By Norimitsu Onishi on June 30 2012
 
 
ARCATA, Calif. — Faced with growing chaos in the state’s medicalmarijuana industry, this city in Northern California passed an ordinance in 2008 that meticulously detailed, over 11 pages, how the drug could be grown and sold here.

Humboldt Medical Supply, a dispensary here in Humboldt County regarded as a law-abiding model that has given free cannabis to elderly patients, became the first to obtain a permit in 2010. The Sai Center, whose owner has a history of flouting city regulations and was described by the mayor as running his business “purely for profit,” was rejected last year.
Humboldt Medical quickly closed shop after federal prosecutors began shuttering hundreds of dispensaries in October in one of the biggest crackdowns on medical marijuana since its legalization in California in 1996. The Sai Center’s owner moved locations and has defied the authorities by continuing to operate, most recently out of his mother’s house. City officials, afraid of becoming targets themselves of the prosecutors, have suspended the applications of two other dispensaries that were expected to be approved.
“We feel the federal government’s actions have had a very negative effect,” said Mayor Michael Winkler. “We’re very upset with their actions.”
Like their counterparts in many other municipalities that have regulated medical marijuana on their own, Arcata officials say the federal offensive has brought renewed chaos to the medical marijuana industry. The federal authorities, their critics say, have indiscriminately targeted good and bad dispensaries, sometimes putting the best ones out of business. The crackdown, the critics say, has made it difficult for qualified Californians to obtain marijuana for medical use and is just pushing buyers into the black market.
Acting on federal law, which considers all possession and distribution of marijuana to be illegal, California’s fourUnited States attorneys, working with the Drug Enforcement Administration and the Internal Revenue Service, have shut down at least 500 dispensaries statewide in the last eight months by sending letters to operators, landlords and local officials, warning of criminal charges and the seizure of assets. The United States attorneys said the dispensaries were violating not only federal law but also state law, which requires operators to be primary caregivers to their customers and distribute marijuana only for medical purposes.
“We’re not concerned in prosecuting patients or people who are legitimate caregivers for ill people, who are in good faith complying with state law,” said Benjamin B. Wagner, the United States attorney for the Eastern District of California. “But we are concerned about large commercial operations that are generating huge amounts of money by selling marijuana in this essentially unregulated free-for-all that exists in California.”
Because of the lack of regulation, it is difficult to know precisely how many dispensaries have shut down or even how many were in operation before the start of the current crackdown. But figures provided by three of California’s four United States attorneys totaled more than 500: “dozens” in Mr. Wagner’s district; 217 in the Southern District, in San Diego; and more than 200 in the Central District, in Los Angeles. Officials in the three districts say they have succeeded in putting out of business more than 90 percent of the dispensaries they have identified so far.
Declining to release figures was the United States attorney for the Northern District. The district includes San Francisco and Oakland, the two cities that have led the fight against the current federal offensive, as well as Arcata and other municipalities long known for their tolerance of marijuana.
Dan Rush, an official at the United Food and Commercial Workers Union, said about 650 out of the 1,400 marijuana dispensaries that existed last October have ceased operating. The union represents between 600 and 800 members working in statewide dispensaries, he said.
Except for San Francisco and Oakland, the roughly 50 municipalities with medical marijuana ordinances have suspended the administration of dispensaries, said Kris Hermes, a spokesman for Americans for Safe Access, a group that promotes access to medical marijuana. Though federal authorities have periodically gone after dispensaries since California became the first state to legalize marijuana for medical use, Mr. Hermes described the current crackdown as “unprecedented” because of its “intensity” and because of the number of dispensaries closed and federal agencies involved.
Prosecutors denied that legitimate patients were being driven to illegal sellers.
“Most often the individuals who are visiting these places have obtained sham doctor recommendations for really no purpose other than to engage in the recreational use of marijuana,” Laura E. Duffy, the United States attorney for the Southern District, said of the dispensaries. “To the extent that blatant distribution of marijuana is not available in commercial businesses throughout California, certainly in this district, I think that’s a good thing.”
Here in Arcata — a city of 17,000 people in a region of the state known as the Emerald Triangle, where the illegal marijuana trade has long been tolerated and is a pillar of the local economy — government officials worried that counterparts in neighboring communities had received letters warning them against regulating the medical marijuana industry.
“They said they could prosecute city officials and staff,” said Larry Oetker, a city official who oversaw the regulations on the dispensaries. “That was a dramatic change.”
Under the ordinance here, the city approved the permit of Humboldt Medical Supply, an “exemplary” dispensary according to Mayor Winkler. Greg Allen, a lawyer for the American Civil Liberties Union who represented the dispensary, said its staff included a nurse and rigorously screened customers to ensure that they had legitimate conditions that required treatment with marijuana.
By contrast, the city rejected the application of the Sai Center, which has violated city regulations, including advertising its services and letting customers mill around its premises. Its owner, Stephen Gasparas, exhibited “an extremely hostile attitude” at city hearings for his application, the mayor said.
“He was very contemptuous of any government regulation of this at all,” the mayor said. “He seemed really to be in it for the money. If he also had any commitments to patients, I wasn’t aware of that.”
But federal prosecutors sent warning letters to the owners of the two dispensaries, as well as their landlords, citing their proximity to a ballpark, city officials said. Humboldt Medical Supply, which had been struggling financially, ceased operating. But Mr. Gasparas moved five blocks away to a house owned by his mother and quickly resumed business.
On a recent afternoon, an employee was working out of a single room in the back of the blue, single-story house, sitting behind a large desk, surrounded by marijuana plants and three large safes. Through the employee, Mr. Gasparas declined to be interviewed.
The employee, who declined to give his name but said he was majoring in botany at Humboldt State University here, said the federal offensive was “all political.” The dispensary, he said, was helping the ill who would otherwise buy marijuana from “an unsafe source.” He said he himself first obtained a doctor’s approval to use medical marijuana because he had anxiety.
At the Humboldt Patient Resource Center, one of the two dispensaries whose application was delayed because of the federal crackdown, a steady stream of customers — young men but also middle-aged men and women — came in to buy various strains of marijuana, including those called Blue Dream, Lemon Diesel and Oh Sour Head, at $40 for an eighth of an ounce.
Mariellen Jurkovich, the dispensary’s director, said she had spent $200,000 to comply with the city’s marijuana ordinance. Federal prosecutors had not sent her a warning letter, but she remained worried.
“Even if I eventually get a permit from the city, I don’t think I’m protected as long as the federal law doesn’t change,” she said. “I don’t know who they’ll go after and why.”