MEDICAL-MARIJUANA CLUBS POP UP AS ARIZONA LAW IS DEBATED

Dispensaries Can't Open, So Options Are Emerging

Medical-marijuana dispensaries can't yet operate in Arizona pending a
judge's ruling on Proposition 203. But that doesn't necessarily keep
cardholders from finding pot.

At least a handful of clubs that provide patients with medical
marijuana have opened up in the Valley to fill that void.

Because the new state law allows most medical-marijuana cardholders to
grow their own pot and share it with each other - as long as there are
no dispensaries near - these clubs have developed as a go-between.

Joe Yuhas, a spokesman for the Arizona Medical Marijuana Association,
which led the campaign for Prop. 203, said the law was meant to create
a "regulated industry" of dispensaries. Instead, Yuhas said, the pot
clubs are an unintended consequence of the state and federal dispute
over whether Arizona's new law conflicts with federal statutes banning
marijuana.

"We're going to see more and more developments like this," Yuhas
said.

The development of marijuana clubs has raised questions about their
legality in two areas: the payment for the product and local zoning of
the clubs.

The state Department of Health Services said it has "serious concerns
about the legality of so-called cannabis clubs." Health officials have
asked the Attorney General's Office to determine if the clubs are legal.

Maricopa County Attorney Bill Montgomery agreed the clubs are an
"untested area" but said he will prosecute anyone trying to operate
outside the narrow provisions of the law.

However, club owners said they're operating legally.

Dispensaries stalled

In November, voters approved Prop. 203, which legalized
medical-marijuana use for people with certain debilitating conditions.
The law allowed patients - as long as they don't live within 25 miles
of a dispensary - and caregivers to grow marijuana.

The state was expected to issue up to 126 dispensary permits by
August.

But U.S. Attorney Dennis Burke, following the lead of other federal
prosecutors, warned prospective pot growers and sellers that they
could be prosecuted under federal drug-trafficking laws.

In response to the warning, Gov. Jan Brewer and Arizona Attorney
General Tom Horne filed a lawsuit in late May asking a federal judge
to determine whether compliance with the law would leave state
employees, dispensary owners and patients vulnerable to prosecution
for violating federal drug statutes.

The ADHS then halted its dispensary-licensing process.

Meanwhile, the state has licensed 5,697 patients with
medical-marijuana cards to grow their own.

The department also has approved 270 caregivers to grow marijuana for
their patients.

Under the law, medical-marijuana patients can grow up to 12 plants of
their own. Patients and caregivers can share it with other cardholders
"if nothing of value is transferred in return."

Patients can pay caregivers for the costs and materials they use to
grow pot but not for their work.

Inside the clubs

Caregivers can grow up to 72 plants total for themselves and five
others. Some have given excess marijuana to these new clubs.

Since the clubs aren't regulated, there is no way to say for sure how
many operate in the Valley.

But at least seven advertise and operate openly. Others are
underground and recruit patients by word of mouth.

Owners of the 2811 Club in Phoenix have heavily promoted their club.
Founder Al Sobol said hundreds of people have visited.

Tucked away in a shopping center off Bell Road, members of the 2811
Club lounge on plush-leather couches and gather around small coffee
tables to read about strains of marijuana. Smoking is not allowed in
the club.

In a back room, an instructor demonstrates how to make Italian salad
dressing with pot. And, at a glass display counter, a volunteer hands
out 3-gram samples of marijuana to cardholders.

The club scans the cards and verifies the patients' identity with a
thumb-print machine. An armed security guard stands by.

Sobol said that most members are older than 50 and that only a few are
in their 20s. Members can consult with volunteers to find the best
sample for insomnia or chronic pain.

Mike Miller said he spends his days at the 2811 Club so he can be
around people who understand his health problems.

Miller, a diabetic, had to have a leg amputated five years ago after a
wound in his foot never healed. He said he has been on painkillers and
other medications since then. Miller said he hardly left his house
until he got his medical-marijuana card and found the 2811 Club.

"I'm hoping that the only time I would ever need a pain pill again is
aspirin," Miller said.

Donating for pot

There is no set payment arrangement for the various
clubs.

The 2811 Club charges members an initial application fee of $25 and a
$75 entry fee each visit to attend classes and get a free sample.

The club offers marijuana through the Arizona Compassion Association,
a co-op of patients and legal caregivers that has a display in the
club. Sobol said the 2811 Club makes donations to the growers to help
with expenses of growing marijuana.

Sobol said as long as patients aren't directly paying for pot, the
2811 Club and the Arizona Compassion Association aren't acting as
dispensaries.

"We don't sell marijuana here," Sobol said, adding that clubs that do
sell are "absolutely wrong" in their interpretation of Prop. 203.

Yoki A Ma, another club in Mesa, has a similar payment arrangement,
charging a $65 visit fee and giving members an eighth of an ounce of
pot.

Club President Craig Scherf also said he is confident that his club is
operating within the confines of the law.

But state and local authorities have not yet determined whether this
arrangement constitutes transferring something of value.

Montgomery, the county attorney, said he hasn't received any cases
about medical-marijuana clubs, but he wouldn't be surprised to get
some soon. He said he can't determine whether they're all illegal
because each case is unique.

"It sounds to me like someone is asking for something of value in
order to participate," Montgomery said. "The closer you get to asking
someone to provide money to receive marijuana sounds like a salient
violation of the statute."

Ryan Hurley, an attorney who represents potential dispensary owners
for Rose Law Group, said he would advise the potential
medical-marijuana dispensary owners he represents against opening clubs.

"At best, it's a stretch under the law," Hurley said. "I think it's
very, very risky."

Local zoning

Aside from the legality of payment issues, there are also some
questions about where medical-marijuana clubs can operate.

Because clubs aren't dispensaries, zoning regulations don't apply to
them.

Ken Strobeck, executive director of the League of Arizona Cities and
Towns, worked with localities earlier this year to set up
dispensary-zoning laws. Strobeck said he hasn't heard of anyone trying
to zone a medical-marijuana club.

Scherf said he is trying to open a second Yoki A Ma club in
Tempe.

Tempe Planning Manager Lisa Collins said she isn't sure how local law
enforcement would react to a medical-marijuana club, but the club
would not need special approval to open.

She said a club might need a sales-tax license to operate as a retail
business, but it wouldn't need one if it was only providing a service
for a fee.

A club would need to get construction plans approved, but it probably
wouldn't need to disclose the nature of its business, she said.

Because clubs aren't regulated like dispensaries, they're easier to
open and run.

Sobol said he initially meant for the 2811 Club to someday become a
dispensary, but he has changed his mind, in part, because there are no
zoning laws about clubs.

Still, Scherf said clubs are setting up far from residential areas,
schools, churches and parks to avoid trouble. His club in Mesa is
surrounded by industrial businesses.

Enforcing the laws

Because there's so much ambiguity, Phoenix police said it's still too
premature to determine whether the clubs are operating legally.

Sgt. Steve Martos, a police spokesman, said his agency hasn't made any
arrests relating to medical-marijuana clubs.

"We are looking into whether or not they are covered by the new law,"
Martos said.

Gilbert police have arrested several cardholders for possession but
said those arrests involved other crimes.

Robbie Sherwood, spokesman for the U.S. Attorney's Office for Arizona,
recently reiterated his agency's stance on medical marijuana: Nobody
is safe from prosecution.