Wednesday, September 14,2011
Sales or service?
Some Stay Open. Some Stay Closed: The Road Ahead For Medical Marijuana Dispensaries
Within two weeks after the state Court of Appeals said on Aug. 23 that selling medical marijuana is illegal, the Greater Lansing Medical Marijuana Business Association held a meeting at the vacant Story Oldsmobile car dealership on Lansing’s east side to try and figure out what to do next.
The association’s attorney had told dispensary owners to promptly close their doors. So they did.
According to accounts from two association members, Detroit attorney Tom Lavigne walked into the meeting and advised the dispensary owners to stay open. He invited them to call him, Shekina Pena recounted. Pena is the owner of Your Healthy Choice Clinic at 628 E. Michigan Ave. in Lansing, a former dispensary that now offers only physician services.
“He showed up to tell people to stay open and offered us his business card. He was trying to hijack the meeting,” Pena said Thursday.
Another association member, dispensary owner Ryan Basore, who said he is “liquidating” equipment at the former Capital City Caregivers on Michigan Avenue, said the association threw the Detroit attorney out of the meeting; Pena said it wasn’t quite that harsh.
“He wasn’t necessarily kicked out,” she said.
But this much is clear: Two of Michigan’s most prominent law firms that specialize in medical marijuana are at odds with each other. One is advising its clients to keep their dispensaries open, while the other is telling its clients to shut down.
Lavigne, who with Matt Abel operate a firm called Cannibis Counsel in offices in downtown Detroit, is telling all 10 of their clients who are dispensary owners throughout the state to stay open. And the clients are heeding their advice — one of which is The Herbal Connection, 4314 S. Cedar St., in Lansing. Lavigne said an association member had invited him. Once he stated his opinion that not all dispensaries should have to close down, he said he left before the association’s board voted on a motion asking him to leave.
Lavigne and Abel think there’s still life left in dispensaries, which is welcome news to patients who depend upon dispensaries for medicine.
“I think the death of dispensaries is highly exaggerated,” Abel said in an interview Friday.
Meanwhile, Lansing-based attorney Matt Newburg, who with Lansing attorney Mary Chartier is representing dispensary owners Brandon McQueen and Matthew Taylor in appealing the ruling to the state Supreme Court, is telling his clients just the opposite.
Abel’s theory is this: Dispensaries do not engage in sales. It’s a service industry, therefore someone behind the counter at a dispensary is being compensated for all that goes into growing the plant — how difficult it is to obtain the strain, how long it takes to grow, equipment and any other costs that go into growing cannabis.
Lavigne, of Cannabis Counsel, cited page 16 of the Court of Appeals ruling: “We hold that a person assists a registered qualifying patient with ‘using or administering’ marihuana when the person assists the patient in preparing the marihuana to be consumed in any of the various ways that marihuana is commonly consumed or by physically aiding the patient in consuming the marihuana.”
Basically, Abel said, a patient is compensating for the costs of being able to use or have administered cannabis from a dispensary. “Why did the Court of Appeals mention all the various ways in which marijuana is commonly consumed if they weren’t giving us a roadmap?” he asked. “Clearly this is a service industry.”
Abel penned his thoughts in a guest column in High Times Magazine last week. He wrote: “The Court held that the sale of marijuana is not allowed in Michigan, and so the defendants´ business model was not permissible. But the good news is that the court did not — contrary to widespread media reports — rule that all dispensaries in Michigan are illegal and must close.
“In fact the Court left open the likelihood that transfers involving compensation for costs may be permitted.”
Newburg did not comment on Abel’s theory, but asked: “How do you get marijuana in the door?” In other words: What did dispensary owners who did not grow what they’re selling obtain the marijuana?
“I think the best thing is to close their business,” Newburg said. Meanwhile, he and Chartier are prepping for a bigger stage: appealing the Court of Appeals ruling to the state Supreme Court.
The Court of Appeals said in its Aug. 23 ruling that Compassionate Apothecary in Mount Pleasant (whose owners, McQueen and Taylor, also have a store on Michigan Avenue in Lansing) was a public nuisance, overturning a Mount Pleasant Circuit Court ruling. The Court of Appeals said in its 17-page ruling that the “medical use” of cannabis does not include patient-to-patient “sales.” Under CA’s business model, caregivers stored medical marijuana for their patients at the business in lockers. If the amount in the locker is more than what the patient needs, the business permits the sale of overages to other patients. CA would take 20 percent of the sale price, charge $5 a month for membership and $50 a month for a locker. Approximately 345 patients and caregivers are members of CA, the ruling says.
Abel, of Cannabis Counsel, said the Court of Appeals ruling only pertained to CA’s model — not all dispensaries. “(CA) was a bad business model.” He added that he is “comfortable with putting our business model on the table” in court.
Ingham County Prosecutor Stuart Dunnings III points to page 10 of the Court of Appeals ruling that says: “Specifically, in regard to this case, the MMMA [Michigan Medical Marijuana Act] does not authorize marihuana dispensaries.”
He said any “alternatives” presented in the future — that dispensaries “transfer” medical marijuana or are based on “donations” — “are going to be found to be wanton.”
