William Panzer, an Oakland attorney who co-authored Proposition 215, the 1996 ballot initiative that legalized medical marijuana in California, said the days are numbered for the current model for medical marijuana dispensaries.
"It's an effective strategy because they're basically saying to landlords, 'If you don't do this, then you lose your property, and we could also come after you criminally,' " he said.
The tactic stems from a February 2011 memorandum by the state’s four top federal prosecutors that outlines for the first time a uniform approach to enforcing federal marijuana laws in California. The document, reviewed by California Watch, offers guidance and insights into the thresholds for prosecution.
Initiated by the state’s U.S. attorneys, the statewide enforcement strategy places an emphasis on federal investigations that target “leaders and organizers of the criminal activity as opposed to lower-level workers.”
The memorandum sets thresholds that make investigations more likely to be prosecuted. Those include distributors caught with at least 200 kilograms of marijuana, including distribution near schools, playgrounds and colleges; cultivators with gardens of at least 1,000 plants that are not on federal land and at least 500 plants on federal or tribal land or where there is significant damage; and dispensaries that sell more than 200 kilograms or 1,000 plants annually.
Prosecutors also are looking for provable ties to international drug-trafficking organizations or instances in which marijuana is distributed outside of California. The memorandum also outlines guidelines for civil forfeitures for those who indirectly participate – like landlords or property owners – in marijuana operations.
Officials with the U.S. attorneys’ offices declined comment. In an interview earlier this year, Benjamin Wagner, the top federal prosecutor in Sacramento, said the memorandum was an effort by the federal government to “speak with one voice” about medical marijuana.
“We recognize this issue of medical marijuana in California is something we all have in common,” Wagner said. The memorandum "reflects this is an important problem we are trying to pay attention to and be consistent with. … Circumstances have really gotten to the point where it’s important to not just talk about policy, but also to enforce it.”
Two San Francisco-area property owners who lease space to medical marijuana dispensaries recently received warning letters from Melinda Haag, the U.S. attorney in San Francisco. One such letter, obtained by California Watch, gives one property owner a 45-day notice to end marijuana operations or face possible seizure of the property and money received from the dispensary operator.
U.S. attorneys in San Diego and Sacramento have initiated similar communications in their respective districts, spokeswomen from both offices confirmed. Law enforcement sources said they expect federal prosecutors will send more letters in the coming weeks to locations around the state, including to property owners who rent their land to marijuana growers.
“This is sea change stuff. This is a big deal,” said one federal drug official, who spoke on condition of anonymity to discuss the matter before the official announcement. “They’re sending a very strong message. We’re going to see more. The financial backstory is that it’s become apparent that (medical marijuana) is nothing more than drug dealing for profit.”
San Francisco attorney Brendan Hallinan, who represents dispensary operators and their landlords, including one who received a letter from Haag last week, said civil forfeitures have a lower threshold than criminal indictments.
“We don’t have anywhere to go if they impose federal law on medical marijuana collectives,” he said. "A lot of people are going to get picked off.”
The development is the latest in a series of actions taken by federal authorities to target the industry’s finances. Banks are cutting business ties with dispensaries, possibly under federal pressure. The Internal Revenue Service has hounded dispensaries, including Harborside Health Center in Oakland, seeking millions of dollars in back taxes.
“If we don’t get a change in the IRS ruling, every legal, regulated distributor of cannabis in the United States is going to have to go out of business, and patients will be forced back into the hands of criminals,” said Steve DeAngelo, the Oakland collective’s executive director.
William Ruzzamenti, a former Drug Enforcement Administration official, said that while the strategy already existed in parts of California, the coordinated effort is a new development in what has historically been a provincial approach to enforcement.
“For all four U.S. attorneys to get together on the same page on an issue as controversial as marijuana enforcement in California, I think that’s really unique,” he said.
Wagner said earlier this summer that local municipal officials – including city managers and city councils – who have permitted dispensaries may not be immune.
Prosecutions are “based on conduct, not who they are,” he said. “You learn not to be surprised in this business. You never say never.”
A version of this story aired on KQED's "The California Report," where the audio is available.
Andrew Becker and Michael Montgomery are investigative reporters with California Watch. Read more from California Watch here.