Tuesday, June 4, 2013


This is scandalous. A former U.S. Attorney, now involved in the "medical" marijuana industry, hints that the current U.S. Attorney for the District of Arizona is not upholding his oath of office to defend the U.S. Constitution because of his influence? And that the U.S. Secret Service has indicated a "medical" marijuana facility is "secure?" Secure from what? And why? 

- Ronald L. Kirkish

Carolyn Short, a lawyer and chairman of Keep AZ Drug Free, wrote the following letter to the Prescott Daily Courier about their recent article:

Dear Ms. Nellans,

I read your article, "Chino medical marijuana facility gets help from top attorney; former U.S. Attorney for Arizona's stepson is motivation."

I am deeply concerned about numerous factual inaccuracies in your article that could cause your readers to be misled in several respects. Although most of the article is attributed to statements by Mr. McDonald, the lack of follow up questions or input from anyone on the other side of this issue has inadvertently produced a one-sided, factually inaccurate opinion piece. In offering this information, I certainly don't think your intention is to mislead.
Inaccurate statements:

1. "I think it's going to be a win-win for the valley," he [Mel McDonald] said. "And the tax revenues will be outstanding."

Mr. McDonald apparently hasn't read Prop 203 and he apparently isn't aware that our Legislature specifically considered and rejected the idea of taxing marijuana sales. There are two potential taxes that could apply, (a) State income tax and (b) State sales tax. Mr. McDonald's statement is false as to both.

There are no tax revenues.

(a) With respect to State income tax, Prop 203 specifically and intentionally exempts marijuana dispensaries from paying any state income tax and that likely will be the case forever. Because Prop 203 is voted protected, the Legislature could only change it with a ¾ vote of both the House and Senate, and signature by the Governor. Even then, the only changes they could make would be those that further the purpose of the Proposition. Changing a tax exemption to a taxable transaction would not further the purpose. Therefore, the Legislature could not change the law to require marijuana dispensaries to pay state income tax.

(b) With respect to State sales taxes, Arizona state law currently exempts drugs prescribed by a doctor from sales tax. A.R.S. Sec 42-5061(A)(8). This is clear to anyone who visits a pharmacy. Those purchases are not subject to sales tax. Marijuana recommended by a doctor under Prop 203 is considered "medical," so that transaction would not be subject to a sales tax. This result is made crystal clear by the fact that the Legislature specifically considered and rejected taxing "medical" marijuana sales. In March 2010, the State Senate considered a bill to tax marijuana sales if marijuana were to become legal for "medical" purposes. That bill failed in the State House. The creation of a “medical” marijuana sales tax in the future would require a 2/3 majority vote of  the Legislature (20 of 30 in the Senate and 40 of 60 in the House). A significant portion of the Legislature has signed and lives by a “no new tax” pledge. To assume that the Legislature would pass a new sales tax requires a gargantuan leap and frankly is a folly. And you can bet the pro pot folks would be out fighting that effort; otherwise, they would have included such a tax in Prop 203.

Even if the State were able to tax dispensaries or marijuana sales, any tax revenues collected would be illusory because they could be seized by the federal government as the proceeds of illegal drug trafficking. And, as the recent Rand study concluded, tax revenues would be a drop in the bucket compared to the increased social costs caused by marijuana consumption.

This is not a "win-win" situation for our State. In fact, it is very costly for our State in terms of increased health care, increased substance abuse treatment costs, increased costs to cities for law enforcement and litigation, increased costs for legitimate businesses whose "medical" marijuana card-holding employees cause accidents, property damage and lawsuits, etc. Therefore, with no tax revenues being raised, yet costs being increased, this is a lose-lose situation for our State.

2. "'I'm of the belief that the feds aren't going to do anything to an operation that's legitimate, that follows the rules,'" McDonald said. He knows current U.S. Attorney for Arizona John Leonardo well, since Leonardo used to work for him. The California dispensaries that were raided by the feds were fronting for illegal marijuana sales, McDonald said."

These three sentences raise three different areas of concern. First of all, no marijuana business is "legitimate." Secondly, the raids on dispensaries in California demonstrate that compliance with state and local law do nothing to shield marijuana businesses from federal enforcement action. Thirdly, the hint that U.S. Attorney John Leonardo has communicated something to Mr. McDonald (or that Mr. Leonardo is subject to Mr. McDonald's influence) that will cause a different result than the policy expressed by the Department of Justice ("DOJ"), as well as the U.S. Attorneys for the District of Arizona in warning letters to our state officials, is disconcerting.

(a) No marijuana operation is "legitimate." Every sale of marijuana is illegal under federal law, therefore, no operation is "legitimate" or "follows the rules." Mr. McDonald's statement thus makes no sense. Mr. McDonald should know that the DOJ enforces federal, not state law. State law, in fact, is irrelevant.