Dunnings said he “maintained from the very beginning” that dispensaries are illegal, even though at least two cities — Lansing and Ann Arbor — adopted ordinances to license such businesses. He said the Court of Appeals ruling was “inevitable.”
“I think it’s unfortunate for people who established these businesses in good faith — most of them, not all of them — and they’ve now been hit with having to close their businesses,” Dunnings said. “But I’ve said all along this (dispensaries are illegal) is the law.”
Open for business
It’s safe to say a large majority of dispensaries closed after the Aug. 23 Court of Appeals ruling. But not all of them — at least three Lansing dispensaries are still open.
At The Herbal Connection, 4314 S. Cedar St., it was business as usual on Friday based on Abel’s and Lavigne’s advice, according to a man who answered the phone. He identified himself as the owner but only agreed to speak on the condition that his name not be used. The dispensary’s website identified a man with the same name as the owner.
“We’re here to fight for the patients,” he said, adding that all products are “grinded and pre-rolled before leaving the store.”
The same goes for HydroWorld on Martin Luther King Jr. Boulevard. HydroWorld owner Danny Trevino confirmed to City Pulse last week that he would remain open for business selling medical marijuana and starter plants. Trevino said his shop on Barnes Avenue in Lansing and another in Jackson are open as well. He said authorities closed his shop in Mt. Pleasant — where Compassionate Apothocary, the dispensary in the court ruling is as well — but that he intends to reopen it.
However, open dispensaries — at least in the city — don´t square with City Attorney Brig Smith´s cease and desist order he issued on Aug. 25. Smith said in an e-mail that “enforcement" will come "as warranted." Smith´s letter reads, in part: "Because this ruling renders illegal the activities occurring at most, if not all, medical marihuana establishments, my office has advised the City Clerk not to issue any licenses for the operation of medical marihuana establishments at this time. Without a license, you are operating illegally under local law. ... Medical marihuana establishments that continue to engage in activities that do not comply with the Act will be subject to civil and criminal enforcement and to any penalties provided by law."
As for Lavigne´s and Abel´s legal opinion: "(I) generally do not find merit in his (Lavigne´s) argument," he wrote in an e-mail.
Elsewhere, two business owners from Ann Arbor said they would reopen.
Rob Bethke, owner of Ann Arbor Health Collective and also one of Cannabis Counsel’s clients, said after temporarily shutting down, the collective is back open. Bethke didn’t offer specifics about how the collective’s model works, but said it’s a “closed network of patients and caregivers” with more than 2,000 members.
Chuck Ream, who’s Med Mar in Ann Arbor was raided Aug. 25 by a southeast Michigan regional narcotics enforcement team for reasons apparently unrelated to the Appeals Court ruling, said he will reopen his “collective.” Ream said “acquisitions” at Med Mar must occur between members, which he estimated to be at about 900.
“I’m always worried (about being open),” he said. “But I’m willing to die for this struggle. At this point, we’re following the law.”
Ream said he is part of an effort to get the Legislature to amend the Medical Marihuana Act to allow for “local control legislation,” which would permit dispensaries on a localized basis like Lansing and Ann Arbor had already done prior to the ruling. “We want to find the right person, probably a Republican, to take it up,” Ream said. (See related story on this page.)
Pena, who said Friday that Your Healthy Choice in Lansing is still open but only as a health clinic with doctors on hand, said Abel and Lavigne are leading a dangerous effort and are putting patients at risk.
“I don’t want patients to be lured” into dispensaries that may not be legal, Pena said.
(Pena ran into trouble on another front when she was charged Friday under state election law after she offered free marijuana to patients who registered to vote. The offer was coupled with endorsements of Lansing City Council candidates. Pena pled not guilty Monday in Lansing’s District Court to a misdemeanor count of influencing voters with money or other valuable consideration.)
While some news reports since the court ruling said some local prosecutors, like Otsego County’s Kyle Legel, disagree with the court’s decision and may not prosecute cases, Newburg said the attorney general has the authority to do so. Schuette said in a statement following the Court of Appeals decision: “This ruling is a huge victory for public safety and Michigan communities struggling with an invasion of pot shops near their schools, homes and churches.”
So is staying open courageous or foolhardy? Are these businesses the tall, strong kid on the playground, or the puny one picking a fight with the stronger hand — like law enforcement, the county prosecutor or even the attorney general for that matter? Who’s to say law enforcement won’t go break down their doors after reading this, if they haven’t already?
The Herbal Connection’s owner, who spoke on the condition his name not be used, said it comes with the territory.
“There’s always that fear,” he said of getting shut down by the police. “What can we do? Somebody’s gotta fight for it.”
Abel, of Cannabis Counsel, sticks by his advice: “Let’s cut (patients) off so there’s no medicine at all. Is that less riskier for them? I don’t think so.” He, too, said risk comes with the territory of operating a dispensary. “Anyone who thinks they’re gonna run one without risk is deluded.”
Dunnings, the Ingham County prosecutor, said anyone who’s opened is “going to find themselves in court one way or the other. … They’re going to be liable to prosecution,” he said, adding that it’s up to the police to investigate dispensaries. “I don’t control police departments.”
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