Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Friday, May 2, 2014

Important new appeals court decision on California's medical marijuana law is very bad news for dispensary operators

As I've mentioned before, when it comes to dispensaries, California has a horribly vague medical marijuana law.  The law says that patients and caregivers may associate in order to collectively or cooperatively cultivate marijuana but they may not do so for a profit.  Courts have pretty uniformly held that this provision of the law permits retail medical marijuana dispensaries.  But many of the particulars--like what it means to operate on a not-for-profit basis or whether an employee's criminal exposure should turn on the not-for-profit nature of the enterprise should impact the criminal (given that employees may have no idea how the enterprise is set-up)--remain laregely untested in court.

This week, a Los Angeles area appeals court issued an opinion addressing the collective cultivation law, and the result is not good news for medical marijuana operators and advocates.  Indeed, this is one of the most restrictive interpretations of the law that I've seen in a published case.  Though it pays lip service to precedent that says storefront dispensaries are allowed, its holding seems to leave most anyone involved in a dispensary open to criminal charges in California.  

The decision should also serve as a reminder to attorneys who advise dispensaries in California of the need to be clear about the legal risks with clients (in this case, it appears that an attorney had led the defendant to believe that the operation was in compliance with California's law.)

The defendant was an employee and patient of a medical marijuana dispensary (that was operated by a for-profit company), getting paid between $50,000 - $60,000 annually for growing marijuana.  The defendant and the collective had received advice from a private attorney, who seems to have advised that the arrangement was legal.  The trial court precluded his medical marijuana defense, a decision affirmed by the court of appeal.  

Here are some of the key parts of the opinion (PDF) (though anyone practicing in this area of law in California will want to read the whole thing):  

Defendant, Brian Edward Mitchell, appeals after he was convicted of marijuana cultivation. (Health & Saf. Code,1 § 11358.) . . . Defendant entered into two written agreements to grow marijuana every month and sell it to a for-profit corporation that operated a collective of which he was a member. Defendant anticipated being paid $50,000 to $60,000 annually for marijuana delivered to the for-profit corporation. Under these circumstances, defendant may not secure the immunity provided by section 11362.775 [the "collective cultivation" law that I mentioned above--AK.]

 

In 2002, defendant fractured his spine and was constantly in pain. On September 21, 2007, defendant visited Dr. Wesley Albert. Dr. Albert approved the use of marijuana for defendant’s symptoms. 

 

On November 7, 2007, defendant executed a K.I.M. Membership Agreement [for the medical marijuana collective -- AK]. 

 

Mr. Conway testified defendant would regularly spend time at the Barham Boulevard establishment. Mr. Conway testified defendant helped with the collective. Mr. Conway described defendant’s activities at the collective: “Just help us with the cultivation, or that, you know, introductory grow classes.["]

 

Defendant and Mr. Conway began discussing growing marijuana for the collective. After reviewing the Attorney General’s marijuana guidelines, Mr. Conway and defendant agreed that it “seemed that the collective was in a need” of more marijuana for its membership. Defendant testified there was very limited space at the Barham Boulevard collective for growing marijuana.

 

As result, defendant met twice with an attorney, Stewart Richlin. Defendant paid money to Mr. Richlin who provided the following advice: “He informed me that in order to grow legally for my collective, there were some documents that I could fill out. There were some certain parameters that I . . . had to stay within, but he advised me
essentially . . . that I was cleared as a patient and a member of the collective to engage in this activity.” Defendant then secured a number of documents which he believed would allow him to lawfully grow marijuana. 

 

On January 28, 2010, Officer Jorge Cervantes of the San Fernando Police Department arrived at the premises rented by defendant at 1933 First Street. Officer Cervantes went to the business in response to a citizen complaint indicating a possible break-in at the 1933 First Street address had occurred. The windows for the premises were covered with a “black plastic tarp-type” of material. Officer Cervantes saw a broken sectional door and glass. The sectional door had been forced open.

 

Inside the premises, the investigators found “man-made little make shift” rooms divided by tarps. Officer Cervantes saw numerous marijuana plants in various stages of growth in the different rooms. 

