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Obama administration warns Oakland on pot farms

Ryan J. Reilly/FlickrAttorney General Eric Holder

The Obama administration has warned Oakland over the licensing of four giant pot farms, saying the plan is in violation of state and federal law and could trigger multiple legal actions against the city. 

Officials from the Justice Department’s civil division and the U.S. attorney’s office in San Francisco delivered the blunt message to Oakland City Attorney John Russo, according to two officials who asked not to be identified because they were not authorized to talk about the meetings.

“The warning is clear: These are illegal, large-scale pot growing operations, with Oakland planning to get a cut of the illicit profits,” said one official. 

City Attorney Russo confirmed that Justice Department officials raised objections to Oakland’s marijuana cultivation ordinance in separate meetings last month.

“They've expressed their concerns that the path Oakland is taking is in violation of the law,” Russo said in a statement.

He declined to discuss details of the meetings or disclose the identities of the other participants. A spokesman for the U.S. attorney's office in San Francisco did not respond to phone messages.

At issue is a controversial ordinance, approved by the Oakland City Council last July, to license four “industrial” facilities to cultivate and process marijuana and sell the product to medical marijuana dispensaries around the state. If Oakland issues permits and the facilities are built, they could be the largest of their kind in the world.

In November, Oakland voters approved a measure that imposes a 5-percent business tax on all medical marijuana operators, including future pot farms, opening a potentially lucrative revenue stream for the city.

Supporters say the plan is carefully crafted to comply with Proposition 215 and subsequent legislation, which allow for marijuana to be cultivated “collectively or cooperatively” by patients with a doctor’s recommendation. 

More recent guidelines drawn up by Attorney General Jerry Brown call for a closed-circuit cycle of “marijuana cultivation and consumption with no purchases or sales to or from non-members.”

Even though pot remains illegal under federal law, the Obama Administration has taken a hands-off approach to California's medical marijuana operators so long as they are in unambiguous compliance with state law.

However, after closely studying the Oakland plan some federal officials have concluded the ordinance violates state law because it treats pot farms as distinct business entities for tax purposes, thus severing the direct connection between cultivator and patient that underpins the legal standing of a medical marijuana collective or cooperative.

“Oakland would be on the hook for violating state and federal law,” said one official who foresees possible civil and criminal litigation if the pot farms go into operation early next year as planned.

The Obama administration’s challenge to Oakland over large-scale marijuana cultivation appears to be part of a broader federal effort to bring order to California’s booming medical marijuana industry following last month’s defeat of Proposition 19, the initiative to legalize recreational pot.

Eight days after the vote California’s four U.S. attorneys met with DEA and Justice Department officials to develop a plan to deal with some of the loopholes and gray areas in the state’s medical marijuana program, according to two officials briefed on the discussions.

U.S. Attorney Benjamin Wagner said the Nov. 10 meeting focused on a "state-wide federal enforcement strategy" for marijuana but declined to provide details.

“My responsibility is not to enforce state law. But I do have a responsibility to enforce federal law, which means putting an end to people who use the cover of 215 to try to violate federal law. And there are efforts underway to try to tighten that up,” Wagner said.

Federal officials are particularly concerned about operators who are using medical marijuana as a cover for money laundering and illegal shipments to other states. 

Wagner cited a recent case [PDF] in which several Fresno-based growers are accused of cultivating thousands of pounds of pot under the state’s medical marijuana program, then shipping the product illegally to drug dealers in Boston.

“We are working hard to send a clear message to law enforcement authorities, federal and state and local, that we are determined to go after this kind of activity and bring more cases,” he said.

Wagner declined to say whether targeting Oakland’s pot farms was part of the new federal strategy. But two sources said the city ordinance was discussed in detail at the Nov. 10 meeting.

 

Filed under: Public Safety, Daily Report

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make_money_online's picture
Hi I just wanted to say a big thank you for a great blog post. I always find that I learn great things from you and your work and could never appreciate it enough. You do a wonderful job at opening my eyes and I really feel like I have learned something from you. Keep up the fantastic blog posts and I have just tweeted the post on Twitter and will be joining your RSS feed. Thanks again Doris X
ebird21307's picture
again the gov is trying to undermine the rights of states and especially the rights of individuals access to medicine for relief from terminal and chronic conditions. they are just looking and trying to come up with something to take these rights away, even if they have to use illegal ways or shady ways to eliminate a law that was voted on and approved by the PEOPLE. we still need to be shouting out at the top of our united voices to our representatives and legislators both local, state and federal that they represent us and not special interest groups. telling them it is way pass time that pot be legalized in this country. we need to educate them, because i am sure that the vast majority know that when made illeagle was brought about as a political move, not because it is bad for you and further they are not even educating themselves regarding all of the positive and helpful benefits, they only know and believe the lies that have been fed to us over the many years it has been illeagle and being to stubborn to look at the benefits. we need to educate them and begin inundating all of government with articles, studies and any relative material. those of us, especially, that suffers from a chronic condition or illness and has been helped, no matter if you are in a legal state, by marijuana need to write personal accounts to our reps. when written {both email and snail mail}, i would write personal on the envelope and hopefully it will get right to them or their personal assistants. thank you for sharing this story
jertik's picture
Isn't it about time the govt. gets out of our hair. Pot is being used by at least 50% of the population under 30. Lets legalize it, remember prohibition and all the trouble it caused. People are going to smoke pot and that is that. I am 67 years old and I have been smoking pot since I was 18. I have owned a successful buisness and am now retired. I do not smoke pot daily but I do use it for recreation, spiritual and medicinal purposes. Lets just legalize it, after all it is not as bad as alcohol and if someone robs a bank while smoking pot they will probably forget to put bullets in their gun
fxcoaching's picture
Obama's decision is best for Oakland, Good Job!
themarijuanalawyers's picture
The issues discussed and the "agreements" reached at the meeting discussed above with DEA and the 4 US Attorneys must be open and available to the public immediately. This is a very serious issue. State law allows for dispensaries and collectives. In federal law, that is irrelevant. Federal sentences are extremely high, in most cases mandating 10 years in prison. So, again, it is legal in the state, but if the federal prosecutors charge you, the issue of whether you were in compliance with state law is not relevant and not even mentioned. So, innocent people will rely upon their belief that they are doing something correctly and legal. The California Attorney General in 2008 issued "guidelines" which were intended to make it very clear what would be acceptable conduct to be in compliance with state law. It is horribly un-American and a mirror image of Stalinist Russia to have the powerful federal government meeting in secret to make their "policies" for when they will arrest and charge citizens who are going about their daily life assuming all is right because they are doing legal things. There is absolutely no benefit to anyone to have the US Attorneys and DEA keep a secret their internal guidelines and policies for when they will charge someone and when they will not. When law loses its normative ability, people have no respect for it and they cease to obey it. The US Attorneys mentioned should announce their guidelines.

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