(b) If Mr. McDonald is suggesting that compliance with state or local law will prevent federal enforcement action he still is wrong. The best, most recent example of federal enforcement action despite compliance with state and local law is the DEA civil forfeiture action against Harborside Health Center, a "medical" marijuana dispensary in Oakland, California. After receiving notice of civil forfeiture proceedings, the city of Oakland filed a lawsuit against the DEA, claiming Harborside was in strict compliance with state and local law. The court ruled recently, in City of Oakland v. Holder, in favor of the federal government and dismissed Oakland's lawsuit.  http://www.bloomberg.com/news/2013-02-14/u-s-wins-bid-to-dismiss-oakland-lawsuit-defending-pot-clubs.html The civil forfeiture action by the DEA against Harborside is proceeding.  The Harborside proceedings are not the only indication that the federal government is continuing to prosecute those violating federal drug laws. Take a look at this recent article concerning the ongoing criminal prosecution of a San Clemente, California dispensaryowner: http://www.presstelegram.com/news/ci_22917630/man-pleads-guilty-drug-trafficking-tax-evasion?source=rss

You also might want to take a look at the very recent action in Oregon concerning a search warrant of "medical" marijuana records signed by a Federal Magistrate Judge stating that "probable cause exists to believe that records from the Oregon Medical Marijuana Program will contain evidence and instrumentalities of marijuana manufacturing and trafficking and conspiracy to commit marijuana manufacturing and trafficking offenses, (all violations of federal law)." http://blog.seattlepi.com/marijuana/2013/04/11/feds-scoop-up-medical-marijuana-patient-records-in-oregon-investigation/ This, frankly, should be sending chills up the spines not only of dispensary owners and landlords, but Arizona state officials.

The policy of the DOJ, as expressed in the Cole memorandum and numerous warning letters from the U.S. Attorneys in various states, including Arizona, is that those violating, and facilitating violations of, the Controlled Substances Act ("CSA") have no immunity from federal enforcement action. Dispensary owners, as well as landlords and state officials who facilitate the operation of dispensaries, are violating the CSA and can be prosecuted under federal law, despite compliance with state and local law. U.S. Attorney John Leonardo is obligated by his oath of office to enforce federal law, so it should be just a matter of time until Arizona dispensaries experience federal enforcement action. See (c) below.

Following the election, Will Humble, Director of Arizona Department of Health Services (ADHS) was warned by then-U.S. Attorney Dennis Burke that those who "knowingly facilitate the actions of traffickers should know that compliance with AMMA [Arizona Medical Marijuana Act] will not protect them from federal criminal prosecution . . . . " Mr. Burke's May 2, 2011 letter is attached. At that time, Arizona was the very first state in the country to authorize dispensaries to cultivate and sell unlimited quantities of marijuana (a clear violation of federal drug laws). Also at that time, the U.S. Attorneys in other states, including Delaware, Rhode Island and Washington state were warning state officials that dispensaries selling marijuana should not be licensed. (In response to those warnings, the Governors in Delaware, Rhode Island and Washington all quashed legislative attempts to authorize dispensaries.) 

When ADHS continued to move forward despite the warning from Mr. Burke, Governor Brewer was warned by acting U.S. Attorney Ann Scheel that state employees would have no immunity from federal prosecution for facilitating violations of federal drug laws. Ms. Scheel's February 16, 2012 letter is attached. 

Attorney General Tom Horne, on August 6, 2012, issued an opinion stating that state authorization for growing or selling marijuana is prohibited under federal law and thus AMMA is unconstitutional in that respect. He further acknowledged that state employees "could be subject to prosecution for actions required by AMMA." Maricopa County Attorney Bill Montgomery already had issued (on May 26, 2011) his opinion to the Maricopa County Board of Supervisors, advising that the AMMA conflicts with federal law and places county employees in a position of potentially facilitating violations of the CSA. His opinion is attached.

Following the issuance of his own opinion, Attorney General Tom Horne then joined the pending lawsuit against Maricopa County by White Mountain Health Center, which was denied necessary documents to open a dispensary by Maricopa County on the basis of Mr. Montgomery's opinion.

Mr. McDonald is entitled to his beliefs, regardless how unfounded, but conveying his misinformation to Arizonans is irresponsible and you should not help him do that. Dispensary owners and landlords should be made aware that the U.S. Attorneys in fact are enforcing federal law. And, they should be reminded regularly that state officials have been warned twice by our own U.S. Attorneys not to move forward with dispensaries in this State. Rather than lulling Arizona dispensary owners, landlords and state officials into a false sense of security with articles like this one, Arizona media outlets should be warning of the potential civil and criminal penalties for operating federally illegal marijuana businesses.

(c) Any indication by U.S. Attorney John Leonardo that he will not enforce the CSA against state-compliant facilities would be a violation of his oath of office to uphold the U.S. Constitution and contrary to the stated policy of the Department of Justice, as stated in the Cole memorandum, as well as all subsequent warning letters from the various U.S. Attorneys (including Arizona's). 

