Longform

In a Strange About-Face, the President Tries to Hack Medical Marijuana Off at the Knees

The new federal crackdown on medical marijuana announced on October 7 by California's four U.S. Attorneys sent chills through the industry. It was a stunning reversal by the Obama administration.

Only two years ago, Deputy U.S. Attorney General David Ogden wrote his infamous "Ogden Memo," announcing that the feds wouldn't bother businesses in compliance with their own state laws. It proved a dose of Miracle-Gro to California, where pot-selling stores had multiplied since voters approved the state's 1996 medical-marijuana law. By late last year, California reportedly had more dispensaries than Starbucks outlets.

Colorado also made it legal in 2000, seeing a similar explosion of new storefronts. The same thing was happening to varying degrees in 16 states, from Arizona to Washington, New Jersey to Delaware.

But the feds' tolerance wasn't quite what it seemed. While legal weed grew to an estimated $10 billion to $100 billion industry — no one's quite sure of the exact figure — activists noticed an alarming undercurrent to the rhetoric: Raids on growers and dispensaries actually increased under President Barack Obama.

As hundreds of thousands of state-approved, doctor-recommended patients happily bought their medicine in well-lighted stores from knowledgeable "budtenders," the ire of cops and prohibitionists rose.

The first sign of Obama's subterfuge came in late 2010, as California prepared to vote on a ballot proposition that would have legalized growing and possessing small amounts of marijuana for anyone over age 21. Under pressure from teetotalers — nine former Drug Enforcement Agency chiefs begged Obama to oppose the measure — Attorney General Eric Holder said it didn't matter what Californians thought. The feds would continue to bust people regardless of the election.

The measure got 46 percent of the vote, but not enough to pass. Yet the medical side of things kept going strong — too strong for Obama.

When the Oakland City Council prepared to authorize large-scale cultivation centers, U.S. Attorney Melinda Haag of California's Northern District issued the first in what would become a series of letters from her fellow attorneys general. She reminded residents — in no uncertain terms — that marijuana was still criminalized under federal law, considered equal to heroin or meth, irrespective of its medicinal value.

Nor did she care what the California law said. Her "core priority" would be to prosecute "business enterprises that unlawfully market and sell marijuana" under federal law.

Over the next few months, U.S. Attorneys from Maine to Washington wrote their own increasingly menacing letters. In Washington, the feds even threatened to arrest state workers who helped facilitate the industry.

Then the Obama administration released a new letter to "clarify" Ogden's memo. Deputy U.S. Attorney General James Cole verified the about-face: The only people safe from arrest were the "seriously ill" patients and their caregivers.

Everyone else? Be forewarned.

The letter didn't just target those directly involved in the trade. Cole also threatened supporting industries (read: banks) with money-laundering charges for dealing in the proceeds from marijuana. Obama had launched a full-on attack on the industries essential to any functioning enterprise.

Banks responded by canceling their weed-related accounts. "Perhaps there may be a few financial institutions here or there that are still accepting accounts," says Caroline Joy, a spokeswoman for the Colorado Bankers Association. "Those facilities don't want to reveal who they are."

The president's push grew louder last month. The U.S. Alcohol, Tobacco, and Firearms bureau warned medical-marijuana patients that they couldn't legally use pot and own or buy guns.

Then came a one-two punch.

On October 5, the IRS ruled that one of the largest California dispensaries, Harborside Health Center, owed $2.5 million in taxes because federal law precluded standard deductions for businesses engaging in illegal activity.

In other words, Obama not only was blowing off state laws. He was declaring that legal businesses were now nothing more than criminal rackets. And he was carving away every tool they needed to function.

Harborside's owner said he'd go out of business if the IRS didn't reverse course. Dispensaries nationwide saw it as a crippling decision.

Then came another blow two days later: The bombshell dropped by California's four U.S. Attorneys.

They now were going after people who leased stores and land to the pot industry. Violators were given 45 days to close doors, uproot plants, and kick out renters. The penalty for not acting: seizure of property and arrest.

U.S. Attorney Laura Duffy of California's Southern District went so far as to threaten media with prosecution for taking pot advertising. (Disclosure: This newspaper accepts such ads.)

There was no doubt about it: Obama was intent on killing an entire industry — in the middle of a depression, no less. Left unexplained was why, especially since he was giving the finger to voters in 16 states just a year before he would face them in his own election.

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.