California Senate moves to crush medical marijuana profits

By Stephen C. Webster
Tuesday, May 21, 2013 11:48 EDT
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Woman smoking pot at Toronto rally via Shutterstock
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A bill approved by the California state senate on Monday would further restrict the state’s medical marijuana industry by requiring the end of all for-profit sales of the drug to licensed patients and caregivers.

The proposed law would go further than the state attorney general’s non-binding guidelines issued in 2008, making the not-for-profit collective model mandatory for dispensaries. Provisions in S.B. 439 would also place even greater records-keeping requirements on dispensary owners, who would still be entitled to reasonable compensation for their time and efforts. In theory, that should allow tax enforcers to peer more closely at dispensary finances to ensure shady businesses are not taking profits while reporting none.

“Everybody benefits from tighter regulations,” Chris Lindsey, legislative analyst for the Marijuana Policy Project, told Raw Story. “Where you run into problems is when you have a law that can be interpreted several different ways, which means that people trying to comply with the law don’t know where they stand.”

Former Attorney General Jerry Brown, now the state’s governor, issued those 2008 guidelines after several law enforcement agencies asked for clarification on who can be prosecuted and why. After California voters legalized medical marijuana in 1996, the state updated the laws again in 2004 with S.B. 420, the Medical Marijuana Program Act, moving the industry from a Wild West-like stage to a system of voluntary regulations that established a licensing system and put limits on growing and purchasing the drug.

“[The Senate bill] gives the force of law to the guidelines established by the attorney general in 2008,” Lindsey added. “Where before the guidelines were guidelines, they would have the force of law, and I think that benefits everyone.”

However, those voluntary regulations have not settled the dispute cities around the state are still having with medical marijuana dispensaries. Over 200 municipalities have banned pot shops outright — actions which the California Supreme Court upheld — and on Tuesday Los Angeles voters will decide on competing initiatives that deal with the same issue. The city council’s favored initiative, Proposition D, would dramatically shrink the number of dispensaries in the city. Measure F, which dispensaries support, would impose higher taxes on dispensary revenues and allow store owners to launch their own industry-wide set of voluntary regulations. If Measure F passes, however, the council still has the ability to completely ban all dispensaries within city limits.

The confusion over rules for marijuana storefronts is precisely the target of S.B. 439 as well, according to sponsor Darrell Steinberg, president pro tempore of the California Senate. The Los Angeles Times noted he told colleagues during debate that because state law does not yet address issues affecting marijuana storefronts, he crafted the bill to “ensure that drug cartels and other criminals do not benefit from the lack of regulation.” Dispensary owners also told the paper that they support the legislation, which cleared the senate without a single Republican vote.

“I don’t really know” if drug cartels are taking profits from shady medical marijuana businesses, Lindsey said. “I can understand that there would be concerns about that, but this is another example of why tighter regulations serve everybody best.”

[Photo: A woman smokes marijuana at a public rally. Shutterstock.com]

[Updated with quotes from the Marijuana Policy Project.]

Stephen C. Webster
Stephen C. Webster
Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.
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