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April 1, 2010 -- California Lawyer (CA)

High Times In L.A.

In the Pot-Consumption Capital of California, Marijuana Defense Lawyers Thrive on the Haziness of the Law.

By Michael Estrin, freelance writer living in Los Angeles.

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In a Van Nuys parking lot one afternoon last November, Allison Margolin spoke to me about her drug defense work while sharing a joint with one of her clients-a lanky, somewhat disheveled-looking young man named Seamus Ethridge. The conversation struck me as a bit odd, actually.

It also seemed to me that Margolin was taking a needless risk. After all, she knew that I was a reporter working on a story for this magazine.

Moreover, in a nearby courthouse she had just argued passionately on behalf of Ethridge, who stood accused of breaking the state's drug laws. Still, if Margolin felt any discomfort at all about lighting up in my presence, I failed to detect it.

"I don't know where the DA gets off bringing this fucking case," she had said to me earlier in the day as she marched toward the courthouse. "The law is on our side!"

Margolin, a Harvard Law School graduate, is the daughter of Bruce Margolin, the criminal defense lawyer who literally wrote the book on marijuana law (The Margolin Guide). Now, at the age of 32, she is a well-known advocate in her own right.

And like so many of her clients, she herself uses marijuana with a doctor's approval.

In her case, it's for anxiety. "Marijuana helps me focus in a productive way without obsessing," she says, hastening to add that she would never consume it before a court appearance.

Clad in bohemian chic-dark, tight jeans, a vintage sweater, and a frilly red scarf-the diminutive Margolin has an in-your-face style that suits her twentysomething-year-old client just fine. "Allison is pretty well known among [pro-marijuana] activists," Ethridge tells me. "She's great because she doesn't take any shit; she fights hard and she believes in this."

Margolin also can be counted on not to give any grief to a marijuana-growing client who shows up in court wearing neon green trousers and a T-shirt that proclaims, in a pot-leaf pattern, "I Am Not a Criminal."

"Love the shirt," Margolin beamed when she met up with Ethridge at the courthouse's first-floor elevator bank.

Six months earlier, Ethridge had been staying at a Motel 6 in Canoga Park when, at about 10 p.m., two police officers knocked on his room door. They were from the Valley Bureau Motel Detail, which routinely checks motel registries for persons with outstanding warrants.

In Ethridge's case, they had determined that he had an outstanding narcotics warrant in San Luis Obispo. They also determined at the time of his arrest that he had a large quantity of marijuana on him, as well as about $5,000 in cash.

"I showed them my patient ID," Ethridge remembers, "and explained I had grown marijuana for various collectives that I belong to. The cops didn't know much about medical marijuana laws, so they arrested me, which is common.

When the cops are in doubt, they usually make an arrest."

This arrest-first mentality infuriates Margolin. Yet, in making the case that the charges against Ethridge should be dropped, she didn't even bother denying that he was a full-time marijuana cultivator. Instead, she simply argued that everything he did was perfectly legal.

Of course, whether or not her approach would work depended heavily on how the judge interpreted California's fuzzy medical marijuana statutes-starting with Proposition 215, also known as the Compassionate Use Act, which voters approved in 1996 (Cal. Health & Safety Code 11362.5). Under that law, sick people-in theory the gravely ill, but in practice anyone who can secure a doctor's signed approval-are exempted from criminal liability for cultivating, possessing, or using marijuana.

Then, seven years later, the state legislature passed the Medical Marijuana Program Act to clarify how patients can cultivate and distribute medical marijuana (Cal. Health & Safety Code 11362.711362.9). Together, these two laws gave birth to an industry worth an estimated $14 billion that today serves as many as 400,000 Californians. But the laws provided little guidance for distinguishing legal sales from illegal ones. And this has put the courts in an awkward bind.

Did Ethridge have a right to grow, distribute, and consume marijuana? Sure he did. But if in the course of doing so he exchanged money with anyone-well, then, all bets were off.

In fact, when Ethridge walked into the courtroom that day wearing his green and white T-shirt, he faced the grim prospect of spending the next couple years in prison.

