DEA CRACKS DOWN ON MARIJUANA CLINICS

LOS ANGELES -- Federal agents trailed Sparky Rose as he drove a
Porsche Carrera convertible to his medical marijuana clinic.

For the U.S. Drug Enforcement Administration the sports car was a
sign Rose might be pocketing big money from the purportedly nonprofit
clinic, New Remedies Cooperative.

An investigation turned up records showing $2.3 million was deposited
in a New Remedies bank account in eight months starting in December
2005. Rose also wrote himself weekly checks of $9,600, according to
court papers.

When Rose was arrested in October and accused of illegal drug
trafficking -- charges he denies -- authorities seized $125,000 in
cash, thousands of pot plants and the Porsche from his San
Francisco-area clinic.

Under California law, clinics are supposed to dispense marijuana just
to seriously ill people and owners are to get only "reasonable
compensation" for their services. But oversight is lax and there are
few specific guidelines for buyers and sellers of a drug still
illegal under federal law.

Who can open a clinic, what constitutes reasonable compensation and
who can grow and supply marijuana are all open to broad
interpretation -- factors that have helped fuel a surge in new
clinics. Oakland, Santa Rosa and even famously permissive West
Hollywood are among cities that have imposed moratoriums on new
clinics amid concerns owners and buyers are abusing the law.

The DEA also has taken notice, embarking on a stepped-up effort
targeting clinics run by people like Rose who appear to flout the
reasonable compensation provision.

Federal officials raided 11 Los Angeles-area dispensaries in one day
in January, the largest-ever such crackdown. They returned to one of
the clinics in West Hollywood on Wednesday, breaking down a door and
seizing additional records.

DEA spokeswoman Sarah Pullen said authorities chose clinics that were
making big money, had become hot spots for crime or were part of
large franchises. The raided clinics on average raked in $20,000 in
profits each day, she said.

Many clinics were buying pot wholesale from street dealers and
reselling it for twice the roughly $100-an-ounce black-market rate,
Pullen said. "It's become something we can't ignore," she said.

The investigation is ongoing and has yet to produce any arrests or
charges. Some clinics have remained closed while others reopened.

West Hollywood City Councilman Jeff Prang said the federal government
should leave it to local governments to monitor and regulate
marijuana dispensaries that provide relief for those suffering from
cancer, Parkinson's, AIDS and other debilitating diseases.

"It's a real sad day for the DEA if these type of facilities are that
high on the list of priorities," he said.

California was the first of 12 states to allow the sale of marijuana
for medicinal purposes, mainly pain control, and is regarded as
having the loosest regulations.

Since the law was passed in 1996 the statewide number of clinics has
grown to about 400. Customers can order from a menu of marijuana
varieties, such as Green Crack and Hindu Kush. Some clinics even
offer packaged marijuana-laced lollypops, candy bars and pastries.

In Los Angeles alone there are about 100 dispensaries, up from just
four in 2005, according to Police Chief William Bratton, who has
called for a moratorium on new clinics in the state's largest city.

Bratton is among those who believe the murkiness of the "reasonable
compensation" provision added in 2003 has stoked a proliferation of
outlets run by people more interested in earning big money than
providing a service.

Police, clinic owners, activists and legislators -- even the author
of the law -- can't say for sure how much money clinic owners can legally earn.

"A profit is in the eye of the beholder," said Joseph David Elford, a
lawyer for Americans for Safe Access, a medicinal marijuana advocacy group.

Elford said a hands-off government approach to the clinics should
boost competition, keeping marijuana prices affordable for those who
need it and forcing owners to limit profits. But Pullen said that
hasn't happened -- the number of clinics has swelled while pot prices
remain high and some owners are pocketing big money.

Former state Sen. John Vasconcellos, the San Jose-area lawmaker who
authored the 2003 law, has no problem with clinic owners earning
hefty salaries as long as they provide help for ill people. He said
the federal government should mellow out.

"We're helping people who are sick and they have this fascist
mentality against good health and pleasure," Vasconcellos said.

The bill's co-author, state Assemblyman Mark Leno of San Francisco,
sees no need to clarify the law and there is no serious effort from
state politicians to further regulate the industry.

"Micromanaging how private businesses operate is not something the
state should be involved in," Leno said.

Law enforcement officials like Bratton, however, believe some
enhanced state or local regulations are needed to keep drug dealers
from operating behind a veneer of legitimacy.

They cite recent DEA targets, such as 26-year-old Luke Scarmazzo,
co-owner of a Modesto clinic. A video for his rap song "Business
Man," shown at his bond hearing, features him counting wads of $100
bills, puffing what appears to be pot smoke into the camera and
cursing federal authorities.

Records at Scarmazzo's clinic, co-owned by Ricardo Ruiz Montes, 26,
showed the pair made more than $4.5 million in marijuana sales from
October 2004 to June 2006, according to the DEA. Authorities seized a
2007 Mercedes, two loaded handguns and some 60 pounds of processed
marijuana from the clinic.

Shon Squier, a 34-year old proprietor of a San Francisco-area clinic,
was apprehended in December. Federal officials froze the Hayward
clinic's bank accounts, which had some $1.5 million, and seized about
$200,000 in cash and several cars and motorcycles.

Rose attracted the DEA's interest after local police raided a West
Hollywood clinic he ran in 2005 and seized almost 700 pounds of pot,
$242,000 in cash and evidence of nearly $2 million in bank deposits
from the business and pay sheets "reflecting enormous profits,"
according to court papers.

Rose claims his clinics are nonprofit, though they and others were
not listed in a database of IRS-registered nonprofit companies.

At the time of the arrest, DEA Special Agent in Charge Javier F.
PeIna scoffed at that claim, saying anyone who uses marijuana
proceeds to "buy fancy cars, boost their bank accounts, and exploit
vulnerable citizens is not compassionate. They're criminal."

Rose, who is free on bail, did not return a message left on his home
voicemail. He defended himself on his Web site, www.freesparky.org.

"My dispensary was a nonprofit and to paint me or my employees as
profiteers is simply appalling," he said.

He also wrote the silver Porsche was leased and valued at less than
$50,000. -- News Researcher Judy Ausuebel contributed from New York.