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Selling medical cannabis in the 21st century

Editor’s Note: Proposition 215, also called the Compassionate Use Act, was passed in 1996. Since then, there seems to be a lot of confusion from people on all sides of the issue about exactly what is and isn’t legal concerning medical marijuana.
This is the second in a two-part series on medical marijuana in San Diego County and focuses on medical marijuana dispensaries and features prominent local legal battles addressing the issue.

“This is the front line,” said Eugene Davidovich as smoke from his cigarette trailed into the air at a recent medical marijuana rally.
In March 2010, a San Diego jury acquitted Davidovich on five felony counts relating to possessing and selling medical marijuana through his collective, which offered delivery service. Now the 30-year-old, a Navy veteran and a former “IT guy,” is an activist and spokesman for the San Diego Chapter of Safe Access Now, which promotes legal access to medical cannabis.
“I was vindicated of all the charges,” Davidovich explained, but added the case, which lasted for a year and half, cost him his savings, job and marriage. Davidovich said he was going to focus on lending support to James Stacy for his sentencing in federal court for operating a Vista collective.
Authorities arrested Stacy in September 2009 for violating federal drug laws in connection to his collective on South Santa Fe Avenue. Both men were arrested under the San Diego District Attorney’s Office “Operation Green Rx,” which ran from August 2008 to September 2009.
Several days before Stacy’s Nov. 1 trial date, federal prosecutors offered the Vista man a plea deal that would keep him out of jail; he accepted. Pleading guilty to a single count of manufacturing marijuana, Stacy received two years probation at his sentencing Jan. 7.
Due to the lack of other drugs, large amounts of money or an abundance of cannabis plants, Davidovich and other medical marijuana advocates viewed the federal government’s indictment of Stacy as a “test case.”
“I think that they realized there’s no way they had a case,” Davidovich said. He added that Stacy had gone out of his way to comply with the state’s law regarding medical marijuana collectives; though, for the San Diego District Attorney’s Office and federal prosecutors, that didn’t seem to matter.
Understanding Prop. 215
Fifteen years and many raids after its enactment, San Diego County remains in a mixed-up state over the California’s Compassionate Act Use, also known as Proposition 215. Even with the passage of SB 420 in 2003, an ongoing disconnect between District Attorney Bonnie Dumanis and medical cannabis advocates’ interpretation of the California’s attorney general guidelines continues to make San Diego a land of confusion for medical marijuana patients, collective owners and law enforcement agents.
In 2008, Attorney General Edmund Brown Jr. issued a set of guidelines relating to medical marijuana in California, which included information regarding collectives and cooperatives; however, while a step in the right direction, the regulations surrounding collectives are still not clear-cut. For example, the report stated, “Although medical marijuana ‘dispensaries’ have been operating in California for years, dispensaries, as such, are not recognized under law … dispensaries that merely require patients to complete a form summarily designating the business owner as their primary caregiver — and then offering marijuana in exchange for cash ‘donations’ — are likely unlawful.”
However, the guidelines also state that the attorney general recognizes that “a properly organized and operated collective or cooperative that dispenses medical marijuana through a storefront may be lawful under California law,” as long as the collective either incorporates with the state and conducts its business for the mutual benefit of its members, or is an organization that “facilitates the collaborative efforts of patients and caregiver members — including the allocation of costs and revenues … it should only provide a means for facilitating or coordinating transactions between members.”
At a recent rally in support of James Stacy, retired Superior Court Judge Jim Gray chastised California for not setting up concrete regulations for Proposition 215. “I really could issue an indictment, if I could on Sacramento,” Gray told the audience at the rally.
“The police don’t know what’s legal or illegal or right or wrong; a lot of the medical marijuana dispensaries and the people don’t either,” added Gray, who is a proponent of California’s legalization of marijuana. “Absolute shame on these people. They should have followed the law and put in some form of procedures by now.”
Authorities, including Assistant District Attorney Steve Walter and Assistant San Diego Sheriff Ed Prendergast, are also in favor of clarifying the Attorney General’s guidelines.
“I think that would be great,” said Walter when asked about establishing more concrete regulations. “Either the legislature or the courts are going to have to step in and give some clarity to what is on the books now.” For now though, in Walter’s opinion, “a true collective” consists of a small group of people who have gotten together to collectively cultivate marijuana.
“A lot of these stores, which is what they appear to be, are nothing more than retail marijuana stores, and you just go in fill out your forms, show them your recommendation, and then you can buy marijuana,” the attorney said. “The law allows you to collectively or cooperatively cultivate marijuana; it does not allow you to sell it.”
