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MickeyBlue42 · 01-29-2011, 04:07 PM

Marijuana Dispensaries Are Facing New Scrutiny
By ZUSHA ELINSON

Medical marijuana dispensaries try hard to maintain the appearance that they are nonprofit health centers. Customers are referred to as “patients,” and merchandise as “medicine.” Yoga classes are often available, along with health-related literature.

But the rivers of cash flowing in and out of these businesses are attracting scrutiny from local and federal authorities who say they are trying to distinguish between legitimate health practitioners and sellers of illegal drugs.

“We’re trying to get to a point where we get we can weed out — for lack of a better word — to filter out the people that are really perverting this law just to sell drugs,” said Frank Carrubba, deputy district attorney in Santa Clara County.

Last month, the four operators of New Age Healing Collective in San Jose were charged with illegal marijuana sales and money laundering after the police said they turned up two sets of books. The raid was part of a series of recent investigations into San Jose dispensaries by the Santa Clara Special Enforcement Team.

One ledger, kept at the tiny dispensary, showed New Age Healing losing $123,128 since May, according to the police. Another, which the police said had been discovered inside a cash-filled shoe box in the home of the couple that operated the center, told a different story: $222,238 in profits.

The couple said it was operating a legitimate marijuana dispensary and had done nothing wrong, according to one of their lawyers.

In Oakland, Harborside Health Center, one of the largest dispensaries on the West Coast and a model for the medical marijuana industry, is being audited by the Internal Revenue Service, said Harborside’s chief executive, Stephen DeAngelo. An I.R.S. spokesman said the agency neither confirmed nor denied audits.

Last month, officials in Oakland postponed plans to license large-scale marijuana farms in the city after the Justice Department and the city attorney warned separately that the businesses could violate state and federal marijuana laws.

The medical marijuana industry has continued to flourish since a state proposition to legalize cannabis was defeated in November. Oakland finance officials estimate that the city’s three dispensaries generated $35 million to $38 million in revenue last year, up from $28 million in 2009.

San Jose now boasts 98 dispensaries — four times the number of 7-Eleven convenience stories in the city.

State law allows collectives to cultivate medical marijuana, but the law is less clear when it comes to selling the product, said William Panzer, a lawyer who helped write California’s seminal medical marijuana law, Proposition 215. Under guidelines issued by the state attorney general, dispensaries are advised not to profit from their activities. But the guidelines are fuzzy, Mr. Panzer said, and there is virtually no case law on the issue.

“Let’s come out from under the shadows and say, ‘Here are the rules,’ ” Mr. Panzer said. “The law around distribution is very hazy, and we need the Legislature to do something. We’ve fallen behind other states on regulations for medical marijuana sales.”

After staking out the New Age Healing Collective for eight months, Santa Clara County narcotics agents raided it on Oct. 7. They found marijuana and a black ledger listing sales and expenses, a police report said. The ledger stated that the collective’s $255,642 in sales from May through September were offset by $323,170 in operating expenses and $55,600 that the dispensary spent on rent and payroll.

The same day, officers raided the home of Jonathan Mitchell and Sheresie Dyer, the operators of New Age Healing. In a clothes closet, according to the police report, they found a Glock pistol, a pound of marijuana and a shoe box containing $15,971 and a “cash book.” The ledger, the report stated, showed that New Age’s gross receipts were $601,008 for those five months, a $222,238 profit.

“Their described activity as a collective is nothing more than a retail store,” wrote Sgt. Dean Ackemann, who is now with the San Jose district attorney’s office. “Their only actions are providing marijuana to customers at street-level prices.”

The police say they also found state tax returns, listing $84,111 in gross sales for the second quarter of 2010, which the report characterized as “highly suspect.”

Geoffrey Rawlings, Mr. Mitchell’s lawyer, said that he would not comment on the specifics of the case, but that his client was legally providing medical marijuana to patients. Mr. Mitchell and the others have all pleaded not guilty.

Mr. Rawlings noted that the police were not raiding pizza restaurants, which are also cash businesses, but that the profile of marijuana dispensary operators might play a role in attracting the attention of the authorities.

“When you’re dealing with medical cannabis and you see these blond, dreadlocked corporate officers coming and going, it kind of agitates law enforcement and raises their hackles a little more than the pizza shop owner down the street,” Mr. Rawlings said. “They are convinced that these people are breaking the laws without any evidence in advance that they’re breaking the law.”