Is Mr. McDonald suggesting that he knows something from U.S. Attorney John Leonardo that the rest of Arizonans do not know? Given all of the facts outlined in the previous paragraphs, if Mr. McDonald knows something from U.S. Attorney John Leonardo that is different from the stated policy of the Department of Justice, made clear to Arizona in two separate warning letters to our State (first to the Department of Health Services and the second to Governor Brewer, specifically warning that state employees have no immunity for violating the Controlled Substances Act), then that knowledge should be shared with Arizonans officially so appropriate action can be considered. 

Many of us are counting on Mr. Leonardo to do his job. If he doesn't intend to do it, we'd like to know, but we'd like to hear it directly from Mr. Leonardo rather than through hints of inside information from Mr. McDonald.

3. "He [McDonald] said he's even consulted with the Secret Service to make sure the Chino facility is secure."

What is Mr. McDonald trying to tell Arizonans? The Secret Service is "mandated by Congress to carry out dual missions: protection of national and visiting foreign leaders, and criminal investigations." Their mission is "to safeguard the nation's financial infrastructure and payment systems to preserve the integrity of the economy, and to protect national leaders, visiting heads of state and government, designated sites and National Special Security Events." http://www.secretservice.gov/

What exactly is it that Mr. McDonald is suggesting the Secret Service will be making sure is "secure?" This is a very strange statement indeed that you should have followed up on in detail. I, for one, certainly would love to know how or why our U.S. Secret Service will be ensuring the "security" of a federally illegal "medical" marijuana facility. I suspect that the Department of Homeland Security would like to know that, as well. 

4.  "He [McDonald] criticized the federal government for continuing to classify marijuana as a Class 1 drug with no medicinal value, making it harder to conduct scientific tests on it. 'It is insane the government treats this as Class 1,' he said. 'It's absolutely hypocritical. It's almost like a Dark Age mentality: 'Let's not test it because we may not like the answer.'"

First of all, the classification of marijuana as a Schedule I drug does not prevent research. In fact, there currently are more than 200 researchers registered with the DEA who are authorized to conduct bona fide research studies on marijuana, marijuana extracts and marijuana derivatives. In addition, there are almost 300 NIH-supported projects on cannabinoids, more than a dozen of which are looking at the therapeutic value of cannabis-based compounds. Sativex is very close to FDA approval. There already are various components and related synthetic compounds, such as Marinol and Dronabinol, that are FDA-approved. How would Mr. McDonald explain that these derivatives have been approved by the FDA?

The whole attempt to legalize marijuana as a "medicine" is political. The FDA (considered the gold standard of the world), which is responsible for approving all foods and drugs for consumption in this country, has not approved marijuana as a medicine. Marijuana has been found by the DEA to have no accepted medical use, is addictive, and can't be used safely even under the supervision of a physician. These findings recently were confirmed by the DEA in denying a petition to reclassify marijuana into a lower schedule. The DEA's decision was confirmed on January 22, 2013, by the United States Court of Appeals for the District of Columbia Circuit. The classification of marijuana as a Schedule 1 drug can hardly be referred to as "hypocritical."

In addition to the classification by the federal government, every major medical association, including the American Medical Association, National Cancer Institute, National Multiple Sclerosis Society, American Glaucoma Society, and the American Academy of Ophthalmology is opposed to the use of crude marijuana as medicine. In fact, the American Glaucoma Society warns against using marijuana, as it can cause a spike in intraocular pressure, leading to damage to the optic nerve. These medical societies advocate for patients with the very conditions specified in our "medical" marijuana law, yet they do not recommend marijuana for those conditions. 

For whatever reason, Mr. McDonald (a lawyer, not a doctor) might not like that marijuana is placed in Schedule 1, but his judgment is not a substitute for the careful and thoughtful findings of the scientific and medical experts in our country. Accusing the medical and scientific community of hypocrisy is irresponsible and inaccurate. The true hypocrisy comes from Prop 203 and its defenders. Prop 203 was written, financed and promoted by the national pot lobby, a special interest group representing drug users and sellers.

One last observation is that, although the text of your article is about Mr. McDonald's legal representation of a "medical" marijuana facility, the title of your article indicates that Mr. McDonald's motivation is his stepson. Your article actually makes it clear that Mr. McDonald's motivation is financial.

Perhaps if you had talked to someone on the other side of this issue, these numerous factual inaccuracies could have been sorted out for the benefit of your readers. 

Thank you for your consideration of these concerns. Please contact me if you have any questions.

Carolyn Short, Chairman

Keep AZ Drug Free

Carolyn Short is a lawyer and Chairman of Keep AZ Drug Free, an organization that opposes legalization of marijuana for "medical" or recreational use. She was a partner in two large Phoenix law firms, Lewis and Roca and Ryley, Carlock & Applewhite, where her practice was concentrated in the areas of corporate finance, mergers and acquisitions, and securities law. Since leaving private practice, she has volunteered her time to various causes affecting children, the elderly and infirm.