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Autumn 2005
O'Shaughnessy's
Journal of the California Cannabis Research Medical Group

Spurt of Federal Medical MJ Cases Follows Raich Ruling
Three San Francisco dispensaries closed--
DEA claims to target "criminal enterprises"

By Dale Gieringer


"Fear and Loathing at the Dispensary"
Pen and ink drawing by John Denney

In the wake of the Supreme Court ruling handed down June 6, California has seen a resumption of raids on medical cannabis dispensaries. So far, the DEA has been working in cooperation with local police, who have targeted operations accused of abusing local regulations. Federal authorities insist they aren’t interested in pursuing medical marijuana patients, but only organized criminal enterprises.

In San Francisco on June 22, the DEA raided three medical marijuana dispensaries and arrested 19 defendants, all but one Asian-Americans. Federal agents searched 24 homes and businesses, located 10 indoor grow sites, and seized over 9,000 plants. The defendants were all indicted for conspiracy to cultivate and distribute over 1,000 marijuana plants. In addition, three were indicted for sales of ecstasy, and two for money laundering. There are also allegations of international cash smuggling. The three closed dispensaries were Herbal Relief Center at 1545 Ocean Ave., Medicinal Herbal Remedy at 1939 Ocean Ave., and Sunset Medicinal Resource Center at 445 Judah St.

Federal spokesmen denied attacking medical marijuana per se. “It’s not an attack on medical marijuana,” one law enforcement official told the San Francisco Chronicle, “This is an organized crime group that is using the whole pot-club thing as a front.”

Supporters say that the defendants were mostly involved in medical marijuana. One of them, Van Nguyen, was well known as the director of the first Asian- American dispensary, the Herbal Relief Center, which was known to give away cannabis to needy patients. “I am not a profiteer, I don’t know what money laundering is,” Nguyen told the SF Bay Guardian, “This is what I believe in. I’m not going away.” But he has not yet turned himself in.

Lawyers for the defendants include former S.F. District Attorney Terence Hallinan, who contends that the prosecution reflects an anti-Asian bias.

Eleven of the defendants had been arrested for cultivation by local police in the course of six raids in San Francisco, Oakland, and Daly City, over the past two years. They had avoided prosecution on grounds of Prop 215.

The organization had attracted complaints from some neighbors by opening what was the third dispensary in the Ingleside district. Complaints about over-concentration of clubs were a major factor in San Francisco’s recent decision to impose a moratorium on new facilities.

On the same day as the San Francisco raids, federal officials in Sacramento arrested Marion Fry, MD, and her husband, attorney Dale Schafer, on a sealed indictment. Fry and Schafer, who run a medical cannabis center in El Dorado County, had been under investigation since 2001, when DEA agents raided their office. Although Fry was protected from prosecution for recommending marijuana under the federal court Conant decision, a medical marijuana garden was discovered on the couple’s property, rendering them liable to federal prosecution.

Fry, who is also a cancer patient, contended the garden was legal under Prop. 215. However, the Supreme Court’s Raich decision ruled out any defense based on personal medical use, clearing the path for the couple’s recent indictment.

The DEA assisted the Sacramento County sheriff in closing another medical cannabis dispensary, Alternative Specialties, on Folsom Blvd. The dispen-sary’s owner, Wayne Fowler, had a previous felony conviction for embezzling $5 million while a state employee, and was also charged with illegal possession of weapons. Sacramento County Sheriff’s Sgt. R.L. Davis said Fowler was raided “because of who he is and because he was definitely operating without a business license.”

Other dispensaries are continuing to operate in Sacramento County, which has a moratorium on new facilities pending further regulations. Alternative Specialties had been the most conspicuous, located on a major highway with a big pot-leaf sign and live plants visible through the window.

In San Bernardino County, the sheriff’s department moved to shut down the county’s only dispensary just two days after the Supreme Court decision with no federal assistance at all. The dispensary, California Alternative Caregivers Christian Alliance in Big Bear Lake, was busted after selling eight ounces of medicine to an undercover sheriff’s deputy with a physician’s recommendation. San Bernardino District Attorney James Hosking has made it known that the county regards sales of medical marijuana to be illegal, although cooperative gardens are allowed under the law.

In San Diego, police arrested a medical cannabis dispensary owner, Jon Sullivan, at his home. Sullivan was arrested on account of a neighbor’s complaint, not out of any investigation of his two dispensaries, which operate under the name “Triple Holistic Chronic.” Police seized more that a pound of marijuana and patient records that were stored at his home.

Several other dispensaries remain in operation in San Diego, which so far has no ordinance regulating their presence. Three days after the Supreme Court decision, the San Diego grand jury rebuked the county for ignoring the needs of medical marijuana patients and urged it to take “ all possible action” to promote access for the seriously ill.

