California "Medical Marijuana Dispensaries" seems to have business issues

     I was looking at one of my favorite websites for legal stories, http://www.findlaw.com/ and came across a story of interest. "San Diego Medical Marijuana Dispensaries Shut Down" written by Caleb Groos. (1) This article stated that the reason for shutting down several of these dispensaries was due to the business not being set up correctly per the California's Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use.

     The businesses that were shut down and the owners arrested we supposedly set up for profit which violates the Guidelines from teh Attorney General's office, which state that only the businesses operating as cooperatives or collectives are allowed to function under the California State Law. (2) "This is important because "cooperatively" here means not simply working together, but rather being organized as a specific type of legal business entity - a cooperative, which by definition cannot operate for its own or its members' profit." (Caleb Groos) The term "Collectives" apparently is not clearly defined under the California State law, but  should be set up as jointly owned and operated by the members for the members, not to be sold to anyone outside the members.

    The original article from the San Diego Tribune stated tha the store fronts that were targeted wer run by drug dealers out to make a profit, which is illegal per the Guidelines. (3) Several of the people arrested in the raids had prior drug arrest charges. Due to the way some of the drug busts were handled brought about some negative feedback from the medical marijuana advocates, stating that the whole situation could have been handled differently.

     Per the California Guidelines the Statutory Cooperatieves for the distribution of medical marijuana, "the cooperative must file articles of incorporation iwth the state and conduct its business for the mutual benefit of its members." The Guideline state taht the membership must be suet up in accordance to the Coproration or Food and Agricultural Code (Id. at §12311(b).) The cooperative is to be set up for the patrons by members and not to collect a profit from the use of medical marijuana sales. "The earnings and savings of the business must be used for the genral welfare of its members or equitably distributed to members in the form of cash, property, credits, or services. Cooperatives should not purchase marijuana from, or sell to, non-members;
instead, they should only provide a means for facilitating or coordinating transactions between members." (2)
   

(1). (http://blogs.findlaw.com/blotter/2009/09/san-diego-medical-marijuana-dispensaries-shut-down.html?=features)
(2). (http://ag.ca.gov/cms_attachments/press/pdfs/n1601_medicalmarijuanaguidelines.pdf)
(3). (http://www3.signonsandiego.com/stories/2009/sep/11/14-pot-dispensaries-county-shuttered/?metro&zIndex=163961)