Pubdate: Sat, 06 Oct 2012
Source: Seattle Times (WA)
Copyright: 2012 The Seattle Times Company
Contact:  http://seattletimes.nwsource.com/
Details: http://www.mapinc.org/media/409
Authors: Maureen O'Hagan And Jonathan Martin

MEDICAL SMOKE SCREEN

Medical Marijuana Started As a Grass-Roots Movement Among AIDS 
Patients and Still Caters to Medical Patients, but Increasingly It's 
Also Turned into a Party.

Three weeks ago, an event space in Fremont hosted an unusual trade show.

A legal panel debated public policy and a doctor discussed the state 
of health care as girls in bikinis posed near tables of bongs and a 
guy in a green bear suit offered free hits off a 5-foot pipe.

And the smell of marijuana wafted over the Ship Canal.

Seattle's first-ever Medical Cannabis Cup - part gourmet weed 
contest, part trade show, part smoke-in - showcased the 
entrepreneurial drive and explosive growth of the local 
medical-marijuana industry.

 From dispensaries offering dozens of marijuana varieties to new 
potency-testing labs to makers of cannabis-infused capsules and candy 
corn, storefronts displaying the trademark green cross dot nearly 
every Seattle neighborhood. The city estimates there are at least 150 
marijuana-related businesses here, more ubiquitous than Starbucks. 
Elsewhere in Washington, business may not be as out in the open, but 
it's still chugging along.

"We're at the infancy of a new industry," said Dan Skye, editorial 
director at High Times magazine, which put on the Cannabis Cup. 
"Everybody's trying to get their foundations.

But just as quickly as this quasi-legal industry has grown, it is at 
a crossroads.

With virtually no state regulation, hustlers threaten to stain what 
began as a grass-roots patient-care movement. Federal authorities 
continue to enforce the prohibition against marijuana, with recent 
warnings to dispensaries and a handful of prosecutions.

And, as voters consider a ballot measure to legalize recreational 
marijuana use, it's clear that, under the guise of medicine, the 
party has already started, particularly in Seattle.

Leaders in the medical-marijuana industry are pushing for more 
regulation from Olympia. In the interim, they're working to police 
themselves, including writing their own ethics guidelines. Some even pay taxes.

"I would like our industry to appear more grown up," said John Davis, 
owner of a West Seattle dispensary. "But I understand that's not the 
way it is right now."

Now, some say it's more like the Wild West.

Quest for customers

What goes on behind all those green crosses?

Unquestionably, some dispensaries are run by people with an earnest 
desire to ease suffering from cancer, epilepsy and other ailments.

Others seem more focused on the scramble for market share.

Medical-marijuana businesses run raffles on Facebook and give free 
joints to early birds. They offer customer-loyalty programs and 
delivery service, and sometimes stay open until 3 a.m. An ad for one 
business features a woman in a wet T-shirt and panties.

Ostensibly, their customers aren't getting high; they're medicating. 
They attend DJ-fueled shindigs, including one with a "medicated 
chocolate fountain," and another that promised to "make medical 
history" in a party boat at Seafair.

Meanwhile, a Black Diamond woman is turning her property, an 
ornamental horticulture nursery until the economy went bust, into a 
venue for "420 weddings." (420 is a euphemism for marijuana.)

Today, at least four Washington magazines are devoted to medical 
marijuana, including Northwest Leaf and Dope. Ads sell for $1,200 or 
more per page.

Marijuana as medicine has grown more sophisticated, too, as strains 
have become prized for certain properties. Some are known for easing 
pain; others for relieving nausea; still others for, well, what you 
might expect.

"Like a revelatory hit of God's own candy," says one review of a 
particular strain, "cherry-sweet to the nose and tongue, a lemony 
clean and smooth aftertaste and a colossal stone. ... it blindsides 
you, but in a happy-good way."

It's worth noting that almost none of this, with the exception of 
publishing a magazine, is truly legal.

Not exactly as promised

It's certainly not what advocates pitched in 1998, when Washington 
voters passed one of the nation's first medical-marijuana laws.

Dale Rogers got involved in 1991, working at a San Francisco AIDS 
clinic, where a "little old lady" would bake pot brownies for patients.

"You have to understand, at that time we had 20 people dying a week," 
said Rogers, who would later work on the 1998 campaign. "It wasn't a 
party. It wasn't fun. It was medicine, and it was survival."

So how did Washington go from AIDS and cancer to party cruises? Very slowly.

