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DEA Crackdown On Clinics

Jim Finnel

Fallen Cannabis Warrior & Ex News Moderator
LOS ANGELES- Federal agents trailed Sparky Rose as he drove a Porsche Carrera convertible to his medical marijuana clinic.

For the U.S. Drug Enforcement Administration the sports car was a sign Rose might be pocketing big money from the purportedly nonprofit clinic, New Remedies Cooperative.

An investigation turned up records showing $2.3 million was deposited in a New Remedies bank account in eight months starting in December 2005. Rose also wrote himself weekly checks of $9,600, according to court papers.

When Rose was arrested in October and accused of illegal drug trafficking–charges he denies–authorities seized $125,000 in cash, thousands of pot plants and the Porsche from his San Francisco-area clinic.

Under California law, clinics are supposed to dispense marijuana just to seriously ill people and owners are to get only "reasonable compensation" for their services. But oversight is lax and there are few specific guidelines for buyers and sellers of a drug still illegal under federal law.

Who can open a clinic, what constitutes reasonable compensation and who can grow and supply marijuana are all open to broad interpretation–factors that have helped fuel a surge in new clinics. Oakland, Santa Rosa and even famously permissive West Hollywood are among cities that have imposed moratoriums on new clinics amid concerns owners and buyers are abusing the law.

The DEA also has taken notice, embarking on a stepped-up effort targeting clinics run by people like Rose who appear to flout the reasonable compensation provision.

Federal officials raided 11 Los Angeles-area dispensaries in one day in January, the largest-ever such crackdown. They returned to one of the clinics in West Hollywood on Wednesday, breaking down a door and seizing additional records.

DEA spokeswoman Sarah Pullen said authorities chose clinics that were making big money, had become hot spots for crime or were part of large franchises. The raided clinics on average raked in $20,000 in profits each day, she said.

Many clinics were buying pot wholesale from street dealers and reselling it for twice the roughly $100-an-ounce black-market rate, Pullen said. "It's become something we can't ignore," she said.

The investigation is ongoing and has yet to produce any arrests or charges. Some clinics have remained closed while others reopened.

West Hollywood City Councilman Jeff Prang said the federal government should leave it to local governments to monitor and regulate marijuana dispensaries that provide relief for those suffering from cancer, Parkinson's, AIDS and other debilitating diseases.

"It's a real sad day for the DEA if these type of facilities are that high on the list of priorities," he said.

California was the first of 12 states to allow the sale of marijuana for medicinal purposes, mainly pain control, and is regarded as having the loosest regulations.

Since the law was passed in 1996 the statewide number of clinics has grown to about 400. Customers can order from a menu of marijuana varieties, such as Green Crack and Hindu Kush. Some clinics even offer packaged marijuana-laced lollypops, candy bars and pastries.

In Los Angeles alone there are about 100 dispensaries, up from just four in 2005, according to Police Chief William Bratton, who has called for a moratorium on new clinics in the state's largest city.

Bratton is among those who believe the murkiness of the "reasonable compensation" provision added in 2003 has stoked a proliferation of outlets run by people more interested in earning big money than providing a service.

Police, clinic owners, activists and legislators–even the author of the law–can't say for sure how much money clinic owners can legally earn.

"A profit is in the eye of the beholder," said Joseph David Elford, a lawyer for Americans for Safe Access, a medicinal marijuana advocacy group.

Elford said a hands-off government approach to the clinics should boost competition, keeping marijuana prices affordable for those who need it and forcing owners to limit profits. But Pullen said that hasn't happened–the number of clinics has swelled while pot prices remain high and some owners are pocketing big money.

Former state Sen. John Vasconcellos, the San Jose-area lawmaker who authored the 2003 law, has no problem with clinic owners earning hefty salaries as long as they provide help for ill people. He said the federal government should mellow out.

"We're helping people who are sick and they have this fascist mentality against good health and pleasure," Vasconcellos said.

The bill's co-author, state Assemblyman Mark Leno of San Francisco, sees no need to clarify the law and there is no serious effort from state politicians to further regulate the industry.

"Micromanaging how private businesses operate is not something the state should be involved in," Leno said.

Law enforcement officials like Bratton, however, believe some enhanced state or local regulations are needed to keep drug dealers from operating behind a veneer of legitimacy.

