Monday, November 14, 2011

45 Days are up... Were the Fed's faking?

California's four US Attorneys set a 45-day deadline for MMJ dispensaries and their landlords to make themselves scarce or face the consequences, and that deadline expired on Saturday. Whether the federal authorities have the nerve to carry out the threat remains to be seen, since their belligerence has provoked an extraordinary backlash in the media, in Congress and in the courts.

The federal authorities like to paint a picture of a free-for-all marijuana market, in which bogus dispensaries effectively hand out drugs to all-comers. But that does not account for the rapidly evolving regulatory framework imposed by states and local municipalities.

Steve DeAngelo doesn't have the luxury of worrying about a threatened US government crackdown on medical marijuana dispensaries like the one he runs in Oakland, California. For him, the crackdown is already in full swing.

As the head of the largest pot dispensary in the country, with more than 80,000 customers and annual revenues of more than $20m, DeAngelo always knew he would have a big target on his back if the federal authorities chose to challenge the state laws that allow him and thousands of other operators across the United States to sell marijuana on the open market.

At the end of September – even before California's top federal prosecutors announced their intention to start filing criminal charges against medical marijuana purveyors, their landlords and the newspapers and television stations where they advertise their services – the feds fired their first shot. The Internal Revenue Service, America's tax collecting agency, sent a letter demanding an initial $2.5 million in back taxes and characterised DeAngelo's dispensary, the Harborside Health Center, as a drug trafficking organisation.

Using a provision of the tax code originally written to help seize the assets of gangsters and organised criminals, the IRS said Harborside was disqualified from claiming its ordinary business expenses – payroll, insurance, rent and so on – as deductions and needed to pay taxes on them instead.

Seeing himself not as a drug pusher but as an advocate and carer for the sick, DeAngelo is fighting with everything he has, and so is the rest of the medical marijuana movement. He has helped establish a nationwide publicity campaign to push back against the IRS and its characterization of regulated dispensaries as traffickers.

His dispensary is about to be featured in a television reality show called "Weed Wars" in which his battles with the feds will be front and centre. He and other advocacy groups have organised protest marches up and down California.


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