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Officials seize less Calif. marijuana, see more on private land

As California's outdoor marijuana growing season nears its end for 2012, drug officials are reporting a sharp decline in crop seizures for the second year in a row.

The latest figures show that local, state and federal law enforcement agencies are on track to eradicate an estimated 1.5 million plants from outdoor gardens – mostly on public land – down from a decade high of about 7.3 million plants in 2009. This year's seizures would be the lowest since 2004, when a little more than 1.1 million plants were eradicated, according to Drug Enforcement Administration statistics.

Some attribute the drop to a federal crackdown on medical marijuana dispensaries and illegal grows on public land and political losses in California, such as voters’ defeat in 2010 of the pro-legalization Proposition 19. At the same time, fewer counter-narcotics teams hunted for California pot this year due to the elimination of a three-decades-old state eradication program.

Others say growers have retreated to smaller garden plots on private land and gone back underground to wait out what legalization advocates have deemed the last throes of prohibition. They also point to a glut of marijuana that depressed wholesale prices and burst the state’s so-called “Green Rush” to capitalize on the relaxed attitudes toward the drug.

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New book discounts theory of marijuana as top US cash crop

For years, legalization advocates have argued that marijuana is America’s leading cash crop, outranking corn, wheat, soy and a host of other heartland staples produced on an industrial scale.

Bringing pot production above ground, the argument goes, could produce a $30 billion tax bonanza for cash-strapped governments and a huge savings for law enforcement and prisons.

But new research dumps cold water on many of these claims, concluding that far from being America’s biggest cash crop, marijuana probably isn’t even in the top five. Rather, marijuana might make the top 15, “ranking somewhere between almonds and hay and perhaps closest to potatoes and grapes,” the researchers say.

These findings are part of a new book, "Marijuana Legalization: What Everyone Needs to Know," by a team of researchers and public policy experts from Carnegie Mellon University, Pepperdine University, UCLA and the RAND Corp. 

The authors, Jonathan Caulkins, Angela Hawken, Mark Kleiman and Beau Kilmer, analyze the costs and benefits of legalizing marijuana, challenging many commonly held assumptions on both sides of the issue. 

In particular, the authors take aim at a widely cited 2006 report by Jon Gettman, a former director of the National Organization for the Reform of Marijuana Laws, that valued America’s annual marijuana production at a whopping $35.8 billion.

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Finances of prominent California pot club revealed in documents

At the peak of California’s pot boom in 2009, one of the state’s largest medical marijuana dispensaries recorded more than $15 million in sales to thousands of customers for popular strains like Grand Daddy Purple, OG Kush and Blue Dream. What it didn’t record was much profit.

During the same period the dispensary – Berkeley Patients Group – registered more than $100,000 in “net income.” So where did all the money go? Until now, it’s been hard to know, because Berkeley Patients Group, like other California dispensaries, keeps a tight lock on its internal finances.

But according to company accounting documents and emails obtained by California Watch, much of Berkeley Patients Group's income from lucrative pot sales went to growers, staff salaries that included nearly $1 million for top executives, advertising, security, accountants and attorneys and a host of other operating expenses. Smaller expenditures included $39,916 on “decorations and ambiance” and $2,481 for softball.

The documents, which were reviewed by accounting experts, shed light on the private world of California’s medical marijuana industry, which has been the focus of a major crackdown by federal prosecutors who allege many operations are actually fronts for drug traffickers. Medical marijuana advocates and some state lawmakers have criticized the federal enforcement actions, saying prosecutors have targeted legitimate enterprises that are operating in compliance with state law, which allows "qualified patients" and their "designated primary caregivers" to grow marijuana "collectively or cooperatively."

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Mendocino County pot program at risk after raid

On Oct. 13, the Drug Enforcement Administration raided Northstone Organics, a medical marijuana co-op farm in Mendocino County.

On Oct. 13, heavily armed Drug Enforcement Administration agents raided Northstone Organics, a medical marijuana cooperative in Mendocino County. The farm is part of a county-wide program that remains the only effort in California to impose local controls on marijuana production. The program has generated hundreds of thousands of dollars in fees for the sheriff's department and has become a model for other counties looking to bring order to the medical marijuana industry.

The Center for Investigative Reporting and KQED examined Mendocino's experiment in legalizing medical marijuana cultivation in this summer's PBS FRONTLINE episode "The Pot Republic" and has obtained exclusive access to footage from the Oct. 13 raid.

This reporting is part of an ongoing investigation by CIR, FRONTLINE and KQED.

