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  • D. Ross Cameron / Bay Area News Group

    D. Ross Cameron Bay Area News Group Steve DeAngelo, executive director of Harborside Health Center, answers questions at a news conference Thursday regarding a federal complaint against the marijuana dispensary.

  • D. Ross Cameron / Bay Area News Group

    At Thursday’s news conference, Jason David emotionally describes the relief his 5-year-old son, Jayden, gets from medical cannabis. He said Jayden suffers from a rare brain disorder.

Federal crackdown targets Oakland marijuana

Published: Friday, Jul. 13, 2012 - 12:00 am | Page 3A
Last Modified: Friday, Jul. 13, 2012 - 11:41 am

OAKLAND – The Harborside Health Center reveled in its boast of being the world's largest pot dispensary. It was featured in a hit reality series on the Discovery Channel last year. And it has been one of the largest taxpayers in Oakland, a city that turned to tax revenue from medical pot sales for fiscal relief.

Now the Harborside Health Center is the latest, biggest target of federal authorities' 10-month-long crackdown on California's once-burgeoning medical marijuana industry.

U.S. Attorney Melinda Haag confirmed in a statement that federal authorities filed civil forfeiture lawsuits to seize Harborside's famed dispensary in Oakland and a second dispensary run by the medical marijuana organization in San Jose.

The actions brought protests Thursday from advocates who claimed tens of thousands of people would lose their medical marijuana provider and from officials saying Oakland and California would lose $3.3 million in annual tax revenue if Harborside is forced to close.

At a packed news conference at Oakland City Hall, Harborside executive director Steve DeAngelo said the organization and its landlords will fight the forfeiture order and keep open its two dispensary locations, which have registered over 100,000 medical marijuana users as members.

"Harborside is universally recognized as having set the gold standard for legitimate, regulated distribution of medical cannabis," DeAngelo said. "There is no legitimate reason to target Harborside Health Center."

In Oakland, Harborside, one of four city-licensed dispensaries, featured a vast inventory of cannabis products. It raked in $22 million in annual medical marijuana transactions last year, paying $1.1 million in local taxes to Oakland and $2.2 million in state sales taxes.

Despite its sales volume, Harborside claimed to be a legal and transparent nonprofit operator under California law.

U.S. prosecutors have said they are cracking down on California marijuana businesses that have been "hijacked by profiteers" who they contend are operating in violation of both federal and state laws. In a statement, Haag left little doubt that Harborside was being targeted because of its sheer scale.

"I now find the need to consider actions regarding marijuana superstores such as Harborside," said Haag, who noted that she has previously targeted dispensaries located within 1,000 feet of schools, parks or playgrounds.

Though Harborside doesn't fit that criterion, Haag said, "The larger the operation, the greater likelihood that there will be abuse of the state's medical marijuana laws, and marijuana in the hands of individuals who do not have a demonstrated medical need."

The civil forfeiture action follows other federal crackdowns that have focused on some of the icons of California's marijuana movement.

In April, federal agencies raided the home of Oakland medical pot entrepreneur Richard Lee, as well as his dispensary and the marijuana trade school he founded, Oaksterdam University.

On June 11, federal agents raided the El Camino Wellness Center, Sacramento's first licensed dispensary and believed to be its largest medical marijuana provider. Federal authorities have also raided a Mendocino marijuana cultivator held up as a model for a local licensing program for medicinal growers and shuttered two of California's oldest dispensaries, the Marin Alliance for Medical Marijuana and the Berkeley Patients Group.

Oakland City Council member Rebecca Kaplan protested the action against Harborside on Thursday, saying its closure would deny the city tax proceeds for critical services and harm people using marijuana for medical conditions.

"One might think there was no crime left in America if there are extra-hard-core federal law enforcement resources available to do nothing but go after these nonthreatening people," she said.

Harborside has been battling the Internal Revenue Service over its demand for $2.4 million in back taxes because, under an IRS tax code designed for drug traffickers, organizations furnishing illegal drugs can't deduct business expenses such as salaries, rent and overhead.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Peter Hecht



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