Civil Forfeiture Threats Becoming Key Piece of Feds’ Strategy Against Medical Marijuana Industry

If it wasn’t clear already, it should be now: The federal government’s weapon of choice against the medical marijuana industry is the threat of civil forfeiture.

And it’s working like a charm. Federal officials have used this strategy to close hundreds of dispensaries across the country without diverting too many resources or spending much money on enforcement (as opposed to raids, lawsuits and other measures, which are costly and time-consuming). In most cases, the mere threat of asset seizure is enough.

This scenario played out once again last week in Washington and in California:

- The Drug Enforcement Administration sent warning letters threatening to seize the assets of nearly two dozen Washington State dispensaries located near schools and other areas where children gather. Officials also threatened the landlords of those properties, an extremely effective tactic because property owners have little incentive to defy the government or test its resolve.

- The U.S. Attorney’s Office sent letters to 66 dispensaries in the California cities of Anaheim and La Habra, ordering the operations to close within the next two weeks. The letters also threaten the landlords who own the properties.

The dispensaries in Washington could theoretically relocate. But that’s an expensive proposition, and many MMJ operations simply don’t have the cash reserves or credit to fund a move. They also have just 30 days to comply with the mandate, meaning they’ll likely have to shut down for an extended period of time before they can reopen in another location. It’s difficult in dense cities like Seattle to find a suitable space far enough away from areas where children congregate, and the entire process can take a lot of time. The loss of revenue on the days they are closed further exacerbates the financial situation.

The landscape in California is much different, as federal officials are targeting all types of dispensaries rather than just those located close to schools. Many dispensaries there have little choice but to close down, though some that were told they are too close to schools – like Berkeley Patients Group – are trying to relocate.

The lesson from all of this: Dispensaries and grow operations in every MMJ state that are located within 1,000 feet of a school should put off costly upgrades or expansions and hoard as much cash as possible. They should also research other potential locations ahead of time. Building a reserve fund and planning in advance can help offset the blow if a warning letter shows up in the mailbox.

Other top stories in MMJ Business Daily last week:

Colorado Receives Just 8 Applications for New MMJ Biz Licenses

MMED Officials to Talk About Compliance at Event