Patients Can't Sell Medical Pot, Appeals Court Rules

In an opinion that impacts several criminal cases around the state, the Arizona Court of Appeals ruled on Wednesday that authorized medical-marijuana patients cannot sell cannabis to other patients.

The 3-0 ruling by the state's Division Two appeals court overturns a decision made last July by Pima County Superior Court Judge Richard Fields, who ruled that such sales were legal under the voter-approved, 2010 Medical Marijuana Act.

The ruling resulted in the dismissal of a marijuana-for-sale case involving Jeremy Allen Matlock of Tucson and caught the attention of prosecutors around the state. Marijuana activists and criminal defendants were buoyed by Fields' ruling, hoping their own cases would be tossed out.

The 2010 law calls for state-regulated dispensaries that are now in place across Arizona. But Matlock, with his public defender, attorney David Euchner, argued that the law grants patients the right to sell to other patients in two separate sections. 

In one part, the law states that state-authorized patients can't be prosecuted for providing marijuana to other patients as long as "nothing of value is transferred in return." Euchner and Matlock asserted — and Judge Fields agreed — that the clause refers only to when a patient might give marijuana to a dispensary. Another part of the law states that a medical-marijuana card will be revoked if the patient sells marijuana to someone who isn't authorized to possess marijuana, which seems to imply that a patient can sell to someone who is authorized.

Before the first dispensaries opened in Arizona, operators of compassion clubs and would-be independent cannabis dealers set up shop themselves on basically the same premise used in the Matlock case. A lawsuit on the matter filed by former state AG Tom Horne fizzled without resolving the legal question of patient-to-patient sales. Some continue to operate under the theory that such sales are legal, despite successful prosecutions — so far only through plea deals — of unauthorized cannabis dealers. The new opinion makes such operations even dicier.

The appellate judges parsed the language of the law word-by-word, dissecting the "nothing of value" sentence like English professors:

Notably, the dependent clause [in the law] beginning with the word “if” is essential to the meaning of the rest of the sentence. If the first part of the dependent clause—'"if nothing of value is transferred in return"—applied only to dispensaries, as Matlock contends, and we removed that portion of the sentence, the remainder would not make sense...

Patients who sell to other patients, therefore, aren't immune from prosecution, the three-judge panel goes on to explain.

"Our conclusion is bolstered by the statutory scheme as a whole," they write.

The law authorizes a system of dispensaries and specifically states that the dispensaries and their agents are immune from prosecution for selling cannabis, the judges say. If the ballot authors wanted to give patients immunity to sell, too, they could have said so in the law — but didn't.

The judges also disagreed with the trial court in their analysis of the revocation clause for patients who sell to unauthorized users.

"Allowing such patient-to-patient transactions would ... create an 'incentive to embark on a sales enterprise.'" - AZ Court of Appeals

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Judge Fields wrote in his 2014 ruling that the clause “necessarily implies that a qualifying patient can sell marijuana."

But the appellate judges disagree with his logic, stating that the section on revocation does not mean patient sales to qualified users  "are implicitly authorized."

Although Matlock maintained that the "purpose and spirit" of the medical-marijuana law would be violated if patient sales weren't legal, the appellate judges say they believe just the opposite. They write:

The AMMA makes clear that medical marijuana dispensaries must be “not-for profit” and can only receive payment for “expenses incurred in [their] operation.” ... Similarly, designated caregivers “may not be paid any fee or compensation” for their services but can only be reimbursed their “actual costs.” ... Allowing registered qualifying patients to provide marijuana in exchange for something of value would therefore be the exception. And, allowing such patient-to-patient transactions would, as the state points out, create an “incentive to embark on a sales enterprise.”

With the case returned to trial court, Matlock faces renewed prosecution without the defense that what he was doing might be legal. His attorney plans to appeal the ruling to the Arizona Supreme Court.

A draft decision issued by the appellate court before its official ruling this week "acknowledged that the primary statute at issue did not clearly prohibit Mr. Matlock’s conduct, and the court now holds that the language was clear to all," Euchner tells New Times. "If the language was so clear, then Judge Fields, who has been on the Superior Court bench for nearly twenty years, would not have found it ambiguous either."

Euchner adds: "The opinion also puts undue focus on statutes relating to protections for dispensaries, and it entirely discounts the importance of another statute which expressly states that a cardholder may not sell to someone not authorized to possess marijuana for medical purposes—which necessarily means that a cardholder may sell to another cardholder."

It's unclear how many current criminal defendants the opinion may affect. New Times covered one such defendant, Billy Hayes, in an in-depth piece last year. Hayes is facing the possibility of decades in prison as he fights a raft of charges stemming from his alleged involvement in marijuana cultivation and sales at the Arizona Cannabis Society and Cannabis Spot Vapor Lounge.

With the help of Valley lawyer Tom Dean, Hayes made roughly the same argument used in the Matlock case — but he says Matlock only used part of the argument. 

"Every patient-to-patient sales case that has made its way to court has presented only a portion of the AMMA as a defense rather than approach it as a whole," Hayes says.

He explains that the law's meaning must be interpreted not only by the statute passed by voters, but by other relevant Arizona laws and the rules and regulations for the medical-marijuana program developed by the state Department of Health Services.

Until a court reviews "everything," patients must adhere to the latest ruling, he suggests. A motion the amateur legal scholar helped write for his own criminal case "includes it all," which makes it different than the one used in Matlock, he says. His two criminal cases are still wending their way through the court system, with several stays of trial due to the complex issues at stake.

In related news today: The Arizona Supreme Court announced this week that it will review last year's decision by the appeals court that medical-marijuana patients can be prosecuted on DUI charges for trace amounts of THC in their bloodstreams. That 3-0 decision by the Division One appeals court  defied a specific prohibition on such prosecutions when impairment isn't a factor, so maybe that one will be overturned.

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