Both Walters and Prendergast interpret the attorney general guidelines regarding collectives to be a group of patients who cultivate their own marijuana, and share the costs and duties of the process.
“I understand some patients can’t contribute labor; however, when you have collectives with thousands of members and nobody knows each other, I’m not really sure that’s a closed-circuit collective in terms of what the intent was with,” Prendergast explained.
Recently, Prendergast said cease and desist orders were sent out to collectives operating without proper documentation, such as permits or licenses, but he was quick to point out that authorities would issue these to any business in the county that was not complying with proper procedures, just not businesses relating to medical marijuana.
Though, he conceded it might be beneficial for law enforcement agencies, as well as patients and collectives, if the law is rewritten. “People are struggling with this; law enforcement is struggling with this,” Prendergast said. “There is nothing that officers or deputies dislike more than the uncertainty of knowing what they can and can’t do in certain situations.”
In June, county supervisors approved an ordinance to regulate dispensaries in unincorporated areas, but due to the upfront cost of the $20,000 processing fee to the sheriff’s department as well as sites that are undeveloped or not zoned properly for a non-industrial business, no collectives have been approved for the 20 sites available under the law.
“They made the perfect ban; it’s a legal ordinance,” Davidovich said.
In North County, city attorneys maintain they do not need a policy on collectives, in part because business permits are not granted for operations that do not comply with federal law. However, Davidovich points to a recent appellate court ruling that nixes the excuse. He said his organization has sent out more than 100 notices to cities to inform them of that ruling.
According to the decision in Qualified Patients Association vs. City of Anaheim, the court ruled, “the city may not justify its ordinance solely under federal law, nor in doing so invoke federal preemption of state law that may invalidate the city’s ordinance.”
Currently, advocates of medical marijuana are working to set up an advisory committee with Oceanside City Council, which has a moratorium until May of this year on collectives in the city. In his experience, Davidovich explained that setting up regulations in cities helps to decrease crime, while bringing in money for the city.
Filling a need?
“Patients will have access,” Davidovich said. “If they shut down the dispensaries, they are going to force them to the delivery services, which will flourish. If they shut down the delivery services, they’re going to go back to the black market, which is what we don’t want.” Mike Giusti of Oceanside knows all about not having access.
The 51-year-old who receives kidney dialysis five days a week moved to North County several years ago from Nevada to be able to utilize medical cannabis collectives to help with the nausea he gets from the chemicals in his treatments. “In California, I don’t have to worry about persecution because I’m sick,” Giusti said. “It’s bad enough just being sick.” Realizing North County lacked services for medical marijuana patients, Giusti opened up Mountain High THC, an online medical marijuana education center and delivery collective in Oceanside, last April. Armed with the appropriate documentation, including a California seller’s permit and a primary caregiver card as well as incorporating his business as a nonprofit mutual benefit corporation, Guisti is looking to fight the resistance toward medical cannabis in North County by making his business and practices transparent.
Giusti, a former president of the Mortgage Bankers Association, is hopeful his operation’s openness, focus on empowerment and members’ demographics — many of whom depend daily on medical cannabis to assist with their illness — will help change the “staunch” perspective of collectives from local governments.
“People want a better, easier access way, and that’s what we are trying to provide them,” Giusti said.
Of course, not everyone agrees that delivery services are legal under the attorney general guidelines for collectives; the San Diego District Attorney’s Office still deems them illegal. “I don’t see basically a Pizza Hut model imposed on marijuana being a collective or cooperative,” Walter said.
Despite the continued opposition, much of what Giusti’s considers “posturing,” he said he will remain a “conspirator” in the fight for safe access for medical marijuana patients.
“I believe that’s important and healthy, and I’m going to do it no matter what until they take me away,” Giusti said.


Sifu James January 21, 2011 at 5:30 pm

Thanks for talking to real people and not the crazy ones who lie all the time. Eugene is doing more to help people than any other person in San Diego. We need to keep fighting for our rights.

Mr. Walters and Prendergast need to stop attacking medical marijuana collectives because they can’t read the law. Their job is not to put people in jail when they don’t understand the law but to keep the peace. They need to stop arresting people for medical marijuana collectives and start going after real crime.

herb folks January 21, 2011 at 10:18 am

Please interview folks other than the police/ASA. The public needs a balanced view. Cigarette smoking Mr. Davidovich is not representitive of patients, he represents "the Duncan-ites", merchants posing as activists. Eugene did not run a collective, ever, he ran a small time delivery service, perod.

hemlockroid January 20, 2011 at 12:54 pm

The issues of profit and money laundering can be solved at the bank level.

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