Medical marijuana activists have loudly protested the raids on San Jose dispensaries, which have proliferated without any city regulations.

“We are extremely concerned by the raids,” said Paul Stewart, executive director of the Medicinal Cannabis Collective Coalition, which represents several San Jose dispensaries. “They are acting on what could be considered a specious legal finding by the D.A.; their finding is that all collectives are operating illegally because they are making a profit.”

Mr. Stewart said the dispensaries were easy targets since they were out in the open, unlike methamphetamine labs or other illicit drug operations.

“There is a concern that it appears they are attacking the low-hanging fruit,” he said.

Because laws are murky, dispensaries increasingly operate in the gray area between large-scale businesses and nonprofit health centers.

“It’s almost a hybrid operation,” said Betty Yee, the Bay Area’s representative on the Board of Equalization, which oversees state taxes. “It’s kind of difficult line to straddle for them, but a lot of them are doing it.”

Ms. Yee also said that although money was pouring into dispensaries, that did not mean operators were making big profits.

“The cost of their product is so huge that there is sometimes a perception that they’re making a lot of money when in fact their margins are pretty thin,” she said.

Though federal authorities have halted raids on medical marijuana dispensaries under the Obama administration, the I.R.S. has shown a new interest.

Harborside officials said the I.R.S. was raising questions about a section of the tax code known as 280E. That section, aimed at drug kingpins, prohibits companies from deducting any expenses if they are “trafficking in controlled substances.”

Harborside, which serves 70,000 members, has been lobbying the federal government to exempt medical marijuana dispensaries from the law. It sent a letter to Senator Barbara Boxer, Democrat of California, stating that it could be taxed out of business if the law was not changed.

“Harborside Health Center currently employs approximately 80 individuals in Oakland, CA,” the letter reads. “Unless we can change this law, these jobs are in jeopardy.”

Mr. DeAngelo, the Harborside chief executive, said that all the profits were put back into the business — and that the dispensary was not a drug dealer.

“Our contention is that what we’re doing is legal and not trafficking, and it’s not appropriate to apply it to us,” he said. “This is an industrywide issue.”

Whoever keeps their 'cooked book' records in a shoe box = amateur hour!!!

Seems they will try and get you one way or another, but in a sense this isnt great for the industry as it definitely tarnishes the image!

https://www.nytimes.com/2011/01/09/us...rijuana&st=cse

David762 · 01-30-2011, 02:50 PM

So, would somebody here explain to me exactly how BH Obama is more "pot-friendly" than GW Bush was?

By all appearances, BH Obama is worse. He is smiling to our faces, while his regime's stooges are busy thrusting the knives in our backs. The Obama regime by every means possible, including illegal search & seizures, is trying to put the States' MMJ issue "toothpaste back into the toothpaste tube".

Do you smell that in the air? It is the rank choking stench of fascism.
Sic semper tyrannis.

guambomb813 · 01-30-2011, 06:06 PM

lol @ david. do some research for how many raids have taken place since obama's been in office compared to when bush was. facts are facts. not that I agree with obama but as a MMJ patient im glad to not have as much worry as I did when DEA was roaming free raiding us/dispensaries all around..

kstampy · 01-30-2011, 08:14 PM

Quote:

Originally Posted by David762

Sic semper tyrannis.

Fascism? While our system is far from perfect, do you honestly not feel better off than many others around the world? AFAIK raids are WAY down in comparison to the Bush days and more and more medical states are joining in month by month.

Are you Really comparing Obama to Julius Caesar or Booth in that quote? Lol.

David762 · 01-30-2011, 09:43 PM

Quote:

Originally Posted by kstampy

Fascism? While our system is far from perfect, do you honestly not feel better off than many others around the world? AFAIK raids are WAY down in comparison to the Bush days and more and more medical states are joining in month by month.

Are you Really comparing Obama to Julius Caesar or Booth in that quote? Lol.

The USA is very very far from perfect. I love my country, but I hate it's government. That's right, I said fascism.

