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Medical pot sellers cash in with direct deliveries

Undeterred by laws that have closed storefront dispensaries, medical marijuana sellers across the state are flourishing -- by delivering pot directly to homes and offices.

Hundreds of these unregulated delivery businesses have sprung up in recent months -- a sign of how quickly California's fabled pot industry is moving from the shadows and into uncharted legal territory.

In Fresno, some dispensaries have moved to unincorporated areas since the city began forcing storefronts to close. Some of them deliver marijuana to Fresno residents, and the city attorney concedes the city has little authority to stop them.

Statewide, hundreds of "mobile dispensaries" advertise a wide range of strains and other products, such as brownies and cookies laced with THC, the active ingredient in marijuana. One service delivers organic vegetables along with medical marijuana, as part of a "farm-direct" service.

Some operate in multiple counties, including jurisdictions where storefront dispensaries are banned, or make local deliveries to drop-off points, such as Starbucks parking lots and gas stations. At least three ship to clients across the state using private prescription-drug couriers.

Although delivery of medical marijuana is not a new phenomenon, advocates say the growth of these services could be a game-changer in the state's pot war, which pits law enforcement, elected officials and community groups in some localities against dispensary owners and patients.

And these businesses could increase in popularity if voters approve an initiative on the November ballot that would legalize pot possession.

"They're delivering the product better, cheaper, more discretely and probably at a higher profit rate than dispensaries," said Allen St. Pierre, director of the National Organization for the Reform of Marijuana Laws, which advocates legalization. "These delivery services are starting to grab more and more market share."

Lawful or not?

A question remains on whether these services are legal. Some local and federal officials say delivery services violate the 1996 Compassionate Use Act, which legalized medical marijuana in California for qualified patients, as well as other laws. The services are viewed as a way to circumvent local regulations clearly banning dispensaries.

"They're transporting drugs," said Tommy LaNeir, director of the National Marijuana Initiative, which is funded through the White House's drug policy office. "It's a trans-shipment operation that's trying to bypass the ordinances that have been set up by cities and counties. It's as simple as that."

The exact number of delivery services operating in California is unclear, since the state does not keep a registry of medical marijuana distributors or outlets. In April, 758 services advertised direct delivery of marijuana to patients on Weedmaps.com, a commercial listing service.

Those numbers have nearly tripled in the past 18 months and grown by 39% since February, as more counties and cities began regulating storefront dispensaries or banning them outright, according to Justin Hartfield, owner of Weedmaps.com.

More than half the couriers who advertised in April said they were located in the Los Angeles region. Other services clustered around metropolitan regions, such as San Francisco, San Diego and Sacramento -- with most regions experiencing steady growth.

Local connection

Five services were advertising delivery in Fresno County on Weedmaps in April. Others have since opened up, including HealthCannabis, which proclaims itself "Fresno's first 24-hour delivery service," and has a Web site calling Fresno "a great place to live if you are a medical marijuana patient or want to become one."

Buds4Life, located just outside Fresno on Clovis Avenue, is a storefront dispensary that also offers to deliver marijuana to its "patients." Inside the dispensary, patients can buy marijuana or food and drinks containing the same active ingredient as the drug.

Among the many varieties of marijuana offered by the dispensary are "Purple Haze" and "Cat Piss." Patients can smoke the marijuana in a separate room containing a big-screen TV and pipes.

Delivery allows Buds4Life to serve patients with mobility problems, said co-owner Mark Bagdasarian. It also reduces the potential for crime because it reduces traffic at the dispensary, and crime is the top concern of officials trying to keep dispensaries out of business, he said.

Delivery makes up a small portion of his business, which just opened in April, but it could grow as more people become aware of it, he said.

Fresno City Attorney Jim Sanchez said there's little the city can do to stop dispensaries from delivering marijuana. The city was able to close a dispensary, the Medmar Clinic, through a land-use law that said businesses must follow all laws, he said. While dispensaries are allowed under state law, they're not under federal law.

Dispensaries operating outside of the city aren't subject to the city's land-use laws, Sanchez said. However, the city will monitor their activity to make sure they're not violating any criminal laws, he said.

Hazy legality

Statewide, the trend has caught officials flat-footed and unable to pinpoint any legal guidelines that directly address the delivery of medical marijuana by courier or mail. It's clear that sending drugs through the Postal Service and cultivating pot for sale violates U.S. law, but most marijuana growers know federal prosecutions are rare these days.

"Delivery services are a relatively new creature, one that has not been directly addressed by the courts or in legislation," said Peter Krause, a California deputy attorney general who helped write the state's landmark guidelines on medical marijuana in 2008.

The state's 1996 initiative and a companion law approved by the Legislature in 2003 granted cities and counties most of the authority over implementing the Compassionate Use Act. But no city council or board of supervisors has explicitly outlawed or legalized delivery services, according to Americans for Safe Access, an advocacy group that favors legalized medical marijuana.

Senate Bill 420 -- signed into law by former Gov. Gray Davis during his final weeks in office -- appears to protect individual patients from prosecution for "possession, transportation, delivery, or cultivation of medical marijuana" under legal limits. The law also allows patients and their primary caregivers to "associate" with each other to "collectively or cooperatively" cultivate pot for medical purposes.

Some law enforcement officials say existing laws cover pot deliveries. The Riverside County District Attorney's Office, for example, believes that "based on current law, all mobile medical marijuana operations are illegal," spokesman John Hall said.