Watch California Raids Threaten Medical Marijuana Regulation on PBS. See more from PBS NewsHour.

 

TRANSCRIPT:

In California, federal prosecutors are cracking down on the state’s booming marijuana industry. The state was the first to make medical marijuana legal, but the feds claim the law is now a shelter for illegal profiteers. Reporter Michael Montgomery looks at how the crackdown is affecting one pioneering effort to regulate medical marijuana production. Our story was produced as part of a collaboration of the Center for Investigative Reporting, FRONTLINE and KQED Public Radio.

Reporter Michael Montgomery: Matthew Cohen cultivates medicinal marijuana on a 7-acre farm set amid rolling vineyards in Northern California. And for the past year, he’s been operating legally – atleast in the eyes of local law enforcement. His marijuana plants are protected by these tags.

Matt Cohen: It says Mendocino County Sheriff’s Department on it; it’s upside down, though.

Reporter: This program is unique in California and has allowed Cohen’s nonprofit cooperative to expand around the state. 

Cohen: We’re about 1,700 members now. 

Reporter: County rules allow Cohen to grow up to 99 plants ¬– provided he submits to inspections by sheriff’s deputies and complies with state law. It’s enough marijuana to keep his co-op members supplied for many months.

Cohen: We were just getting ready to start harvesting. You know, we figured that we were compliant with state law and compliant with local regulations, and that’s not what the federal government was interested in.

Reporter: But Cohen was wrong. On October 13th, heavily armed federal agents stormed Cohen’s compound.  

Cohen: This is where our dogs were sleeping when they started barking, then I looked out the window and saw all the cars. Four or five, you know, federal agent vehicles – you could tell with the blacked-out windows and the blacked-out rims, come cruising in here very fast. Everybody hopped out of the car very quickly. I told my wife, “We’re being raided.” They said, “Open up, federal agents; we have a warrant.” And I said, “I’m opening the door right now,” and I opened the door to ¬– you know, they had the battering ram ready to go through the door, and they grabbed me, slammed me up against the wall here, cuffed me.

Reporter: As the agents searched other buildings on the property, Cohen’s state-of-the-art security system recorded their moves.

Cohen: There’s a machine gun right there.

Reporter: Under the federal Controlled Substances Act, marijuana remains illegal, and drug agents are stepping up raids across the state to curtail California’s marijuana industry.

Cohen: Here, you can see that they tore through all our camping stuff, and this is recycling that they went through.

Reporter: Before the agents discovered most of Cohen’s surveillance gear, cameras caught them searching through his business files. Meticulous record-keeping is required by county law. But there’s a twist: The same documents that allow Cohen to operate legally in Mendocino can be used against him as evidence in a federal criminal prosecution. It was only after the DEA raid was under way that Sheriff Tom Allman learned one of the farmers in his inspection program was the target.

Allman: That afternoon, after I assumed that everything had cleared, I called Matt Cohen. I asked him how he was treated. He said he was treated fair, he said he wasn’t arrested and said that they cut down marijuana plants, 99, and I believe that’s what their records show also. I assured him that in my opinion, as far as local and state laws were concerned, he was abiding by those laws.

Reporter: Days before the raid on Cohen’s farm, California’s four U.S. attorneys announced a major offensive against the state’s marijuana industry.

Melinda Haag: One of the reasons that we are making these announcements today is to try to put to rest the notion that large marijuana businesses can shelter themselves under state law and operate without fear of federal enforcement.

Reporter: Targets also include property owners who lease land to growers and distributors. Even newspapers and magazines that carry ads for medical marijuana are under scrutiny.

Joseph Russoniello: The folks that say, “Here I am, and I dare you,’ they make themselves prime targets by their audacity and by the size of their operation.

Reporter: Joseph Russoniello served as a U.S. attorney under four presidents. He says advertising is just one indication that most medical marijuana outfits in California are legitimate targets for the feds.

Russoniello: I think the U.S. attorneys would agree that 96-98 percent of all the operators in the state were out of compliance because they were commercial enterprises; they were not limiting themselves to people in their jurisdiction. As soon as you cross county lines, packaging it, suggesting you have a client base or patients really are all over the state, you are basically in a commercial enterprise for profit.

[Chanting]

Reporter: The crackdown triggered protests and a lawsuit from medical marijuana supporters. They accused the Obama administration of backtracking on what they say were earlier promises to leave states alone when it comes to medical marijuana. In Mendocino County, officials worry that the raid on Matt Cohen’s farm undercuts their effort to strictly regulate marijuana growing.

