Can Regulation Save California's Medical Pot Industry?

Can Regulation Save California's Medical Pot Industry?:

This week the backers of a California
ballot initiative
aimed at regulating the medical marijuana
business are
to get the approvals they need to start collecting
signatures. The Medical Marijuana
Regulation, Control, and Taxation Act
(PDF) would let
patients and their "designated primary caregivers" form
"collectives, cooperatives and other business entities in order
collectively or cooperatively to cultivate, acquire, process,
possess, transport, test, sell and distribute marijuana for medical
purposes." The initiative would create a Bureau of
Medical Marijuana Enforcement within the California Department
of Consumer Affairs to oversee these entities, collecting
application fees from them and issuing "mandatory registrations"
that would shield them from criminal penalties under state law. In
addition to the fees, the initiative would impose a special 2.5
percent sales tax, on top of the existing sales taxes (7.25 percent
state plus up to 2.5 percent local). It would allow cities and
counties to collect their own medical marijuana taxes of up to 2.5
percent and "enact reasonable zoning regulations and other
restrictions applicable to the cultivation and distribution of
medical marijuana based on local needs." But the initiative says
there has to be at least one dispensary per 50,000 residents, and
jurisdictions with populations above that threshold could ban
dispensaries only with voter approval.

The initiative's supporters, which include Americans for Safe
Access as well as various growers and retailers, hope this system,
which is similar to Colorado's but with less of a role for local
regulation, will discourage federal
by clarifying the rules for supplying medical
marijuana. But as The Sacramento Bee notes,
Colorado's regulations have not stopped that state's U.S. attorney,
John Walsh, from
dispensaries that comply with state law. Although
Walsh's threats so far have been aimed at dispensaries within 1,000
feet of a school, at least some of them are
state and local regulations. Walsh
that "the Department of Justice has the authority to
enforce the federal law where appropriate even when such activities
may be permitted under state law." I have been trying to get his
office to clarify whether that means compliance with state law
makes no difference to Walsh, but his spokesman, Jeff Dorschner,
has not returned my calls. At this point it is not at all clear
that Attorney General Eric Holder's assurances
regarding medical marijuana suppliers who follow state law amount
to anything in practice. The Bee's story reflects that

University of Denver law professor Sam Kamin said the
federal actions are likely a surgical strike, not a broad assault.
But he said "if the feds don't respect" Colorado's regulatory
program, "they're not going to respect the watered-down version
that we see (in the measure proposed) in California."

Democratic Assemblyman Tom Ammiano said he met recently with his
region's top U.S. prosecutor, Melinda Haag of San
Francisco. He said she "wasn't very encouraging" that an
initiative – or legislation – could inoculate California's pot
industry against federal actions.

Another possible problem with the California initiative is that
it seems to conflict with the state appeals court ruling that
Long Beach's licensing system for dispensaries. Last October the
2nd District Court of Appeal said Long Beach violated the federal
Controlled Substances Act because it went "beyond decriminalization
into authorization." Specifically, the court cited the city's
application fees and its awarding of permits via a lottery. The
Medical Marijuana Regulation, Control, and Taxation Act does not
call for a lottery, but it does establish application fees, and its
"mandatory registrations" seem to be a euphemism for permits, since
dispensaries could not legally operate without them. Then again,
the California Supreme Court recently
to hear the Long Beach case, and it may overturn the 2nd
Circuit's decision.