And yet, just before he took his seat, I saw him break into a big grin. This was after the uniformed bailiff had made eye contact with him and then, with two fingers pressed to his lips, began to playfully inhale an imaginary joint.

Was it a show of support, or a show of scorn?

I couldn't be sure.

As recently as February, Los Angeles was said to have more marijuana dispensaries than Starbucks coffee shops (Harper's Magazine put the ratio at four to one). But exact numbers are hard to come by; estimates range anywhere from 300 to 1,000. The higher end reflects the number of applications on file with the city; the lower suggests how many have actually opened.

By my own count I found close to a dozen within just a few miles of the Van Nuys courthouse.

Don Duncan, California director of Americans for Safe Access, told the Wall Street Journal last fall that he believes the "vast majority" of the city's medical marijuana dispensaries are "trying to operate legally." But Bill Panzer, a criminal defense lawyer and marijuana legalization advocate who helped draft Prop. 215, acknowledges that "the vast, overwhelming majority" of outlets are not legal because they are not collectives or cooperatives. "If somebody owns the store, sells marijuana, and at end of day takes the extra money and puts it in his pocket and goes home," he told Fortune magazine in September, "that's not a collective."

To get a better feel for what was going on, I decided to drop in on a few of the dispensaries myself.

First off, I would need a doctor's recommendation. (Recommendation is the term of art here, since under federal law marijuana is still classified as a Schedule 1 narcotic, and therefore can't actually be prescribed by anyone.) The process couldn't have been easier.

A Google search led me to a directory of "marijuana-friendly doctors." Choosing one near my apartment, I made an appointment for the following day. The doctor's office was in a run-down strip mall (other tenants included a massage parlor, a Laundromat, and a liquor store). It had a large plasma TV in the waiting room and a black leather couch in the exam room, where I sat while the doctor made his assessment. I told him that I grind my teeth (which is true) and that my dentist had prescribed a mouth guard, but offered only Advil for the headaches.

The doctor nodded, and asked if the Advil worked and if I had asked my dentist about medical marijuana. (No and yes were my answers.) He then agreed to make the recommendation, and indicated that I had 30 days to send his office verification of my claim; a bill for the mouth guard would suffice. He also warned me not to operate heavy machinery while under the drug's influence.

The process took all of five minutes and involved no physical exam. After paying $100 in cash, I emerged with a signed recommendation and a laminated card that resembles a driver's license.

It wasn't necessary to wait for my dentist to send over the paperwork: The recommendation gave me immediate access to every dispensary in the state.

I selected one called Herbal 420 Caregivers, just two blocks away from the Van Nuys courthouse. It had tinted windows and a green neon sign. After presenting my card to a rough-looking security guard, I walked through a double set of doors into a small, unheated room with a concrete floor.

A glass counter held about 30 jars of marijuana.

One jar was labeled "Juicy Fruit," another "Green Crack," and still another "AK-47." On a display shelf below the pot sat an assortment of bongs and pipes.

Scarface movie posters-modified with cannabis-leaf decorations-hung on one wall.

When I asked the clerk what strain would work best for a headache, she shrugged.

Then she told me the shop was running a special on Sour Diesel. If I purchased an eighth of an ounce, she explained, I would get an extra gram free, and because I was a new customer, they'd throw in a joint and a lighter as well. I asked what marijuana-laced edibles she had in stock. "If you buy three brownies," she offered, "I can give you a price break." "What's the dosage?" I asked. "Do you eat the whole brownie?" Again, she shrugged.

When I told her I would take an eighth of an ounce of Blackberry Kush, she put the marijuana in a brown pill bottle and sealed it with a child-safe cap. Nice touch, I thought.

Even so, I left the premises feeling like I had just visited a drug dealer.

I got no such feeling weeks later, however, when I dropped by the Cornerstone Research Collective. Located in the middle of a commercial strip, the three-year-old dispensary is about 15 miles east of Herbal 420 Caregivers. Here the man behind the counter is Michael Backes. He is a bald, scholarly looking man in his mid 50s who studied biology at Indiana University. "There are a lot of really smart people in the medical marijuana business," he told me. "And there are a lot of knuckleheads too."