John McCowen: People are wondering what is behind this, what happens next, am I personally at risk. We had an individual who was doing everything they can do to be as legal as they could with local and state law, adhering strictly to the letter of the law all the way down the line. If the feds are going to raid him, then no one is safe.

Reporter: John McCowen didn’t start out as a medical marijuana advocate. In fact, he supported bans on outdoor growing. But he says the county’s modest cultivation program has helped bring order out of chaos.

McCowen: By bringing the production of medical marijuana above ground, to a place where it is regulated by the sheriff, arguably tremendously increases public safety and environmental protection. The raid, if it has the impact of driving people out of the program and back underground, will have the opposite effect.

Cohen: Well, here’s what’s left. Right there.

Cohen: It certainly sends the message that the federal government would prefer that collectives and co-ops operate underground, unregulated. It’s appalling to me that illegal farms are existing all around this county and that they’re going to come after us.

Reporter: In fact, local law enforcement continues to target large-scale illegal pot farms. And they’re using fees collected from permitted growers to help pay for raids and officer training. Justice Department officials declined to comment on Mendocino’s ordinance. And while the feds have yet to directly challenge the program in court, the recent raids leave the Sheriff’s Department squeezed between local and federal law. 

Allman: If the Mendocino County ordinance is in violation of federal law, I want to be told that by the highest court in the land. But if it’s not in violation, I want to be told that, too. 

Russoniello: Look, we have consequences. There are things that we have to do to enforce federal law, whether you’re in the way of our doing it or you’re half-heartedly cooperating with us, or you’re indifferent to us – the fact of the matter is, we have federal mandates; we will follow those laws.

Reporter: Russoniello says federal prosecutors in the other 15 states with medical marijuana and laws and the District of Columbia will be following the crackdown in California closely.

The raid on Cohen’s farm is cited in a recent lawsuit filed by Americans for Safe Access, a medical marijuana advocacy group, against U.S. Attorney General Eric Holder and Melinda Haag, accusing them of using coercive tactics to interfere with the powers delegated to the states.   

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Calif., Ky. officials at odds over amount of pot in NFL case

A war of words has erupted between state drug officials and a Kentucky prosecutor over the investigation of an NFL player who last year received two pounds of marijuana shipped to his home from Northern California.

Officials in the two states are at odds over the amount of marijuana that was found at the Crestview Hills, Ky., home of Cincinnati Bengals wide receiver Jerome Simpson, 26. Rob Sanders, the Kenton commonwealth's attorney who originally charged Simpson with a count of marijuana trafficking of more than 8 ounces, said a potentially broader investigation was stymied when California drug officials publicly disclosed the case last September. California officials disagree.

"Normally in drug trafficking cases, we hope to work up the supply chain to catch the 'bigger fish,' " Sanders wrote in an e-mail. "The (California) press conference alerted the world that law enforcement was investigating Mr. Simpson. Any time law enforcement loses the element of surprise, it compromises officer safety, especially in undercover operations."

 

A package with two pounds of marijuana was delivered Sept. 20 to Simpson’s home, where an additional amount – a little under a pound – was found, along with related paraphernalia in various locations and containers, Sanders wrote. 

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Prominent Berkeley marijuana dispensary to close shop

One of California’s biggest medical marijuana establishments – embraced by local officials as a model business that donates to the poor and pays millions in taxes – has become the latest target in a statewide crackdown by federal prosecutors. 

Berkeley Patients Group, founded in 1999 by leading names in the state’s medical marijuana movement, will cease operations at its current location later this year, according to an agreement between the dispensary’s owners and the landlord. The document was signed on Feb. 28 by Alameda County Superior Court Judge C. Don Clay.

“Berkeley Patients Group agrees to cease all cannabis-related activities and remove all cannabis-related property from the premises by May 1, 2012,” the document states. Legal experts said agreements of this kind can be revised, but it was unclear if that was possible in this case.

The decision to shutter the outlet on San Pablo Avenue was triggered by a warning from Melinda Haag, the U.S. attorney for Northern California. In a letter sent to the owner of the building that houses the dispensary, Haag said federal prosecutors would file a forfeiture action if marijuana continued to be distributed at the location. Berkeley Patients Group has leased the property since 1999 and operates under a city license. 

 

The letter cited violations of federal law and the fact that the outlet is within 1,000 feet of two schools: the Center for Early Intervention on Deafness, which also houses a preschool, and Ecole Bilingue de Berkeley, a French bilingual grade school.