Another major medical cannabis operation, Compassionate Caregivers, closed several of its outlets after becoming embroiled in a federal IRS investigation. Their troubles began last May, when Los Angeles police raided their West Hollywood outlet, confiscating over $300,000 cash and hundreds of pounds of product. Following the Supreme Court decision, Compassionate Caregivers suspended its business, including seven outlets from Ukiah to San Diego. They have since re-opened in Oakland, San Francisco, and Ukiah.

United Medical Caregivers Clinic of Ukiah and Los Angeles, voluntarily closed doors after the Raich decision. The move followed another LAPD raid last March, which resulted in seizure of $180,000 in cash and 200 pounds of product. No charges have been filed.

The IRS is said to be considering assessing operators for back taxes. Although medical cannabis businesses say they pay IRS taxes, the IRS is claiming that they cannot deduct the expenses of product purchased from growers unless they file 1099 forms for them. This presents an irresolvable dilemma to the dispensaries, since they need to assure anonymity to their growers in order to protect them from federal cultivation charges.

In other federal cases, US District Court Judge Charles Breyer sentenced Robert Schmidt to 41 months in prison for cultivation of marijuana. Schmidt, who operated the Genesis 1:29 cannabis center in Sonoma County, had been arrested in 2002 while growing over 3,400 plants near Sebastopol. He pled guilty in 2003, but his sentencing was put on hold pending the Supreme Court decision. Invoking the recent Booker ruling, which gives judges greater flexibility in sentencing, Breyer granted Schmidt a two-point downward departure, and dropped 10 months from his sentence because he was ineligible for a prison drug treatment program.

Breyer has ordered the government to return a sword collection and other property of Schmidt’s confiscated at the time of his bust. As we go to press this issue is unresolved and Schmidt has not yet been imprisoned.

Post-Raich Federal Cases
• Merced —Dustin Costa (see story on following page).

• El Dorado County —Mollie Fry, MD, and attorney Dale Schafer, her husband, indicted June 22 for marijuana found on their premises by DEA in September 2001. Their medical marijuana clinic in Cool, California had seen 6,000 patients.

• Sacramento —Louis Wayne Fowler, director of Alternative Specialities dispensary, arrested July 7, charged by feds following raid by Sacramento County Sheriff that uncovered two indoor gardens with an alleged 800 plants. Sheriffs say Fowler had a criminal record and failed to file for a business license. Charged for manufacture of marijuana and illegal possession of weapons.

• Modesto —Thunder Rector. Arrested by DEA July 18 with two others on charges stemming from a raid on his property by Stanislaus County sheriffs, who discovered a quantity of marijuana there. Rector, who has been diagnosed as bipolar, was growing for patients at the Divinity Tree, a San Francisco dispensary formerly run by his wife, Rayleen. He was imprisoned for more than two months before his family raised funds to arrange his release, which is expected in mid-October. He suffered as a result of being denied Marinol, according to his father.

• Kern County —Joe Fortt, 42, director of American Kenpo Kungfu School of Public Health, arrested July 20 for cultivating over 2,000 plants at three different locations. Charged with conspiracy to distribute and possess more than 1,000 plants (10 year mandatory minimum). On Sept. 8 James Holland was arrested along with two associates in a raid on the Free and Easy cannabis dispensary in Bakersfield. Kern County sheriffs summoned the DEA after being called to investigate a robbery at the facility. Police found plants growing at Holland’s home plus 20 lbs of marijuana, and firearms.

Holland’s record reportedly includes a felony that makes it illegal for him to possess the weapons that were found in his possession. Patients have described Holland as friendly and attentive. He is being held in federal prison in Fresno, along with Dustin Costa and Joe Fortt, as we go to press in mid-October.

O'Shaughnessy's
O'Shaughnessy's is the journal of the CCRMG/SCC. Our primary goals are the same as the stated goals of any reputable scientific publication: to bring out findings that are accurate, duplicable, and useful to the community at large. But in order to do this, we have to pursue parallel goals such as removing the impediments to clinical research created by Prohibition, and educating our colleagues, co-workers and patients as we educate ourselves about the medical uses of cannabis.
 
SCC
The Society of Cannabis Clinicians (SCC) was formed in the Autumn of 2004 by the member physicians of CCRMG to aid in the promulgation of voluntary standards for clinicians engaged in the recommendation and approval of cannabis under California law (HSC §11362.5).

As the collaborative effort continues to move closer to issueing guidelines, this site serves as a public venue for airing and discussing these guidelines.

Visit the SCC Site for more information.