Hall said the Riverside County district attorney's position is based on a September 2006 legal analysis written by the DA's office that concluded "medical marijuana is not legal under federal law, despite the current California scheme."

Other law enforcement officials said California law clearly does not allow the distribution of medical marijuana to hundreds of people by a service or any single person.

"I don't see anything that suggests that when voters passed the Compassionate Use Act, they envisioned [marijuana] delivery services," said Joseph Esposito, head of narcotics for the Los Angeles District Attorney's Office.

Kris Hermes, a spokesman for Americans for Safe Access, said if delivery services are operating as collectives or cooperatives they are protected under state law. He said all members must be qualified patients or caregivers, the operator must verify each patient's status under legal guidelines and the delivery services must organize as nonprofits.

L.A. action

Statewide, 129 cities and nine counties have banned medical marijuana dispensaries. An additional 96 cities and 13 counties have moratoriums, according to Americans for Safe Access.

Until recently, Los Angeles was ground zero in the rapid growth of medical pot outlets, with dispensaries outnumbering Starbucks locations along some commercial strips.

In January, the Los Angeles City Council approved an ordinance that led city attorneys to order the closing of 439 dispensaries. An estimated 135 will be allowed to remain if they follow new regulations, but action could be imminent on the others.

In the face of the crackdown, some dispensaries have already shuttered their storefronts and rebranded themselves as delivery services. "They tell us, 'we still want to be listed on your Web site. We're just turning into a delivery service,' " said Hartfield of Weedmaps.com.

Dann Halem, a former freelance journalist, founded the Artists Collective delivery service 18 months ago after he started using marijuana to treat a glandular disorder. He quickly saw the benefits of distributing marijuana directly to customers rather than running an expensive storefront.

Together with a business partner, Halem logs hundreds of miles each week to fill phone and Internet orders for 500 or so clients. He said he doesn't charge extra for delivery, but sets a minimum amount of marijuana a patient must buy, depending on the distance.

Fewer delivery services operate in Northern California, but some cover large areas, spanning multiple counties and cities.

One new company, Mediharvest, promises to deliver marijuana to qualified patients anywhere in the state via commercial carriers.

Another new online dispensary, C420, says it will ship pot overnight to qualified medical marijuana users at "almost any legal address in California." The owner, who goes by the assumed name of Matthew Lawrence, said the Bay Area-based company is registered as a nonprofit collective and has signed up 1,000 qualified medical marijuana users across the state since its launch in April.

Lawrence said he distributes marijuana from hubs in Northern and Southern California using third-party carriers "who adhere to pharmaceutical delivery protocols."

He declined to name the carriers, but claimed the operation was in line with state law.

Going organic

Elsewhere, some operations are modeling themselves on organic farms that deliver distinctive boxes of fruits and vegetables directly to customers' homes. Matthew Cohen, owner of Northstone Organics, pioneered what he calls "farm-direct medical marijuana." The Ukiah-based cooperative grows and delivers marijuana to a network of some 500 qualified patients in the nine Bay Area counties.

On a recent afternoon, Cohen stood in a rain jacket and muddy boots, scanning a large garden patch at the rear of his 10-acre farm. Surrounding the area was a network of laser trip lines and high-resolution cameras.

Marijuana from last year's crop is stored in small canning jars in a nearby warehouse. Each week, after taking orders from Northstone's Web site and over the phone, Cohen packs the jars into small paper bags.

Northstone's business has grown briskly. Six months ago, Cohen was driving into the Bay Area twice a week and making the deliveries himself. Now he's hired new workers who make deliveries five times each week.

Marijuana delivery services are attracting a wide range of players. Some sold drugs on the black market for years and now see an opportunity to bring their operations out of the shadows.

"In some people's minds, I'm a drug dealer," said one woman who runs a delivery service in Los Angeles and agreed to talk about her business under the condition that her name and specific areas of operation within Los Angeles County not be revealed. "But what I've tried to do is comply to the laws of Los Angeles County so that I am not just the average pot dealer, but am dispensing medicine to my patients."

Like most delivery services, the woman's business operates as a nonprofit collective, with members making "donations" in exchange for marijuana cultivated by growers in the Los Angeles area and rural regions of California.

But to transform her former customers into legal patients, the woman holds unusual gatherings: Sunday brunches at her home where a doctor evaluates the invited guests in a private room at a discount rate and then signs off on recommendations for medical marijuana.

On a recent Sunday afternoon, about 40 people gathered at the woman's home for a "doctor's party." They ranged in age from early 20s to about 60, included slightly more men than women and appeared to include mostly young and middle-age professionals, and a few stereotypical-looking stoners.

The invited guests paid $100 apiece to see the doctor -- less than the $175 he normally charges for an office visit.

"It's what you would normally go through in the doctor's office, only in a much more comfortable environment," said the operator of the collective.

She and her small, all-female staff are on call noon to 8 p.m. every day and deliver anywhere in Los Angeles County. She says she employs female drivers because they are less threatening to customers. On an average week, the service delivers one to two pounds of marijuana packaged into colored packets, usually weighing an eighth of an ounce and costing between $50 and $70.

"I have doctors. I have lawyers. I have [school] principals," she said on a recent delivery run, which included a Starbucks parking lot and a film production studio.

"I have teachers. I have nurses, doctors, who don't want to be seen going into a dispensary."

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