GREEN RUSH, INTERRUPTED

It's Been More Than a Month Since the Feds Cracked Down on Medical
Cannabis. How Are California Dispensaries Doing?

Northern California's embattled medical-cannabis industry is
cautiously open for business again this week, and remains busy
dispelling rumors of its demise.

Perhaps half the dispensaries in Sacramento County have reportedly
shut their doors either permanently or temporarily, according to field
reports. Fewer closures were reported in the city of Sacramento.

Two of San Francisco's 29 clubs-Medithrive and Divinity Tree-closed
November 11, in response to the October 7 press conference by federal
prosecutors targeting medical-marijuana users. After threatening
perhaps hundreds of dispensary landlords across the state with
forfeiture, federal prosecutors forced the relocation of Oakland
dispensary Coffeeshop Blue Sky. A similar round of saber-rattling
caused half the clubs in San Francisco to close in 2004. The
forfeiture letter tactic was last used under President George W. Bush
in 2007.

However, many NorCal-area dispensary operators are reporting business
as usual, while fact-checking what the feds are up to and urging
patients to protest what watchers are calling a law enforcement PR
stunt.

"Patients are coming in really scared," said Harborside Health Center
founder Steve DeAngelo. "The top three rumors are: Harborside is going
to close, all the dispensaries are going to close and the feds are
going to end safe access to cannabis in California.

"Our message is real clear: Harborside Health Center has no intention
of closing," he continued. "We made a commitment with our patients
when we opened five years ago."

The largest club on the West Coast has a long legal fight ahead of it
since the IRS disallowed its business deductions, slapping the
nonprofit with $2.5 million in back taxes, DeAngelo said. Backed by a
national legal fund, the fight against the IRS could take two years,
he said.

In Sacramento, Americans for Safe Access regional liaison Courtney
Sheats said clubs are closing out of fear, while others were hit with
bank-account seizures that forced their closure, and others have
received landlord letters forcing their eviction. "It's a multifaceted
attack. I would assume it's coordinated."

ASA state spokesman Kris Hermes said the capital's foul enforcement
climate mirrors worst-case scenarios playing out in San Diego. "I
think Sacramento is one of the areas that's been hit the hardest, from
what I understand, dozens of facilities in the unincorporated county
have been shut down. It's our little San Diego in Northern
California."

A targeted city operator who asked for anonymity said, "All the
patients are really freaked out. People that work at dispensaries are
freaked out. People involved in anything related to
dispensaries-insurance, packaging-are afraid of their livelihood being
taken away."

He said federal authorities have singled out model operators like
Harborside and Northstone Organics for enforcement as a way to send a
message to all clubs that no one-not even locally permitted
businesses-are safe from federal law.

The actions have also made the Sacramento City Council suspend its
process to further permit more dispensaries.

"I think they want the dust to settle," Sheats said.

Elsewhere in NorCal, cities like Oakland continue to process
applications. In Berkeley, major dispensaries such as Berkeley
Patients Group and BPCC were open. A Berkeley Patients Group
receptionist said their medication lounge-singled out by federal
authorities-was open as well, though patient verification procedures
have been ratcheted up.

In San Francisco, popular clubs such as SPARC, the Green Door, the
Vapor Room, Waterfall Wellness and others remained open. The Green
Door's Sacramento location closed, but its San Francisco shop still
serves patients.

On the other hand, "pot shops" in battleground California counties
remain under heavy fire. In San Jose, patients are up in arms, not
because of the federal actions but because of local opposition.

San Jose is the home turf of the California Narcotics Officers
Association, and dispensaries there are fighting an existential
threat, said Matthew Witemyre, an organizer for the United Food and
Commercial Workers labor union.

A group of dispensaries has filed more than 50,000 valid signatures to
stop the city council from forcing all clubs to close, he said. "San
Jose patients already feel like they are under attack."

Witemyre said he was unaware of any federal raids, but several
threatening landlord letters have gone out in the area. Some clubs in
San Jose have preemptively closed their doors, according to scattered
reports.

With some 1 million patients and an estimated 2,000 clubs in
California, the best the federal authorities can do, watchers say, is
target egregious profiteers and exporters, make an example of industry
leaders, and fire off threatening letters to everyone else.

In October, Coffeshop Blue Sky operator Lee said that the federal
crackdown amounts to "rear-guard" action in the face of overwhelming
opposition to the drug war. "They want to drag it out as long as they
can."

On October 20, California Attorney General Kamala Harris finally spoke
up on the issue, releasing a statement urging federal officials to
"focus their enforcement on 'significant traffickers of illegal drugs.'"

Witemyre called it a good first step. "But I think it's not enough,
considering that if we had a national referendum, legalizing marijuana
would beat [President] Barack Obama."