BY ED MURRIETA
“Kind of like Whack-A-Mole.”
That’s the assessment of Sacramento TV newsman George Warren, who’s on top of medical cannabis law enforcement coverage these days. Last night on News10, Warren reported that the federal government is threatening to seize the property of landlords who rent to medical cannabis dispensaries.
Warren’s report is based on a letter from the U.S. Attorney in San Francisco regarding dispensaries in that city.
A spokeswoman for the U.S. Attorney’s office in Sacramento told News10 that the feds intend to contact Sacramento landlords.
This federal action follows asset seizures from the bank accounts of two Sacramento dispensaries that the federal government alleges made suspicious cash deposits in order to elude banking regulations. In an unrelated federal case, the former owners of a South Sacramento dispensary are accused of running a criminal operation, a story News10 broke last month.
News10′s posted video makes brief mention of the tax ups and downs of Harborside, the Oakland dispensary that is arguably the nation’s most successful and highest-profile medical cannabis dispensary. In the same week that Harborside wrote a check that infused $360,483 into the City of Oakland’s tax coffers — the payment was for a 5 percent cannabis tax that was approved by 80 percent of Oakland’s voters last year — the Internal Revenue Service said Harborside cannot claim business deductions that are available to virtually every other business in America — standard-claim things like employee payroll and health care deductions. The IRS will only allow Harborside to deduct the cost of cannabis and the cost of its patient-wellness services, such as yoga. The IRS wants $2.5 million from Harborside.
In denying the standard business deductions, the IRS points to a provision in the tax law intended to kill illegal drug operations. The federal government, of course, recognizes no medical value in cannabis and considers cannabis illegal. Harborside says the deduction denials will kill its business model. California law, as per voter-approved Prop. 215, allows medical cannabis.
Meanwhile in Humboldt County, the Eureka City Council essentially shrugged off federal threats last night and make only minor revisions to its medical marijuana ordinance, rather than approving an emergency moratorium on dispensaries within city limits. This, after the council asked the U.S. Attorney’s Office about the legality of its medical marijuana ordinance, inviting the feds’ obvious response.
Meanwhile, Sacramento County code-enforcement inspectors are visiting medical cannabis dispensaries. Some dispensaries are now out of business on building code violations. While the county borrows more than $1 million to shut down dispensaries, there’s still a county ordinance kicking around. Dispensaries, their lawyers and their lobbyists have presented their cases to the county in a series of stakeholder meetings. The dispensary discussion has now been dispersed among 14 community action committees throughout the county. Those committees will hear input from the community and dispensaries before making a recommendation to the county board of supervisors, which is busy feeding $1 million into something resembling an arcade game while Oakland collects $360,483 in tax revenue from just one dispensary.
Yes, it is kind of like Whack-A-Mole, wherein no matter how swiftly or righteously the hammer hits, something pops up somewhere else.