensary owners who had lined up leases, municipal zoning
and medical directors in anticipation of the June 1 application
opening will have to bide their time. It could be awhile.

Several are listed as defendants in the lawsuit, with the motion
arguing that their investments are at risk amid the legal uncertainties.

Attorneys say their clients knew the legal landscape going in but
still pulled together investors and persuaded cities and landlords to
approve their non-profit enterprises.

Under state rules, the Health Department would accept applications
through June and issue up to 126 permits by August.

Prop. 203 allows for lawsuits in Superior Court if the state fails to
implement the law, and Brewer's plan to put the permit process on
hold is likely to spark a few.

"We have several clients who are ready to apply, and they're waiting
to hear whether they're on hold or not," attorney Ryan Hurley said.
"They've invested a lot of money in reliance on this."

- - Patients keep growing their own plants.

Prop. 203, approved by voters in November, legalized
medical-marijuana use for people with certain debilitating conditions
and allowed them to designate someone as a "caregiver" to grow or
otherwise obtain marijuana for them.

Both patients and caregivers are authorized to grow 12 plants per
patient if the patients live more than 25 miles from a dispensary.
Since there are not yet any licensed dispensary licenses, caregivers
and patients are allowed to grow their own. The state has licensed
nearly 2,700 growers so far.

There is no limit to how much a dispensary can grow, and some
advocates argue that a few large-scale cultivation sites would be
easier to oversee and regulate than hundreds or thousands of backyard
operations.

For now, at least, the growing will be small-scale and widespread.

"All (Brewer is) doing is throwing the whole system into chaos," said
Karen O'Keefe, director of state policies for the Marijuana Policy
Project, a national pro-legalization group that backed Arizona's law.
"She's making sure that cultivation is statewide."

- - Dispensaries might give up.

Potential dispensary owners have put together fragile, time-sensitive
deals. Leases and special-use permits expire, and financing can fall through.

Among other things, state rules require that a dispensary applicant
have access to at least $150,000 in startup capital.

"Maybe they hope that after months and months of delays, everybody
will just go away," Hauser said.

They might.

Randy Brown had hoped to apply for a dispensary license, but he lost
his funding this month as fear and confusion mounted over their legal
liabilities.

"What this has done is cause people who would otherwise be financiers
to freak out and pull out," Brown said. "This is probably going to be
a show-stopper."