 

[D]efendant arrived at the marijuana growing facility on January 28, 2010, after the police had arrived. Defendant presented his medical marijuana identification card and led the investigators throughout the area where marijuana was being grown. Defendant presented documents indicating he was cultivating marijuana for the collective. Defendant discussed the issue of compensation for growing the marijuana with Officer Cervantes. Defendant testified, “I told the officer that I had been advised that I was allowed to keep $50,000 for myself for my contributions to the collective garden.” Officer Cervantes described defendant’s statement about being compensated for growing marijuana, “He said that he was only allowed to keep $50,000 a year for his contributions to the medical marijuana dispensaries.” (Defendant denied saying he intended to sell marijuana to a dispensary.) Defendant described his plan, “The plan was to cultivate for my collective and to be compensated for my time.” 

 

The other limited defense of consequence to our case created by the Medical Marijuana Program Act is section 11362.775 which states, “Qualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients and persons with identification cards, who associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes, shall not solely on the basis of that fact be subject to state criminal sanctions under
Section . . . 11358 . . . .” (Italics added.) This defense is limited, as set forth in the highlighted language, to potential criminal liability based solely on the fact the accused engaged in the collective or cooperative marijuana cultivation. Defendant has not been convicted of any crime “solely because” of his collective or cooperative marijuana cultivation. Here, defendant operated, by himself, a sophisticated marijuana growing operation, for which he expected potentially to be paid $50,000 to $60,000 per year. Defendant expected to live off of the income from his marijuana growing venture and to be compensated for all of his expenses. The amount of marijuana he anticipated growing exceeded any quantity that would legally be for his personal medical use. There is no evidence he had any caregiver relationship with any other person in the collective. Defendant commenced his marijuana growing operations only after entering into two written notarized contracts prepared by an attorney with a for-profit corporation, Keeping It Medical. We are in accord with the argument of the Attorney General that defendant’s broad construction of section 11362.775 has no merit. 

 

[D]efendant went beyond the limited immunized scope of collective or cooperative marijuana cultivation. He entered into two separate written notarized contracts to provide marijuana to the Keeping It Medical for-profit corporation. In return, he would be paid a sufficient amount of money so he would recoup his expenses and live off of the rest of the income. His two separate State Board of Equalization seller’s permits, one for a corporation, indicate he expected to earn $60,000 annually. And although not essential, defendant’s marijuana growing venture arose in the context of an absence of any caregiver relationship within the Keeping It Medical customer base and community.
And, of course, defendant’s corporation, Herbmetics, Inc., had no relationship with the K.I.M. Collective other than as a supplier of marijuana. 

 

This case is different from People v. Urziceanu, supra, 132 Cal.App.4th at pages 785-786. In Urziceanu, the defendant was convicted of conspiracy to sell marijuana. (Id. at p. 758.) There was evidence the defendant operated a collective, FloraCare, out of his home. (Id. at pp. 759-765.) The jury was not instructed on section 11362.775. The Court of Appeal held that the jury should have been so instructed. (Id. at p. 785-786.) 

 

In Urziceanu, supra, 132 Cal.App.4th, the only charge upon which a retrial was ordered was conspiracy to sell marijuana. Section 11362.775 prohibits conviction for cultivation based solely on the fact the accused collectively or cooperatively cultivated marijuana for medical purposes. Conspiracy involves matters such as common design, plan or agreement. (See People v. Robinson (1954) 43 Cal.2d 132, 136; see 1 Witkin & Epstein, Cal. Criminal Law 4th ed. 2012) Elements, § 80, p. 375.) The collective action and cooperation elements of section 11362.775 involved a similar type of agreement or conduct covered by the conspiracy to sell marijuana charge in Urziceanu. As noted, the present case does not involve a conspiracy charge; merely marijuana cultivation. Here, defendant was not convicted based on collective or cooperative action by itself. Section 11362.775 has nothing to do with our case. Hence, there is no merit to defendant’s argument his marijuana cultivation conviction must be reversed because his actions were protected from criminal liability by section 11362.775. 

https://lawprofessors.typepad.com/marijuana_law/2014/05/important-new-appeals-court-decision-on-californias-medical-marijuana-law-is-very-bad-news-for-dispe.html

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