Court Clarifies When Financial Contributions to Medical Marijuana Collective Are Lawful
by Derek P. Cole on August 28, 2014
Local governments in California—and especially law enforcement agencies—know all too well the many myths that pervade the medical-marijuana movement. From the notion that California has “legalized” marijuana for medical purposes (those who legitimately use marijuana are only given immunity from prosecution) to the claim that dispensary operators can act as “caregivers” for their often numerous members (the State Supreme Court has clearly ruled otherwise) misperceptions abound about the proper interpretation of California’s landmark Proposition 215 and its companion legislation, the Medical Marijuana Program Act (“MMPA”).
The Myth that Medical Marijuana Dispensaries May Make Money
Among these misperceptions is the notion that dispensary operators may charge their members for medical marijuana and related products just as if they were being purchased in a traditional retail transaction. Guidelines the State Attorney General published in 2008 to interpret Proposition 215 and the MMPA plainly state that members may not profit in any way from a medical-marijuana collective. Members are allowed only to exchange money as necessary to reimburse themselves for the expenses they incur in collectively cultivating and distributing marijuana for their usages.
This clear prohibition has not stopped dispensary operators from illegally profiting. Often claiming they collect the money they charge members to cover their costs, these operators regularly pocket some (and sometimes most) of the funds charged for themselves.
People v. Baniani
On August 22, 2014, the Fourth District Court of Appeals considered the appeal of a criminal defendant accused of such conduct. In People v. Baniani, it overturned this defendant’s conviction on the ground he was denied the right to present a defense under the MMPA for the crimes for which he was charged. The defendant was prosecuted after an undercover police officer had entered his dispensary, filled out forms and became a member, and acquired marijuana upon exchange of cash—all in a single visit.
Baniani is significant because of the theory the prosecutor advanced. Based on the prohibition against profiting from medical-marijuana distribution, the prosecutor argued that any money contributions by a dispensary member to a marijuana collective could be lawful only if made by a member before the cultivation of marijuana occurs. The prosecutor argued that a person could not enter a dispensary and pay cash on the same visit to obtain marijuana or related products. Unless a person is involved at the early stages of cultivation, the prosecutor essentially argued, he or she is not a member of the operation, but really a “buyer” of marijuana and engaged in an unlawful sale.
The court rejected this reasoning, noting it was not justified by the language of the MMPA. As the court explained:
“We do not think the Legislature intended a seriously ill individual whose physician has recommended use of medical marijuana, and who is physically or otherwise unable to participate in the acts involved in cultivating medical marijuana, cannot simply pay money to his or her collective in exchange for the recommended medicine.”
The Baniani makes clear that a member of a marijuana collective need not provide cultivation, planting, labor, or other services as a condition of membership; his or her contribution may be exclusively financial. Consequently, the Baniani case clarifies that a dispensary operator does not engage in an unlawful sale of marijuana solely because he or she charges money for the marijuana a member acquires.
Although Baniani clarifies this point, the court was careful to reiterate that dispensary operators still may not profit from purchases by their members. Thus, while the case makes clear that law enforcement may not conclude illegal sales have occurred strictly because of the exchange of money, it does not legitimize the cash transactions many dispensaries employ to profit from their operations. Prosecution of those who make money from their dispensaries remains justified.