It took a lot of baby steps from Truman forward to bring us to where we are today, what can only be considered fascism. But it was only with the PNAC document as a template, combined with 9/11/2001, to jump solidly into the fascism paradigm. Let's take a look -- the 3rd through the 10th Amendments have been shredded: USA Patriot Act(s), Help America Vote (Our Way) Act, FISA|Telecom Immunity, the Military Commissions Act, and a slew of Executive Orders. This country were from "life, liberty, and the pursuit of happiness" to the Unitary Executive -- habeous corpus is gone, indefinite imprisonment along with torture, supremacy of Feds over States Rights (look at what the DEA is doing to undermine democracy at the State level), guilty until proven innocent, criminal & civil asset forfeiture on the flimsiest of suspicion, illegal search & seizure, etcetera.

Instead of refuting the power of the Unitary Executive, Obama has issued Executive Orders for extrajudicial stripping of USA citizenship, extrajudicial assassination (no grand jury, no trial by one's peers, no judicial sentence with an appeals process) of USA citizens, and more. Obama has embraced and extended the Unitary Executive dictatorial powers assumed by GW Bush. The War on Drugs and the War on Terror have merged, and it's not just foreign Islamic freedom fighters that are being deemed as "enemy combatants" or "terrorists" -- every USA citizen that is anti-war, anti-Fed, anti-monopoly, anti-status quo, every non-violent drug offender who falls under the category of "person of interest" or worse, potential "domestic terrorist".

In every State where there is legal MMJ, the powerful police state minority is doing the best it can to put the MMJ "toothpaste back into the toothpaste tube" through increasingly draconian regulation, LEO enforcement, etcetera. Under GW Bush, were Local, State, and Feds raiding MMJ dispensaries and cooperatives just to destroy property AND gather intel regarding patient lists, doctor lists, etcetera which should be covered under HIPAA? The Obama regime is up to something big, a big LEO push is pending, and when it does happen a large number of current Obama supporters will have their eyes open wide.

HorseMouth · 01-30-2011, 10:23 PM

I live in Oregon, and I would have to say the laws are NOT becoming more stringent, and those who enforce the laws are NOT acting like turds about it. Also, with all the communication I have with Washington friends I feel safe saying WA is becoming a lot more lenient and sympathetic in it's laws and enforcement of.

Can't really speak for other states, but I'm interested to know what state David762 is from.

Peace

I think the number of OMMP patients was just higher then the number of Concealed Weapons permits, in the last year.

That's huge for us BTW.

sh1wn · 01-30-2011, 10:48 PM

I'm in oregon also and I'm just waiting for them to start busting all these new dispensaries that are poping up. I can see them letting one slide in portland but I'm sure they will not let it go on for to long in the small towns. Maybe there just waiting so they can make some more money for them to steal?

Ioni Botani · 01-30-2011, 10:51 PM

Quote:

Originally Posted by HorseMouth

Can't really speak for other states, but I'm interested to know what state David762 is from.

I think the number of OMMP patients was just higher then the number of Concealed Weapons permits, in the last year.

That's huge for us BTW.

That IS huge. Spread peace and not war!
I think Occam's Razor is a good one to cite! Sounds like somebody needs to turn off the TV. More specifically FoxNews.

LOL.

robbiedublu · 01-30-2011, 11:44 PM

Quote:

Originally Posted by HorseMouth

I think the number of OMMP patients was just higher then the number of Concealed Weapons permits, in the last year.

That's huge for us BTW.

Plenty of us have both.

Ioni Botani · 01-31-2011, 12:03 AM

Quote:

Originally Posted by robbiedublu

Plenty of us have both.

Now THIS is what I'm talking about. FREEDOM.