For the first decade after voters approved medical marijuana, small 
numbers of patients found their medicine through word-of-mouth. This 
has to do with the strange nature of the law.

The 1998 initiative didn't legalize marijuana. Instead, it gave 
authorized patients a defense if charged in state court. Possession 
or sale remains illegal under federal law, but the feds usually get 
involved only in big cases.

Rogers says a turning point came in 2010, after the Legislature 
allowed more medical professionals, including naturopaths and 
physician assistants, to write marijuana authorizations. That led to 
the growth of what some call "authorization mills." Walk into one of 
these clinics complaining of pain, and $100 or $200 later you'll 
likely walk out with a doctor's recommendation allowing you to get "medicine."

"Being able to buy your authorization, that changed the landscape," 
Rogers said. "This is no longer in good faith." What he sees are "shenanigans."

In 2011, the Legislature tried to regulate the industry, much as in 
other states. Gov. Chris Gregoire vetoed most of the bill, but left a 
provision that inadvertently became the underpinning of the industry.

It lets 10 patients together grow as many as 45 plants. It was the 
first time "collective gardens" were explicitly legal.

Now dispensaries characterize themselves as "access points" for a 
network of collective gardens tended by expert growers. Customers 
walk into a dispensary and enroll as one of a garden's 10 patients. 
After getting their cannabis, they drop their enrollment until the next visit.

With an expanded pool of patients, plus some legal cover for 
dispensaries, medical marijuana began to look like a business opportunity.

Ben Reagan, for instance, used his severance from being laid off as a 
computer tech at WaMu to open a dispensary with a friend, Jeremy 
Kaufman. People who left the mortgage industry and real estate have 
entered the fray, as have underemployed construction workers and 
former Microsofties.

The business model hinges, however, on local prosecutors' attitudes 
toward the murky law. King County Prosecutor Dan Satterberg hasn't 
cracked down on dispensaries. In other counties, like Spokane, 
dispensaries were threatened with prosecution and dived underground or closed.

Overall, of the 17 states and the District of Columbia that allow 
medical marijuana, Washington is one of the least regulated. It's 
harder to open a nail salon.

This is the only medical-marijuana state without a centralized 
patient registry, a frustration for police. There are no rules for 
location, security or access, except a few imposed by cities.

Without such regulation, said Ian Goodhew, Satterberg's chief of 
staff, "It makes it more difficult for law enforcement to separate 
out who's doing it for medical purposes and who's doing it for profit purposes.

"And not so shockingly, a lot of times it's a mixture of both."

Inside the dispensaries

Drive down Seattle's Rainier Avenue South and you'll see the green 
crosses, one after another. Some dispensaries are clean and well-lit. 
Others are dingy, with homemade signs out front.

The people behind the counter often don't fit the image of a 
pharmacist who can answer questions for an elderly cancer patient. On 
a recent visit, one "budtender" looked barely 20.

"We have the best stuff," a clerk at another dispensary explained. 
"You won't be disappointed."

A third, which bills itself as the "home of gourmedibles," runs 
customers through a metal detector.

At a fourth, a skinny young man who looked like a teenager was buzzed 
into the marijuana room. (Absent regulation, there is no age limit.) 
He walked out about a minute later, bag in hand.

Who runs these places?

The city has issued business licenses to about 130 people associated 
with medical marijuana.

Of those, The Seattle Times had enough information to run background 
checks on 96 and found that 18 - nearly one in five - have histories 
of felony charges in the state, often for drug-related crimes.

Kristian Wheelwright, for example, was charged in August with 
assaulting two cops. The officers had been escorting a Seattle City 
Light worker to check the meter at the dispensary Wheelwright still 
runs, called Plump.

Lance Gloor, who at one time helped run a chain of four dispensaries, 
had a history of drug charges, as well as an unlawful-imprisonment 
charge, before getting involved with medical marijuana.

Last year, he posted a picture of three duffel bags of cash on 
Facebook. "This gonna take all night to count ... lol," he wrote.

The Drug Enforcement Administration (DEA) found more than $850,000 
flowing through his company's bank accounts in one month in 2011. He 
faces state drug charges.

Gloor said he couldn't comment on the case, but wanted to talk about 
food and clothing drives at his Lacey dispensary.

"My job is to help (people)," he said.

Some in the industry have tangled business histories.

Before getting into the dispensary business, Adam Greenhalgh was sued 
seven times for his work in the mortgage industry. Amid complaints, 
he canceled his state license in 2008.