Compared to the first dispensary I went to, the Cornerstone was harder to find: For starters it didn't have lighted pot leaves in the window or neon signs.

Also, its security guard was not quite as scary looking, dressed in khakis and a button-down shirt.

At the Cornerstone, patients coming through the door are shown to a modest waiting room where they can look at the menu. The menu doesn't change much from month to month, Backes says, because the collective always purchases marijuana from the same growers.

Once patients are confirmed-a staff member verifies both the patient's recommendation and the standing of the doctor-they are brought into a side room that looks a lot like a medical lab. Glass jars of organic marijuana are displayed on a metal table during business hours and stored in a refrigerator at night.

The dispensary generally limits patients to an eighth of an ounce each visit, although exceptions are made for long-distance customers who can't come in as often.

I asked Backes how he maintains the quality of his inventory. "You talk to your growers," he explained. "You visit them, they bring in plants during the growing process, so you really know who's conscious of the fact that they're producing medicine, and who's out to make a quick buck."

Of course, even at the Cornerstone money changes hands.

The collective pays growers a flat fee for their costs, and an additional amount based on their expertise.

But Backes stressed that no one in his network is getting rich from this line of work. "If you're doing it right-operating in a closed circuit as defined by the attorney general's guidelines-you're not making a profit," he said. "The problem is that we've come to a place where the illicit market has become somewhat legitimized, and it has run into the medicinal community, which is still in its infancy."

Meanwhile, it's up to the local jurisdictions to figure out how they can legally regulate distributors. These can be co-ops (defined under the attorney general's guidelines as democratically controlled entities "organized and registered ... under the Corporations or Food and Agriculture Code"); collectives (less formal, nonstatutory entities); or dispensaries (storefront outlets, which have been operating in California for many years but are not explicitly recognized under state law). In San Diego, the district attorney tried unsuccessfully in 2008 to persuade an appeals court to strike down the state's medical marijuana laws, arguing that they conflict with, and are preempted by, the federal Controlled Substances Act (County of San Diego v. San Diego NORML, 165 Cal. App. 4th 798 (2008)). The DA's office suffered another high-profile setback last December after police raided 14 local dispensaries and arrested 31 people. The first defendant to be tried-a Navy veteran who ran a collective called Answerdam Alternative Care-was acquitted of all drug-related charges.

Apparently, the jury felt that the law was just too vague to support a conviction.

Elsewhere in California, at least 120 cities and eight counties have passed bans on "pot shops," according to Americans for Safe Access. These bans, often rooted in nuisance law, are typically justified as falling within a community's traditional power to protect the health, safety, and welfare of its citizens.

Recently a court of appeal upheld one city's efforts to regulate zoning for pot dispensaries (City of Claremont v. Kruse, 177 Cal. App. 4th 1153 (2009)). But the litigation over such ordinances appears to be far from over: At this writing the state's Fourth District court of appeal was considering whether to overturn a ban that the city of Anaheim enacted in 2007 (Qualified Patients Association v. City of Anaheim, No. G040077 (4th Dist., Div. 3)). The case has attracted substantial briefing from friends of the court.

"There's a lot of confusion out there about zoning collectives and dispensaries," says Chrystal James, a lawyer in Pasadena who has advised small towns throughout Southern California on marijuana law. "And so there's going to be continued litigation going forward no matter what happens, because there has been such a divergence of experience throughout the state," he says.

The divergence is particularly striking between Northern and Southern California. Consider Oakland: There, last year's ballot measure to increase by a factor of 15 the gross-receipts tax at the city's four dispensaries drew 80 percent of the vote and the enthusiastic support of marijuana activists, who saw it as a big step toward legalization. In Silicon Valley, "local governments have been very reasonable and cooperative," reports Matt Lucero, an attorney who left corporate work last year to launch Santa Clara County's first medical marijuana collective. "We don't have any outspoken diehards crusading against medical marijuana like they do down south."

Yet even in the Southland, some communities have come to a meeting of the minds.

