Jim Wilson New York Times Matthew Davies hasn't accepted a plea bargain in the federal case over his medical marijuana venture. His lawyers say it followed California law, but federal XXXXX xxxxxprosecutors claim illegal profiteering.

Medical marijuana partner pleads guilty to federal drug charges

Published: Saturday, Jan. 19, 2013 - 12:00 am | Page 1B

A partner in a medical marijuana enterprise pleaded guilty to federal drug charges Friday, even as the debate rages over a federal crackdown against marijuana providers operating under California law.

Lynn Farrell Smith, 62, of Stockton pleaded guilty in a Sacramento federal court to manufacturing and distribution charges that can send him to federal prison for five years. He was a partner in a venture that included a Stockton marijuana cultivation warehouse and seven dispensaries, including four in Sacramento.

Meanwhile, a public appeal – including letters to President Barack Obama and U.S. Attorney General Eric Holder, and a communications effort by former Clinton administration officials – is being made on behalf of another partner, Matthew Davies, 34, also of Stockton.

Davies, whose enterprise included the MediZen, River City Wellness, Twelve Hour Care and Sacramento Patient Group dispensaries, is being portrayed by his wife, his lawyer and a public relations team as an honorable businessman and father who was compliant with California medical marijuana law.

Federal prosecutors, however, say Davies' venture consisted of "large scale" commercial marijuana distributors who profiteered in violation of both federal and state laws.

In a letter to Obama, Mollie Davies wrote that her husband, the father of two daughters, faces extended time in federal prison "for providing medical marijuana to sick people in California, even though he complied with state law concerning medical cannabis."

His lawyer cited a 2009 Justice Department memo, declaring that the government wouldn't target patients and caregivers compliant with state law, to decry his prosecution in a letter to Holder.

Davies' defense team has hired the communications firm headed by former Clinton administration officials, Chris Lehane and Mark Fabiani; and backers have launched a "Keep Matt Free" website.

But in a letter to Davies' attorney, Elliot Peters, U.S. Attorney Benjamin Wagner in Sacramento said: "Mr. Davies was not a seriously ill user of marijuana nor was he a medical caregiver – he was a major player in a very significant commercial operation that sought to make large profits from the cultivation and sale of marijuana."

Wagner detailed a plea bargain offer of six to seven years in federal prison, which Davies hasn't accepted.

Federal prosecutors say one of the venture's dispensaries grossed $3 million a year, producing a profit of over a half-million dollars and that partners also operated two cultivation centers, including one with more than 2,000 plants.

While all marijuana, medical or otherwise, is illegal under federal law, the case illustrates the challenges of California's vague medical marijuana laws.

State voters approved medical marijuana use in 1996, but California's billion-dollar industry of dispensaries has thrived under the hazy language of a 2003 law, Senate Bill 420. It declared that medical marijuana patients can "associate" to "collectively or cooperatively cultivate marijuana for medical purposes" but made no mention of pot stores or commercial cultivation.

"The problem is it is not clear what that means," said George Mull, a Sacramento medical marijuana lawyer and president of an industry group, the California Cannabis Association. The group last year backed unsuccessful legislation to establish a commission to regulate and set rules for dispensaries and medical growers.

Colorado, which licenses medical marijuana workers, stores and cultivation facilities, has not drawn nearly the same level of federal prosecution as California.

"My guess is the feds would be much less likely to bring actions in California if there were reasonable regulations" spelling out rules for medical marijuana distribution under state law, Mull said.

Friday's federal guilty plea by Smith came after a third defendant, Robert Duncan, pleaded guilty to federal marijuana charges last September. They are to be sentenced April 5 and March 22, respectively.

In a statement on behalf of Davies, who appeared in court Friday, attorney Steven Ragland said: "The case of Matt Davies demonstrates more than any other case … the conflict of federal and state law regarding medical marijuana."

He said his client "trusted President Obama and his administration when they told the American people they would not prosecute people who follow state law."

In another case this month, a Los Angeles federal judge sentenced Aaron Sandusky, 42, operator of medical marijuana dispensaries in Riverside and San Bernardino counties, to 10 years in federal prison after U.S. prosecutors asserted in a memo that Sandusky "used the perceived ambiguity surrounding 'medical' marijuana to exploit a business opportunity."

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