OAKLAND — Federal agents issued the ultimate stocking stuffer Thursday when they gave more than $1.2 million in drug money confiscated from a former Hayward medical marijuana store to five Bay Area police agencies.

Drug Enforcement Administration and the Internal Revenue Service agents announced the distribution of the money from the U.S. Department of Treasury Asset Forfeiture Fund at the Ronald V. Dellums Federal Building in downtown Oakland.

“The assets forfeiture program is one of the federal government’s most effective tools against drug trafficking, money laundering and organized crime,” said Scott O’Briant, IRS criminal investigations special agent in charge. “The program disrupts and dismantles criminal enterprises by seizing their assets” and then distributes those resources to local law enforcement to help fight crime.

“This is a true holiday gift,” said Hayward police Chief Diane Urban, whose department received nearly $475,000, the largest payment. “It will allow us to offer a higher level of service to our community and to combat crime with funds during tough economic times.”

The Southern Alameda County Narcotics Enforcement Team, which includes Newark, Union City and Fremont officers, also received almost $475,000. Police departments in Livermore, Vallejo and South San Francisco each received nearly $95,000.

The various cash amounts are based on each agency’s participation in an investigation, and the funds can only be used for law enforcement, said Bob Cooke, special agent in charge at the state Department of Justice Bureau of Narcotic Enforcement.

Authorities said these particular funds were seized from a Hayward drug investigation that began five years ago, when a federal search warrant was served at Local Patients Cooperative, a medical marijuana store that opened in 2003.

Two Hayward residents — owner Shon Matthew Squier and store manager Valerie Lynn Herschel — were arrested, and agents seized indoor marijuana grows, hundreds of pot plants, processed marijuana, two residences and a number of vehicles, O’Briant said.

Squier, 39, later pleaded guilty to maintaining a drug-involved premises and money laundering, authorities said.

He was sentenced to 30 months in prison and ordered to forfeit real estate, weapons and cash from bank accounts totaling nearly $1.9 million, federal agents said.

Herschel, 28, pleaded guilty to maintaining a drug-involved premises and was sentenced to five years of probation and ordered to forfeit a Hayward home, police said.

“The outcome of this investigation is a perfect example of cooperation between state, local and federal agencies working toward taking major suppliers off the street,” Newark police Chief James Leal said.

Contact Chris De Benedetti at 510-353-7011. Follow him at Twitter.com/cdebenedetti.