01-29-2011, 04:07 PM	#1
MickeyBlue42 Member Join Date: Apr 2007 Location: nice swanky apartment Posts: 505	IRS Moves on Dispensaries Marijuana Dispensaries Are Facing New Scrutiny By ZUSHA ELINSON Medical marijuana dispensaries try hard to maintain the appearance that they are nonprofit health centers. Customers are referred to as “patients,” and merchandise as “medicine.” Yoga classes are often available, along with health-related literature. But the rivers of cash flowing in and out of these businesses are attracting scrutiny from local and federal authorities who say they are trying to distinguish between legitimate health practitioners and sellers of illegal drugs. “We’re trying to get to a point where we get we can weed out — for lack of a better word — to filter out the people that are really perverting this law just to sell drugs,” said Frank Carrubba, deputy district attorney in Santa Clara County. Last month, the four operators of New Age Healing Collective in San Jose were charged with illegal marijuana sales and money laundering after the police said they turned up two sets of books. The raid was part of a series of recent investigations into San Jose dispensaries by the Santa Clara Special Enforcement Team. One ledger, kept at the tiny dispensary, showed New Age Healing losing $123,128 since May, according to the police. Another, which the police said had been discovered inside a cash-filled shoe box in the home of the couple that operated the center, told a different story: $222,238 in profits. The couple said it was operating a legitimate marijuana dispensary and had done nothing wrong, according to one of their lawyers. In Oakland, Harborside Health Center, one of the largest dispensaries on the West Coast and a model for the medical marijuana industry, is being audited by the Internal Revenue Service, said Harborside’s chief executive, Stephen DeAngelo. An I.R.S. spokesman said the agency neither confirmed nor denied audits. Last month, officials in Oakland postponed plans to license large-scale marijuana farms in the city after the Justice Department and the city attorney warned separately that the businesses could violate state and federal marijuana laws. The medical marijuana industry has continued to flourish since a state proposition to legalize cannabis was defeated in November. Oakland finance officials estimate that the city’s three dispensaries generated $35 million to $38 million in revenue last year, up from $28 million in 2009. San Jose now boasts 98 dispensaries — four times the number of 7-Eleven convenience stories in the city. State law allows collectives to cultivate medical marijuana, but the law is less clear when it comes to selling the product, said William Panzer, a lawyer who helped write California’s seminal medical marijuana law, Proposition 215. Under guidelines issued by the state attorney general, dispensaries are advised not to profit from their activities. But the guidelines are fuzzy, Mr. Panzer said, and there is virtually no case law on the issue. “Let’s come out from under the shadows and say, ‘Here are the rules,’ ” Mr. Panzer said. “The law around distribution is very hazy, and we need the Legislature to do something. We’ve fallen behind other states on regulations for medical marijuana sales.” After staking out the New Age Healing Collective for eight months, Santa Clara County narcotics agents raided it on Oct. 7. They found marijuana and a black ledger listing sales and expenses, a police report said. The ledger stated that the collective’s $255,642 in sales from May through September were offset by $323,170 in operating expenses and $55,600 that the dispensary spent on rent and payroll. The same day, officers raided the home of Jonathan Mitchell and Sheresie Dyer, the operators of New Age Healing. In a clothes closet, according to the police report, they found a Glock pistol, a pound of marijuana and a shoe box containing $15,971 and a “cash book.” The ledger, the report stated, showed that New Age’s gross receipts were $601,008 for those five months, a $222,238 profit. “Their described activity as a collective is nothing more than a retail store,” wrote Sgt. Dean Ackemann, who is now with the San Jose district attorney’s office. “Their only actions are providing marijuana to customers at street-level prices.” The police say they also found state tax returns, listing $84,111 in gross sales for the second quarter of 2010, which the report characterized as “highly suspect.” Geoffrey Rawlings, Mr. Mitchell’s lawyer, said that he would not comment on the specifics of the case, but that his client was legally providing medical marijuana to patients. Mr. Mitchell and the others have all pleaded not guilty. Mr. Rawlings noted that the police were not raiding pizza restaurants, which are also cash businesses, but that the profile of marijuana dispensary operators might play a role in attracting the attention of the authorities. “When you’re dealing with medical cannabis and you see these blond, dreadlocked corporate officers coming and going, it kind of agitates law enforcement and raises their hackles a little more than the pizza shop owner down the street,” Mr. Rawlings said. “They are convinced that these people are breaking the laws without any evidence in advance that they’re breaking the law.” Medical marijuana activists have loudly protested the raids on San Jose dispensaries, which have proliferated without any city regulations. “We are extremely concerned by the raids,” said Paul Stewart, executive director of the Medicinal Cannabis Collective Coalition, which represents several San Jose dispensaries. “They are acting on what could be considered a specious legal finding by the D.A.; their finding is that all collectives are operating illegally because they are making a profit.” Mr. Stewart said the dispensaries were easy targets since they were out in the open, unlike methamphetamine labs or other illicit drug operations. “There is a concern that it appears they are attacking the low-hanging fruit,” he said. Because laws are murky, dispensaries increasingly operate in the gray area between large-scale businesses and nonprofit health centers. “It’s almost a hybrid operation,” said Betty Yee, the Bay Area’s representative on the Board of Equalization, which oversees state taxes. “It’s kind of difficult line to straddle for them, but a lot of them are doing it.” Ms. Yee also said that although money was pouring into dispensaries, that did not mean operators were making big profits. “The cost of their product is so huge that there is sometimes a perception that they’re making a lot of money when in fact their margins are pretty thin,” she said. Though federal authorities have halted raids on medical marijuana dispensaries under the Obama administration, the I.R.S. has shown a new interest. Harborside officials said the I.R.S. was raising questions about a section of the tax code known as 280E. That section, aimed at drug kingpins, prohibits companies from deducting any expenses if they are “trafficking in controlled substances.” Harborside, which serves 70,000 members, has been lobbying the federal government to exempt medical marijuana dispensaries from the law. It sent a letter to Senator Barbara Boxer, Democrat of California, stating that it could be taxed out of business if the law was not changed. “Harborside Health Center currently employs approximately 80 individuals in Oakland, CA,” the letter reads. “Unless we can change this law, these jobs are in jeopardy.” Mr. DeAngelo, the Harborside chief executive, said that all the profits were put back into the business — and that the dispensary was not a drug dealer. “Our contention is that what we’re doing is legal and not trafficking, and it’s not appropriate to apply it to us,” he said. “This is an industrywide issue.” Whoever keeps their 'cooked book' records in a shoe box = amateur hour!!! Seems they will try and get you one way or another, but in a sense this isnt great for the industry as it definitely tarnishes the image! https://www.nytimes.com/2011/01/09/us...rijuana&st=cse __________________ "Hell, one of my friends can't stop hitting other cars unless he's driving blasted out of his mind" by !!!
	Quote

