Court rulings bode ill for medicinal pot The Bottom Line By Andrew Ross

Protesters of President Obama's recent medical marijuana crackdown march down Broadway in downtown Oakland. Obama is giving a speech at the Fox Theater during a fundraising stop in Oakland, CA Monday July 23rd, 2012 less Protesters of President Obama's recent medical marijuana crackdown march down Broadway in downtown Oakland. Obama is giving a speech at the Fox Theater during a fundraising stop in Oakland, CA Monday July ... more Photo: Michael Short, Special To The Chronicle Photo: Michael Short, Special To The Chronicle Image 1 of / 8 Caption Close Court rulings bode ill for medicinal pot 1 / 8 Back to Gallery

It's understandable that President Obama didn't respond to pleas he call off the federal dogs shutting down medical marijuana businesses in the Bay Area when he was in Oakland last week.

That was the same week that the Democratic-controlled Los Angeles City Council voted unanimously to ban medical marijuana dispensaries in the City of Angels, a move backed by Democratic Mayor Antonio Villaraigosa, who also happens to be chairing the Democratic National Convention in Charlotte, N.C., where Obama will be formally renominated for the presidency in September.

It was also the same week that the U.S. Justice Department said that federal courts in all four California judicial districts have rejected appeals by dispensaries threatened with shutdown.

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The most recent rejection came this month, when a federal court in Oakland rejected appeals filed by the Marin Alliance for Medical Marijuana in Fairfax, the Medthrive Cooperative and the Divinity Tree Patients' Wellness Cooperative in San Francisco, and Medthrive's landlords. Similar appeals by dispensaries in Sacramento, Butte County and Los Angeles County were rejected earlier this year.

Given those rulings, it's safe to say that Harborside Health Center, whose landlord in Oakland and San Jose received a forfeiture notice from U.S. Attorney Melinda Haag two weeks ago, probably won't have any luck in federal courts either.

Revenue potential: All told, approximately 400 dispensaries in California have closed since the four U.S. Attorneys began their coordinated crackdown in September, depriving the state and municipalities - whatever one thinks of the merits of marijuana dispensaries - of much needed tax money.

According to the state Board of Equalization, medical marijuana dispensaries contribute $100 million in state sales tax revenue alone. Oakland garnered $1.4 million in local taxes from them in 2011. San Jose gets $2.5 million from the city's dispensaries. In the third quarter of 2011, San Francisco hauled in $410,000 from its dispensaries, according to the Office of the Controller, which estimated annual sales in the city at $41.7 million.

What to do? State regulation would be a start - like most of the 16 other states and District of Columbia that have legalized medical marijuana - instead of the patchwork of local ordinances overseeing California's $1.7 billion industry.

"There have been abuses. Some cities like San Francisco and Oakland have been great, but others have gone into Dante's hell," said Assemblyman Tom Ammiano, D-San Francisco, who introduced a measure last year to tighten the rules statewide. He could have been referring to Los Angeles, with up to 1,000 dispensaries, many of them unregistered, and which even strong medical marijuana advocates regard as a disaster area.

Tweaks needed: Ammiano's legislation, called the Medical Marijuana Regulation and Control Act, would put the state's Department of Consumer Affairs in charge of licensing businesses engaged in the medical marijuana trade, from crop cultivation to distribution and sales. The law would set fees and zoning standards, and empower municipalities to implement special taxes.

It would also make falsifying a physician's written recommendation for marijuana a crime, and give the state the power to rescind registrations and ban dispensaries in certain areas.

The bill passed the Assembly but was pulled from the state Senate after running into some flak on taxation matters and provisions giving local governments the power to ban dispensaries under certain circumstances. There is also disagreement over which state agency should be in charge, with some saying it would be better under the Department of Alcoholic Beverage Control.

Ammiano said his bill would undergo some "tweaking," and plans to reintroduce it in September. "It's generally in the right vein, but it's important to leave local communities with some discretion," said Kris Hermes, a spokesman for Americans for Safe Access, a medical marijuana advocacy group in Oakland.

Despite the recent action against Harborside, Oakland officials are looking to increase the number of dispensaries in the city from four to eight.

Whether Ammiano's bill would alter the federal government's approach to California remains to be seen. So long as federal law bans marijuana as a controlled substance and claims of its health benefits are officially dismissed, any change is probably in doubt.

Still, whichever administration is in office come January, sooner or later, Washington will have to get in line with the increasing number of states that regard marijuana differently.

"Any problems can only be solved by regulation and taxation under color of law, not by driving these businesses underground or forcing them to exist in a gray zone of legal uncertainty," said Betty Yee, a member of the Board of Equalization, protesting the federal government's current approach.

"Clearer, not murkier, regulation will make more Californians safer."