One bank chased him into bankruptcy, seeking to seize a $375,000 
home. While its sale was pending, Greenhalgh was seen stripping the 
home of its sinks and toilets. Its cabinets, wiring and downspouts 
vanished, too, according to bankruptcy records.

Emiel Kandi, who runs a Tacoma dispensary, was the subject of a 
Seattle Times investigation into unscrupulous lending. In one case, 
he charged 45 percent interest.

Said Greta Carter, who runs a Seattle authorization clinic, "Entry 
level to get into the cannabis industry is low."

A different philosophy

"There are two ways to play this game," said Davis, who runs a 
for-profit dispensary, Northwest Patient Resource Center. "Completely 
invisible, with no records. And completely aboveboard, and you are spotless."

Davis' storefront is bright, with comfortable chairs and a clean 
restroom. It looks vaguely like a pharmacy or a bank, with 
bulletproof glass separating the cashier and product from the customer.

"They can access their meds in a way that doesn't feel sketchy," he explained.

He says he runs it like any other business.

Davis, along with Kaufman, Carter and others, is part of a movement 
to legitimize the medical-marijuana industry. He has employees and an 
accountant, and welcomes police and fire inspectors. He pays his 
suppliers with checks. He records his sales on Microsoft Dynamics.

Kaufman calls it "going pro." It means spending money on 
infrastructure. Registering with the city and state. Paying state and 
federal taxes.

About 50 medical-marijuana businesses statewide - a minority - paid a 
total of $756,000 in taxes last year, according to the state 
Department of Revenue (DOR). They reported gross income ranging from 
$500 to $2.25 million, with a median of $82,410. Their total reported 
gross was $11.5 million.

"I pay sales tax, payroll, B&O," Kaufman said. "I don't have to pay 
any frickin' taxes. What I'm doing is illegal. I want to pay."

Actually, Kaufman may not be paying his full share. He doesn't charge 
sales tax on marijuana, reasoning it should be treated like a 
prescription drug.

DOR, meanwhile, insists even illegal businesses have to cough up, and 
it has begun auditing those that don't.

Turns out most dispensaries aren't paying anything. Many in the 
medical-marijuana business have been advised by their lawyers that 
paying sales tax is evidence of a federal crime: selling cannabis.

Davis thinks this is disingenuous.

"I say to them, 'The thing is, you sell cannabis,' " he said. "If the 
DEA wanted me, my doors are unlocked. There is cannabis on my counter."

Kaufman has tried to convince some of his colleagues. "They give you 
the finger."

In the absence of clear state rules, Davis, Carter and others helped 
create the Coalition for Cannabis Standards and Ethics. They've 
developed a list of voluntary standards; those who meet them get a 
stamp of approval - sort of like the seal from the Better Business 
Bureau. But they believe government regulation is crucial, as well.

"The problem is that you cannot get all of the businesses to 
voluntarily do things right," Davis said.

Marijuana on ballot

In some ways, we are at a unique point in the evolution of medical marijuana.

In November, voters will consider Initiative 502, which would 
regulate the recreational use of marijuana. It calls for licensed pot 
stores and a heavy tax. How passage of the measure would affect 
dispensaries is unclear.

Many in the medical-marijuana industry oppose the initiative, saying 
patients could pay more in taxes for marijuana and could be ensnared 
by a new driving-while-stoned provision in the measure.

Some in the business envision parallel tracks, one recreational, one 
medical, should I-502 pass.

Alison Holcomb, campaign manager for I-502, predicts some 
dispensaries would convert to state-licensed stores.

Or the Legislature could see the potential tax windfall - estimated 
at up to $560 million a year, - and seek to channel users away from 
the unregulated, untaxed dispensary market. Of course, the Justice 
Department could block I-502 from being enacted, and federal law 
enforcement continues to be hostile to dispensaries.

Regardless of the outcome, more regulation appears inevitable. Two 
champions of medical marijuana, state Sen. Jeanne Kohl-Welles and 
Rep. Roger Goodman, hope to reintroduce comprehensive oversight in January.

"I do believe we need to overregulate, and if it's clear the sky is 
not falling, we can be more permissive over time," said Goodman.

In the meantime, Davis and others say they'll deal with the chaos.

"This is a moment in history," he said. "This isn't going to seem 
dangerous 10 years from now. As odd and hard as it is, this is history.

"And might I go to fed prison? God, I hope not."

Staff reporter Justin Mayo and news researchers Gene Balk and Miyoko 
Wolf contributed.
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MAP posted-by: Jay Bergstrom