01-30-2011, 02:50 PM	#2
David762 Member Join Date: Apr 2010 Posts: 563	So, would somebody here explain to me exactly how BH Obama is more "pot-friendly" than GW Bush was? By all appearances, BH Obama is worse. He is smiling to our faces, while his regime's stooges are busy thrusting the knives in our backs. The Obama regime by every means possible, including illegal search & seizures, is trying to put the States' MMJ issue "toothpaste back into the toothpaste tube". Do you smell that in the air? It is the rank choking stench of fascism. Sic semper tyrannis.
	Quote 4 members found this post helpful.

01-30-2011, 06:06 PM	#3
guambomb813 Member Join Date: Jun 2009 Posts: 115	lol @ david. do some research for how many raids have taken place since obama's been in office compared to when bush was. facts are facts. not that I agree with obama but as a MMJ patient im glad to not have as much worry as I did when DEA was roaming free raiding us/dispensaries all around..
	Quote 2 members found this post helpful.

01-30-2011, 10:23 PM	#6
HorseMouth Member Join Date: Jan 2010 Location: Oregon Posts: 478	I live in Oregon, and I would have to say the laws are NOT becoming more stringent, and those who enforce the laws are NOT acting like turds about it. Also, with all the communication I have with Washington friends I feel safe saying WA is becoming a lot more lenient and sympathetic in it's laws and enforcement of. Can't really speak for other states, but I'm interested to know what state David762 is from. Peace I think the number of OMMP patients was just higher then the number of Concealed Weapons permits, in the last year. That's huge for us BTW. __________________ A Man is what he thinks about all day long. -R.W.E Three can keep a secret, if two of them are dead. - B. Franklin A secret shared is never a secret halved. - Alistair MacLean When you borrow a thousand dollars, the bank owns you. When you borrow a million, you own the bank. - Larry Niven Only I chose to move into a field where there was little or no competition. Why fight my way up a chain of command when by taking one step sideways I could form my own chain of command with myself at the top, running things the way I felt they should be run from the start instead of adapting someone else's system until I was high enough to make my presence felt. -Robert Lynn Asprin Last edited by HorseMouth; 01-30-2011 at 10:24 PM.. Reason: information
	Quote

01-30-2011, 10:48 PM	#7
sh1wn Member Join Date: Jan 2010 Posts: 60	I'm in oregon also and I'm just waiting for them to start busting all these new dispensaries that are poping up. I can see them letting one slide in portland but I'm sure they will not let it go on for to long in the small towns. Maybe there just waiting so they can make some more money for them to steal?
	Quote