In its effort to shut down California’s booming medical marijuana dispensaries, the Justice Department is seeking to seize the property where the clinics are based, even going after at least one bank that holds the mortgage on a clinic.
Chase bank received a letter to evict the Marin Alliance for Medical Marijuana, according to Greg Anton, attorney for the clinic. The bank owns the note on the building in Fairfax, Calif.
According to Anton, the bank received a similar letter from U.S. attorney Melinda Haag for the northern district of California that was sent to the Alliance’s landlord on Sept. 28 and other medical marijuana dispensaries. The letters threatened that unless the owners evicted the cannabis clinics within 45 days, they could face criminal action.
Anton said he obtained a copy of the letter to JPMorgan Chase through the clinic’s landlord, as reported by the Bay Citizen.
A spokesman for JP Morgan Chase said he had no comment and would not confirm whether the bank received a letter from the U.S. attorney.
The Justice Department announced on Oct. 7 it is cracking down on the illegal distribution of marijuana in four federal districts in California, which has had a growing cannabis industry since legalizing medicinal marijuana in 1996 through Proposition 215.
A spokesman for the U.S. attorney in the state’s Northern district said he could not comment on who received letters.
The U.S. attorneys for Sacramento, San Francisco, Los Angeles and San Diego revealed enforcement actions against at least 16 cannabis distributors in those federal districts. Deputy Attorney General James Cole said the department will not focus the investigation on individual patients with serious illnesses like cancer or their immediate caregivers.
Lynnette Shaw, owner of the Marian Alliance for Medical Marijuana, which calls itself the oldest medical marijuana dispensary in the state, said her landlord is planning to evict the business from the premises, though Shaw is hoping to obtain a court order or even an executive order that would bring a temporary stay on the U.S. Attorneys’ actions.
Shaw said she has obeyed all state laws for 15 years and never diverted medicine for non-medical purposes or sold out of state.
But she and her landlord, who she has been supportive since the time the clinic launched, are fearful of the Justice Department’s threats.
“My landlord is terrified, I would never do anything to endanger him,” Shaw said. “Now he’s asked us to remove marijuana from premises.”
On Tuesday, state and local legislators gathered with clinic owners in San Francisco prior to President Obama’s fundraiser event, calling on the president to intervene.
“This destructive attack on medical marijuana patients is a waste of limited law enforcement resources and will cost the state millions in tax revenue and harm countless lives,” California Assemblyman Tom Ammiano said. “President Obama needs to reverse this bad policy decision and respect California’s right to provide medicine to its residents.”
Aaron Smith, executive director for the National Cannabis Industry Association, said, “President Obama needs to immediately reign in the Justice Department for defying his administration’s stated policy to respect state medical marijuana laws.”
The Justice Department’s action places into question marijuana-related activities in 15 other states and the District of Columbia, which have legalized medicinal marijuana in some form.
Kevin Sabet, former Senior Policy Advisor to President Obama’s Drug Czar, Gil Kerlikowske, and currently a consultant to drug prevention and policy organizations, said financial institutions that deal with medical marijuana organizations should be on alert.
“Smoked marijuana remains illegal in all states, and federal law — while recognizing certain components of marijuana as having medicinal value — does not allow the whole marijuana plant to be smoked for any purpose, including purported medical purposes,” he said.
Sabet also warned that all states with legalized medical marijuana should pay attention to the enforcement actions in California.
“Remember, all actions have to be approved by Attorney General Holder, so it’s hard to imagine that California would be the only place the Department of Justice is focusing on,” Sabet said.
While dispensaries outside California have not received similar letters from the Justice Department, some have been audited by the IRS for taking business deductions that were related to “trafficking in controlled substances.” The IRS can penalize cannabis dispensaries based on section 280E of the tax code, passed during the Reagan administration in 1982, which prohibited drug dealers to take any deductions based on trafficking activities.
Jill Lamoureux, chairwoman of the National Cannabis Industry Association, said she knew of one audit in Colorado, the details of which are confidential. She said the deductions were accepted an no additional taxes or fines were assessed.
“If the IRS determines across the board that this industry cannot take standard business deductions it will severely limit the ability of these businesses to thrive serving patients and contributing to our state’s economies desperately in need of new growth industries,” Lamoureux wrote in an email to ABC News.
Sabet said the federal government is sending a message that the “rush” in the medical marijuana industry is “over.”
“People – including drug dealing organizations – flocked to the promise land of California thinking they could get rich off of this grey market, but the federal government is now reminding folks that there’s nothing grey about marijuana markets,” Sabet said. “‘Marijuana is an illegal drug and we take it seriously,’ is the message they seem to be sending.”
