SDPD chimes in

“Even if one takes every reefer madness allegation of the prohibitionists at face value, marijuana prohibition has done far more harm to far more people than marijuana ever could.
—William F. Buckley

Ever since the San Diego City Council-appointed Medical Marijuana Task Force began meeting in early October, panel members have begged for input from local law enforcement.

That day finally came last week, when an assistant police chief and a narcotics-unit captain appeared before the task force to offer their interpretation of state law and begin a dialogue that many hope will bring clarity to the murky world of medical-marijuana dispensaries.

While the winds whipped and rain pelted San Diego last Thursday, the task force reconvened after a brief respite to tackle what many on both sides of the medi-pot debate consider the crucial issue of the day: How can patients, their caregivers and dispensary operators avoid running up against the wrong side of the law?

The two-hour discussion was devoid of confrontation, with police acknowledging that some local cooperatives are probably operating legally under state guidelines—something District Attorney Bonnie Dumanis has never acknowledged—and patient advocates embracing police involvement in coming up with regulations that protect neighborhoods.

After the meeting, Assistant Police Chief Cesar Solis seemed satisfied with the initial discussion, which primarily revolved around two areas of concern for police: the matter of nonprofit versus for-profit establishments and how to ensure that dispensaries are “closed circuit”—in other words, that only members are obtaining marijuana and that it’s produced within the collective, not brought in from outside sources.

“We’re not arresting any cancer patients or grandmothers,” Solis told Spin Cycle. “That’s not who we’re after. But the dispensaries that are making the money, yes, we are going to go after them.”

Now, Spin Cycle is neither an attorney nor an accountant, but it certainly seems apparent that the task force would do well to invite such experts in hopes of making sense from the cacophony of opinions that are engulfing the medi-pot issue.

Mark-Robert Bluemel, a task force member and an attorney, agreed. He told the task force that patients and dispensaries face a “catch-22” in that state officials are refusing to recognize dispensaries as tax-exempt nonprofits, which he contends could toss the hard work of the task force “down the toilet.”

An accountant colleague, Bluemel said, recently contacted the state Franchise Tax Board (FTB) and was told that the state “is no longer considering nonprofit status for medical-marijuana dispensaries. So that throws another wrench in the work here.”

Spin Cycle tried to confirm that with the Secretary of State’s office, where articles of incorporation are filed for nonprofits. A spokesperson there suggested calling the Attorney General’s office for clarification. The AG’s office in turn advised calling the Secretary of State’s office.

Welcome to the world of medical-marijuana law.

John Barrett, an FTB spokesperson, offered this scenario: “In the case of a medical-marijuana dispensary, the operators will go to the IRS, who will decline their application for tax-exempt status. Since there is no tax-exempt letter from the IRS, FTB can’t grant exemption, either. The dispensary will operate as a general corporation and be subject to corporate tax.”

Only one problem: The Attorney General’s guidelines for medi-pot collectives and cooperatives offer no path to operating as a corporation, only as a nonprofit.

Confused yet? Yeah, Spin Cycle thought so.

Alex Kreit, task force chairman and a law professor, reviewed the FTB interpretation for Spin Cycle and concluded, “The medical-marijuana law does not require collectives to obtain official nonprofit status, only that they do not turn a profit…. So, even if a collective does not have tax-exempt status, they can still operate within the law on a nonprofit basis and within the regulations the task force has recommended.”

But Bluemel wonders if it’s fair that non-marijuana-related nonprofits are allowed to write off their expenses and generate revenue while, from his perspective, medi-pot shops can’t. “They need to understand that revenue is not the same as profit,” he said.

The good news is that the Attorney General’s office is in the process of rewriting its medi-pot guidelines to take into account recent court rulings, including last week’s state Supreme Court decision that struck down a portion of state law that had limited the amounts of marijuana a patient may possess. A spokesperson said the AG’s office hopes to issue the new guidelines sometime this spring.

While Assistant Chief Solis and Capt. Guy Swanger tried their best to answer the task force’s questions, some queries will likely remain unanswered until these new guidelines are made public.

Solis said that in a perfect world, medi-pot collectives would have only 20 members or so and would require that those members participate in growing their own. “All I know is Prop. 215 didn’t account for, unfortunately, dispensaries,” he told the panel. “If they can’t grow it, they don’t have a caregiver that can grow it, there’s a little bit of a dilemma.”

Task force member Stephen Whitburn told police about a friend who has brain cancer and wanted marijuana to alleviate her suffering. He said she was in no position to grow her own; nor did she want to seek it out on the street. “She just wanted the opportunity to go somewhere and get medical marijuana,” he said.

Solis, while sympathetic, said, “I don’t have an answer to your question.”

Swanger agreed, adding that the city is heading into new territory and that transparency and oversight will be major challenges.

“If you’re asking if there’s a magic remedy, we don’t have that answer,” Swanger said, adding amid some chuckles from the audience, “I’m glad you’re looking at it, not me.”

The task force meets again at 9 a.m. Feb. 5, on the 12th floor of City Hall, 202 C St., Downtown.   

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