Take the city of West Holly-wood. The 1.9-square-mile, ultra-liberal enclave struck a delicate compromise between neighborhood groups that wanted to cap the number of pot shops, and medical marijuana advocates who demanded storefronts in safe, accessible locations.

After a brief moratorium on new dispensaries in 2005, city leaders worked out a straightforward set of rules that restrict the number of shops to seven, limit business hours, require security measures, and prohibit consumption of marijuana on the premises. As the Los Angeles Times reported in November, "When the West Hollywood City Council updated its ordinance ... the vote was unanimous, no residents spoke in opposition and the city's dispensary operators lined up in support."

Compared with Allison Margolin, Los Angeles Deputy District Attorney Stacey Solomons comes across as a low-key legal advocate. (Solomons declined to be interviewed for this article.) For Ethridge's November court hearing, she dressed conservatively in dark slacks and a muted red blazer, and for the most part spoke in a slow, methodical manner. Nevertheless, when she began to question the defendant about his back and shoulder problems-the conditions Ethridge says he treats by smoking marijuana-she could barely contain her annoyance.

"Well, if you're in so much pain," she asked, "are you high right now?"

"Do you mean, am I medicated?" Ethridge responded.

"Whatever. Are you medicated?."

"I medicated several hours ago," Ethridge acknowledged.

This exchange was entertaining enough to listen to. But it hardly seemed to advance the prosecutor's case, since Ethridge never claimed that the 72 marijuana-laced chocolate bars and the pound or so of bagged weed that police found in his motel room was entirely meant for his personal consumption.

On the other hand, when Margolin argued that Ethridge, in his role as a pot provider, enjoyed all of the legal protections of a qualified primary caregiver, a more substantive discussion ensued. "[The California Health and Safety code] allows for a primary caregiver to receive reasonable compensation for services related to helping a patient obtain medicine," Margolin told the court.

Because Ethridge had been issued a caregiver card, she concluded, he could not be prosecuted.

Margolin's argument had a simple elegance to it. Unfortunately for her, though, an appeals court had previously ruled that the mere provision of marijuana does not confer caregiver status to the provider (People ex rel. Lungren v. Peron, 59 Cal. App. 4th 1383, 13951398 (1997)). And when, under Solomons's questioning, Ethridge couldn't come up with the last names and addresses of a few of his Santa Barbara patients, the prosecutor chortled. "A caregiver should at least know the last names of his patients," she said.

This left Margolin with her last, best option: to attack the prosecutor's case by raising two related questions.

First, what constitutes an illegal marijuana sale? And second, what constitutes an illegal profit? "Sales [of medical marijuana] are not illegal," Margolin declared, waving her arms as if to embrace every one of the city's several hundred dispensaries. "They happen all the time, all over the city and the state." And only through sales, she argued, is medical marijuana available to most of the people who need it.

By Ethridge's own account, it costs about $41,000 to run his operation for the three months it takes to get a harvest.

That includes rent for the grow-house, supplies, water, and power. (Electricity alone, he says, can cost him as much as $4,000 a month.) But the figure that Solomons wanted to focus on was the $35 an hour Ethridge paid himself to cultivate and transport his product.

"Thirty-five dollars for trimming a few weeds a couple times a month," Solomons scoffed, after Ethridge took ten minutes to explain his expenses in detail. "The defendant is making a ton of money, and it seems clear that he is exploiting the law and making a very big profit." Solomons then cited People v. Mentch (45 Cal. 4th 274 (2008)), a recent state Supreme Court decision that California prosecutors are fond of using to argue that marijuana sales are inherently illegal.

Margolin, in turn, accused Solomons of cherry-picking the case law. Mentch, she noted, referred to primary caregivers and made no mention of sales or collectives. She then cited two other rulings, which held that collectives and cooperatives may sell medicine to their members (People v. Urziceanu, 132 Cal. App. 4th 747 (2005); and People v. Hochanadel, 176 Cal. App. 4th 997 (2009)). "It's as if," Margolin bristled, "the DA's office simply wants to ignore the rules laid out in Urziceanu and Hochanadel and take from Mentch what simply isn't there."

