In Legal Showdown Over Marijuana, Oakland Dispensary Takes Leading Role

In California, the battle between federal and state authorities over legal marijuana is coming to a head in a high-profile legal challenge. Our report comes from special correspondent Jake Schoneker of Media Enterprise Alliance, a PBS NewsHour Student Reporting Lab based in Oakland, Calif.

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    The battle between federal and state authorities legal marijuana is coming to a head in a high-profile case in California.

    A dispensary there is capturing national attention, even more so now that Colorado and Washington state have approved the legal use of recreational pot.

    Our report comes from special correspondent Jake Schoneker. Production help came from the Media Enterprise Alliance, a PBS "NewsHour" student reporting lab based in Oakland.

  • RICHARD SCOTT SILVA, (Suffers from back pain):

    Good afternoon. How are you?

  • MAN:

    How can I help you today?


    Well, I'm interested in probably two-eights of medicine.


    Richard Scott Silva has suffered from lower back pain since he was in a motorcycle accident six years ago. He says the most effective treatment for his pain is not a pill, but a plant, cannabis, also known as marijuana.

    For the most part, Silva grows his own cannabis at his home in California's Central Valley. But when he wants to try out new varieties or buy plants, he makes the two-hour drive to Harborside Health Center in Oakland.


    What's the best (inaudible) you have on the top shelf there as far as eighths?

    You're guaranteed good, clean medicine that is quality. It's just a nice safe haven. People feel safe coming here, just like going to your neighborhood CVS or anywhere else or any neighborhood pharmacy.


    Harborside offers its patients about 250 different strains of cannabis in a variety of different forms, including edibles, tinctures, and creams. And it's big business. This past year, Harborside brought in $25 million in sales, money that co-founder Steve Deangelo says would otherwise end up on the street.

  • STEVE DEANGELO, Executive Director, Harborside Health Center:

    We have taken $25 million a year of illegal drug sales off the streets of Oakland and brought them into Harborside.


    DeAngelo has been a cannabis activist and entrepreneur since he was a teenager. He says when he moved to California in 2001, there weren't many places for patients to buy marijuana safely.


    I started Harborside to create a model of best practices for the cannabis industry to demonstrate that cannabis be distributed in a way that is professional and responsible and bring benefits to communities, instead of harms.


    Since it was founded in 2006, Harborside has become what is thought to be the world's largest marijuana dispensary. It serves more than 115,000 patients and has expanded to a second location in San Jose.

    DeAngelo's business has attracted media attention from across the globe.

  • MAN:

    … at the Harborside Medical Center. This is actually the largest medical cannabis dispensary in Oakland.

  • MAN:

    Harborside Health Center says it has 20,000 clients.

    BILL O'REILLY, "The O'Reilly Factor": From the Harborside Health Center in Oakland, California.


    But it wasn't just media that was paying attention. Someone else noticed Harborside, too, the federal government.

    This past July, U.S. attorney Melinda Haag filed a forfeiture action against the dispensary's two locations. That means that the buildings could be seized and the dispensary shut down. It's all part of an ongoing federal crackdown on pot in California.

  • MELINDA HAAG, U.S. Attorney:

    One of the reasons we are making these announcements today to try to put to rest the notion that large marijuana businesses can shelter themselves under state law and operate without fear of federal enforcement.


    Henry Wykowski is the lead attorney for Harborside. He says in the past year hundreds of California dispensaries have been shut down.

  • HENRY WYKOWSKI, Lead Attorney, Harborside Health Center:

    Up until now, every time the federal government has attempted to close down a dispensary through a forfeiture action, they have closed their doors and moved on. And I suspect that that's what they thought was going to happen with Harborside, but they got a big surprise.


    Shortly after they received the notice, Harborside announced they would contest the case. And in October, they received an unlikely ally: the city of Oakland.

    City attorney Barbara Parker filed suited against the federal government to stay the forfeiture. Parker says Oakland has already heavily invested in a system to tax and regulate dispensaries like Harborside.

  • BARBARA PARKER, Oakland City Attorney:

    We have spent a great deal of time, energy and money in setting up this system that is consistent with California law. And it is a tragic way of the government's resources that are scarce.


    But others say that pot shops like Harborside never should have been able to open in the first place.

    CARLA LOWE, Founder, Citizens Against Legalization of Marijuana: Is federal law the law of the land, or is it not? That's the bottom line.


    Carla Lowe is founder of Citizens Against Legalization of Marijuana, a lobbying group based in Sacramento. She as you says pot is unsafe and ineffective, not a medicine, but an addictive, dangerous drug.


    It's not a medicine. It's always been a joke, a cruel hoax, always has been, always will be. FDA will never approve a smoked vehicle for any product to be deemed a medicine.


    But with the recent legalization of recreational marijuana in Washington and Colorado, national leaders are reexamining pot policies.

    The Justice Department is soon expected to issue an official response to the states, which now allow adults 21 and older to possess up to one ounce of marijuana legally. On Capitol Hill, Senate Judiciary Chairman Patrick Leahy has called for congressional hearings on the issue.

    And for his part, President Obama told ABC's Barbara Walters that the federal government has bigger fish to try than to go after pot smokers.


    It doesn't make sense from a prioritization point of view for us to focus on recreational drug users in a state that has already said that, under state law, that's legal.


    But while marijuana users in those states may be off the hook, dispensaries and stores that sell the drug may not get the same treatment. The Justice Department hasn't said whether it will crack down on businesses who try to sell marijuana in Colorado and Washington.

    But in states like California, where only medical marijuana is legal, the strategy has been to target the very largest cannabis growing and dispensaries. And there's none bigger than Harborside.

    If the dispensary is shut down, it could open the door for other federal crackdowns across the country. But if Harborside is able to win its case in federal court, it would be a game-changer for the entire medical marijuana industry.


    This case presents an excellent opportunity for the cannabis community and the federal government to sit down and work out the solution that would end the conflict between state law and federal law on this most important issue.


    DeAngelo says the model he's established in Oakland could be replicated across the country, a network of well-run dispensaries with a focus on quality control and customer service.

    He says that despite the new laws in Colorado and Washington, marijuana should remain a medicine.


    We're not a supermarket. People who want cannabis need to choose to come to a licensed cannabis dispensary. And people who don't choose to be exposed to cannabis won't have to see it in their face. That's the future I envision.


    But that dream could still go up in smoke. The next phase of the case has already begun, with hearings in federal court.