Feds Crack Down On Pot Shops

The federal government is cracking down on medical marijuana dispensaries in California. Four U.S. attorneys are telling some landlords that their property could be seized if they don't stop leasing to pot shops.

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GUY RAZ, HOST:

The federal government is launching a new effort to crack down on medical marijuana in California. Here's Andre Birotte, U.S. attorney for the Central District of California.

ANDRE BIROTTE: Federal law allows the government to take property and money that's directly related to illegal drug trafficking. The law is that simple. It is a tool that the federal government has and will continue to use.

RAZ: The Justice Department has issued warnings to more than a dozen medical marijuana dispensaries. Despite a 1996 state law that allows the sale of medicinal pot, the dispensaries are still violating federal law. More now from NPR's Richard Gonzales.

RICHARD GONZALES, BYLINE: In a news conference in Sacramento, four federal prosecutors announced a series of civil forfeiture lawsuits against properties involved in what they call drug trafficking. They also said they've sent letters of warning to dozens of property owners and landlords where commercial marijuana stores are located and gave them 45 days to shut down. California voters approved Prop 215, the medical marijuana law 15 years ago. But the sale, cultivation and possession of cannabis is still a federal crime. And Melinda Haag, the U.S. attorney in San Francisco, says the intention of that law was to provide sick people with marijuana on a nonprofit basis.

MELINDA HAAG: What we are finding, however, is that California's laws have been hijacked by people who are in this to get rich and don't care at all about sick people.

GONZALES: The feds aren't targeting every medical marijuana dispensary. They are focusing on stores near schools, parks, any place near where kids congregate, as well as what they call significant commercial operations. On a typical weekday afternoon, the Harborside Health Center in Oakland has the clean, light and airy atmosphere of an Apple computer store. A dozen customers stand in line patiently waiting to hear about their choices from a young salesman.

UNIDENTIFIED MAN: We have pretty much a selection of everything from our low grades to our top shelf. These are usually our specialties, the best of the best.

GONZALES: Harborside hasn't heard from federal prosecutors, but it is Oakland's largest medical marijuana dispensary, and perhaps that's one reason why it caught the attention of the IRS. The taxman spent two years auditing Harborside and concluded that the dispensary couldn't take standard business deductions such as employee pay and health insurance. That leaves Harborside with a tax bill of over $2 million. Steve DeAngelo is the owner and operator of Harborside.

STEVE DEANGELO: The IRS is not trying to tax us. They're trying to tax us out of existence.

GONZALES: It's ironic, DeAngelo says, that on the same day that he got the bad news from the IRS, he had just handed the Oakland city treasurer a check for more than $300,000, which was the third installment of the more than $1 million he's paid in city taxes this year. Rules governing the dispensaries vary from city to city. William Panzer is an attorney who co-authored Prop 215, and he's always criticized the haphazard regulation of dispensaries by state and local jurisdictions. Panzer says the feds crackdown isn't a surprise.

WILLIAM PANZER: But I think the federal government is recognizing that they're losing the battle against cannabis and against medical cannabis. So I think that now they're trying to make a big splash politically, you know, at the very source where it all started, California.

GONZALES: And Panzer says the likely result is more medical marijuana dispensaries operating on a smaller scale. Richard Gonzales, NPR News, San Francisco.

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