From the outset of the hearing, the judge presiding over the case-a silver-haired, no-nonsense jurist named Leland B. Harris-made little effort in either tone or facial expressions to mask his doubts about the wisdom of the state's medical marijuana laws. Nor did he seem particularly impressed by Margolin's arguments.

At one point Judge Harris asked why didn't Ethridge simply pay himself a minimum wage. Ethridge answered that he based his compensation on what he had previously earned as a construction worker.

Harris acknowledged that the legal question raised here wasn't an easy one. "It seems like an arbitrary head-scratcher," he said. Then, after a long pause, he added, "Intuitively, I believe that the defendant is making a profit.

However, legally I don't feel as though I can honestly reach that conclusion. ... Case dismissed."

Throwing up his arms in triumph, Ethridge reached over to give his lawyer an emotional hug. It was over. Or so he thought.

But Margolin knew better.

And a few moments later she approached the prosecutor to ask her if she intended to refile charges.

"It's not my call," Solomons responded, but then allowed that the chances were pretty high.

"Are you really going to do that?" Margolin snarled. "How do you sleep at night?

I just want to know. Is this fun for you?"

"It's not personal, Allison," Solomons shrugged. "And you could be a lot nicer in court."

Less than a week later, on the morning of November 16, the Los Angeles City Council considered making a fifth attempt to cap the number of medical marijuana dispensaries in the city. The meeting drew hundreds of activists, including at least a dozen seriously ill people who insisted that the only way they could get their medicine was through the storefronts. Others berated the council for failing to seek outside legal opinions on the matter, and promised to mount a vigorous court challenge to any zoning ordinance that closed dispensaries or relegated them to high-crime industrial areas.

And still others-about a dozen, actually-braved jeers from the crowd to urge the city council to pass a zoning ordinance-even a flawed one, if necessary. "You've had long enough-do something!" one man shouted.

His frustration was easy enough to understand. In 2005, two years after the Legislature passed the Medical Marijuana Program Act, only four dispensaries operated openly in Los Angeles. A year later there were 98, according to a report by the LAPD's then-Chief William Bratton. He warned that without an updated zoning ordinance in place, criminal elements would exploit the vagueness of the law and set up shop near schools and residential areas.

The city council responded in 2007 by passing a moratorium on new pot shops.

But that measure did little to check the rapid spread of outlets, since it contained a loophole allowing dispensaries to apply for a hardship exception. Then, shortly after the council got around to closing that loophole, a judge declared the entire moratorium unconstitutional (Los Angeles Collective Assoc. v. City of Los Angeles, No. BC422215 (Los Angeles Super. Ct. preliminary injunction issued Oct. 19, 2009)).

So after all that, what would or could the city do to put the genie back in the bottle?

The answer came in January, when the council finally passed a resolution to cap the number of marijuana dispensaries in Los Angeles at 70, while leaving unaffected those that had registered with the city before November 2007.

The same measure also forbade dispensaries to operate within 1,000 feet of "sensitive use" areas such as schools, parks, libraries, and other dispensaries.

The vote drew cautious praise from law enforcement officials, the Los Angeles Times, and even a few defense lawyers.

But one aspect of the new ordinance that could spell trouble for prosecutors is its requirement that dispensaries pay their employees "reasonable wages and benefits." How could a dispensary afford to pay its workers anything and not run afoul of the district attorney's position that all marijuana sales are illegal?

An answer was not forthcoming.

Los Angeles defense lawyer Michael Chernis advises doctors and a dozen collectives on how to operate within the state's medical marijuana laws. "The city council gets credit for not trying to ban dispensaries in the entirety or bowing to pressure from the DA and city attorney to ban sales," he says. "However, this [new ordinance] reflects a compromise position on many issues, the net result of which will likely be more litigation and patients getting hurt."

Margolin concurs. "The Medical Marijuana Program is about providing access. Limiting the number of dispensaries, forcing patients to drive greater distances for their medicine-that doesn't help patients at all," she says. Moreover, she argues, capping the number of pot shops would only benefit the illicit drug market: "These places are supposed to be nonprofit, but if you limit sales to only a few shops you're going to have crazy amounts of cash running through just a few places. How does that make any sense?"

