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Wednesday, September 14,2011

Sales or service?

Some Stay Open. Some Stay Closed: The Road Ahead For Medical Marijuana Dispensaries

by Andy Balaskovitz

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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