They cite recent DEA targets, such as 26-year-old Luke Scarmazzo, co-owner of a Modesto clinic. A video for his rap song "Business Man," shown at his bond hearing, features him counting wads of $100 bills, puffing what appears to be pot smoke into the camera and cursing federal authorities.

Records at Scarmazzo's clinic, co-owned by Ricardo Ruiz Montes, 26, showed the pair made more than $4.5 million in marijuana sales from October 2004 to June 2006, according to the DEA. Authorities seized a 2007 Mercedes, two loaded handguns and some 60 pounds of processed marijuana from the clinic.

Shon Squier, a 34-year old proprietor of a San Francisco-area clinic, was apprehended in December. Federal officials froze the Hayward clinic's bank accounts, which had some $1.5 million, and seized about $200,000 in cash and several cars and motorcycles.

Rose attracted the DEA's interest after local police raided a West Hollywood clinic he ran in 2005 and seized almost 700 pounds of pot, $242,000 in cash and evidence of nearly $2 million in bank deposits from the business and pay sheets "reflecting enormous profits," according to court papers.

Rose claims his clinics are nonprofit, though they and others were not listed in a database of IRS-registered nonprofit companies.

At the time of the arrest, DEA Special Agent in Charge Javier F. Pena scoffed at that claim, saying anyone who uses marijuana proceeds to "buy fancy cars, boost their bank accounts, and exploit vulnerable citizens is not compassionate. They're criminal."

Rose, who is free on bail, did not return a message left on his home voicemail. He defended himself on his Web site, Free Sparky Rose.

"My dispensary was a nonprofit and to paint me or my employees as profiteers is simply appalling," he said.

He also wrote the silver Porsche was leased and valued at less than $50,000.

News Hawk- User 420 MAGAZINE ® - Medical Marijuana Publication & Social Networking
Source: San Jose Mercury News
Contact: San Jose Mercury News
Copyright: 2007 San Jose Mercury News
Website: San Jose Mercury News - DEA crackdown


New Member
Regulation and Taxation. The right to a Free Enterprise: The right to pursue the American dream: Yeah whatever:
Remember, the Dark Environment Around us has their Special Agents involved in every aspect of the Marijuana Business.
It is their job to find out as much as possible in any which way they can, everything and anything with the upscaled involvement in Marijuana Growers and the business. The clubs that were taken down had several things in common. "They have DEA working right along with the owners/ operators. One will never know who they are. Carte Blanche has been given to these Men & Women who the Taxpayers pay their salary to infiltrate, seek and destroy many operations, clubs, etc...At any cost!!!
They are doing their job, nothing else.

Happy Kitty

Well-Known Member
ummmm..do you have a card?

I have never even seen an 1/8th for 80 bucks. At least not in the clubs I have visited. Thats about as common as the 100 bucks an ounce they say this quality is bought in the "black market". Another embellishment of the story.

The last time I bought an ounce from somewhere other than the club it was 350, and not nearly the quality I have found in the club. The last time I bought an ounce in the club it was 300. Ounces go for as much as 450, but I have even seen it for 90oz(dirtweed).There's no big stems or seeds, and I have a great selection each time I go. Before I got my MMC never, ever, did I had any choice other than what my connection had at the time. I will be happy to pay for being able to go to a specific, legal location, and for a selection in any price range I am looking for.

P.S. When it comes to the news, only believe half of what you hear.

As far as the way a club operates, for me, I have no problem with making profit. The problem I have is feeling like a herd of cattle - get em in, get em out. Some of the clubs sorely lack the compassion that should be shown to the patients. And I mean SOME, not ALL.

So if the law is so gray about profits of a club, what is the big deal?

As long as they supply to medical card holders, and operate their facilities according to the laws of their community, I don't see a problem.

I will gladly pay the price for quality at the clubs.

Some of the club owners have commented on the site about this, look em up.

Peace and happiness


New Member
"I've seen alot of menu boards quoting prices of 80-85 an eigth"

me too.
ridiculously, criminally high prices is why many times i opt to buy street chronic for 50-60per 1/8th although im way more nervous going to visit the gangbangers than a co-op.
the weed is about 70% as good..
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