Meanwhile, the wheels of justice continue to grind.

On February 22, the Los Angeles district attorney filed 24 felony charges-including selling, transporting and possessing marijuana-against Jeff Joseph, operator of a popular dispensary in Venice. (Joseph's lawyer, Eric Shevin, pushed back in the press, mostly agreeing to the facts of the case but differing over the interpretation of the law.) Those charges came on the heels of a February 18 civil action by the city attorney's office against 21 dispensaries, attempting to shut them down. The filings followed a preliminary injunction issued by a trial court against Eagle Rock's Hemp Factory V dispensary which, prosecutors say, supports the theory that state law forbids sales.

Before I began work on this article, I assumed that in spite of all the controversy surrounding marijuana, Californians had come a long way from the days when the drug was associated with crime and deviant sexual behavior.

But a close reading of history suggests that, by and large, we've merely come full circle.

Back in 1937, the year after the infamous anti-marijuana film Reefer Madness came out, pot was still perfectly legal-yet was considered dangerous enough that Congress passed a stiff excise tax on doctors, pharmacists, and farmers who promoted its use. (In the early 20th century, drug companies as large as Eli Lilly sold cannabis in powdered form as a painkiller, a sedative, and an "exhilarant.") During World War II cannabis even enjoyed a brief period of respectability when the U.S. government-in need of rope and textiles for the armed forces-encouraged farmers to grow "Hemp for Victory." And in 1944, New York Mayor Fiorello La Guardia commissioned a study that ended up debunking many of the fanciful claims made against pot. By the 1950s, however, marijuana was once again being demonized by federal lawmakers: In 1951 Congress passed the Boggs Act (26 U.S.C. 2557), and in 1956 came the Narcotic Control Act (70 Stat. 567), which imposed minimum sentences of two to ten years, plus a fine of up to $20,000 for anyone caught using marijuana outside the purview of the 1937 Marijuana Tax Act. Finally, in 1970 Congress passed the Controlled Substance Act (21 U.S.C. 801971), which effectively criminalized all uses.

Today, however, in the face of the most serious economic crisis since the Great Depression, legalizing marijuana has once again become a topic of serious discussion, if only as a way to generate much-needed sales-tax revenue.

In Mendocino County alone, where cultivation is said to account for nearly two-thirds of the local economy, pot is a $1 billion-a-year crop. Moreover, BusinessWeek magazine recently reported that Oakland's Harborside Health Center, the nation's largest collective, has $20 million in annual sales, with a payroll of 75 full-time employees. (Oakland is also home to Oaksterdam University, where aspiring cultivators can enroll in semester-long courses at its 30,000-square-foot facility.) And according to Harvard economist Jeffrey Miron, if marijuana were suddenly to be legalized across the country, it would generate $7 billion in tax revenue and save about $13.5 billion in prohibition costs.

So it wasn't altogether shocking when, in the midst of this state's multibillion-dollar budget-deficit crisis, Gov. Arnold Schwarzenegger called for a debate on legalization. Nor was it surprising that, in December, the promoters of an initiative to make marijuana legal easily collected more than the number of signatures required to get the measure onto the November ballot.

When I visited Allison Margolin's bustling Beverly Hills law office several weeks after she got the first set of charges against Ethridge dismissed, she told me, "I'd love it if I didn't have any more marijuana cases.

Legalization would hurt my business, but I'd be thrilled."

Maybe so. But for the present, Margolin's marijuana defense practice appears to be booming.

In fact, the client she saw just before I arrived was a man whose son had recently been arrested for possession with intent to distribute. To Margolin, it was just another routine consultation-except that in this case the father of the potential client was a cop.

On January 27, after a second hearing in front of a second judge, the case against Seamus Ethridge quietly died. At last report Ethridge was back in Santa Barbara, where he recently expanded his collective and is accepting new patients.

In a rare moment of restraint, though, Margolin declined to provide any further details.

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