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Under federal pressure, Mendocino pulls plug on marijuana program

This week, officials in Mendocino County, Northern California, are expected to pull the plug on an unusual program that put pot growing under supervision of the local sheriff. It was the first effort of its kind in the nation and proved a success, at least in the eyes of many locals. But, as Michael Montgomery reports, federal prosecutors took a different view.

TRANSCRIPT:

Reporter Michael Montgomery: Call it weed détente. For years, Mendocino County, like other places in Northern California, struggled to contain an explosion in pot growing, especially since the state legalized the use of medical marijuana. So two years ago, officials decided to try something completely new – legalize medical marijuana production under strict conditions. And they gave the job to a barrel-chested sheriff's sergeant named Randy Johnson.

Randy Johnson: Prior to July, when the program started, what I knew about marijuana was chop it down and haul it to the evidence locker. (Crowd laughs.)

Reporter: That's Johnson speaking at a local library last year. It was one of dozens of meetings with growers aimed at coaxing them out of the shadows. Johnson tells the group they're allowed to cultivate enough medical marijuana to support a real business – but only if they follow environmental rules, submit to inspections by the cops and pay hefty fees. 

 

Johnson: I haven't had a single complaint on any of your gardens, and I thank you for that. (Applause)

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Drug agents closing in on NFL player's pot supplier

California drug enforcement agents say they are closing in on the suspected marijuana suppliers to pro football player Jerome Simpson, four months after the Cincinnati Bengals wide receiver received a 2.5-pound package of Northern California pot sent to his suburban Kentucky home.

The investigation likely includes at least one other person with ties to the National Football League, a state Department of Justice spokeswoman said.

“We’re following up on leads in Northern California and getting close to wrapping that up,” said Michelle Gregory, the spokeswoman. “It’s going to be pretty big.”

Simpson, 25, was indicted Thursday by a grand jury in Kenton County, Ky., on a charge of trafficking more than 8 ounces of marijuana, according to the indictment. Simpson’s attorney, Burr Travis, said the case starts and stops with his client, who plans to plead not guilty at his Jan. 30 arraignment.

In what authorities say is an unrelated investigation, another NFL player, former Chicago Bears wide receiver Sam Hurd, also faces drug-trafficking charges following his arrest last month in Chicago. Police reportedly have a "double-digit" list of players to whom he supplied drugs.

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Prosecutors move to shut down Mendocino pot permit program

Mendocino County’s ambitious effort to regulate marijuana production – the first of its kind in California and the nation – is facing growing uncertainty following new threats of legal action by federal prosecutors.

The controversial program, which began two years ago, authorizes growers to cultivate up to 99 marijuana plants, provided they follow local and state medical marijuana rules, pay thousands of dollars in fees to the county and submit to inspections by sheriff's deputies.

The program has proven popular with growers seeking a safe harbor – nearly 100 registered for last fall’s harvest – and county officials assert that drawing a bright line between legal and illegal marijuana growing benefits the safety of the wider public.

“We’re trying to bring order from chaos,” County Supervisor John McCowen said in a 2011 interview.  McCowen earlier had sought to ban marijuana cultivation, but soon realized it was a losing proposition in a county where pot – legal and illegal – is widely seen as the biggest cash crop.

But just as the program has gained local acceptance, it’s facing growing pressure from federal law enforcement.

In October, DEA agents raided a farm near Ukiah owned by Matthew Cohen, a well-known medical marijuana grower who helped draft the county’s cultivation ordinance. 

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Marijuana prices rising after federal clampdown

A crackdown by federal prosecutors is casting a long shadow over the state’s marijuana industry, but there is one bright spot, at least for some Northern California growers willing to risk prison time: Wholesale prices appear to be on the rise.

After slumping precipitously, prices for a pound of high-grade, outdoor-grown marijuana are stabilizing and in some areas are up between 20 and 40 percent, according to interviews with growers, law enforcement agents and analysts.

“It’s been a downward thrust since 1996, but this year, prices have been up,” said Kym Kemp, a Humboldt-based blogger who closely follows Northern California’s marijuana scene.

 

“People are saying, ‘Maybe this isn’t our last season,’ ” she said. “I don’t think people are ready to be optimistic, but they’re less depressed.”

In recent years, California’s booming medical marijuana industry attracted a rush of new players who harvested increasingly large amounts of pot – for storefront dispensaries and the black market. Some longtime operators responded by also “growing big.”

Surging production pushed down prices for some strains to less than $1,000 per pound. This led more growers to illegally ship their marijuana out of state, where they can double or triple their profits.

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