CAMPBELL: Head north from San Francisco on Highway 101 and you soon reach the famous vineyards of Mendocino County. These grapes were once the lifeblood of the community. Mendocino, like its neighbour the Napa Valley, is still a magnet for connoisseurs.

But we're not here for the wine. We're here for a much more lucrative crop that's the real source of the country's wealth. We're here for the marijuana.

You won't see it from the highway as it's grown discreetly on the back roads.

MATT COHEN: So this is our light deprivation greenhouse. What you do.... the larger plants that are in here are going to be forced into flowering.

CAMPBELL: Matt Cohen is one of the county's most successful horticulturists, producing premium organic marijuana.

MATT COHEN: These are pedigree clones of the best cannabis strains in California.

CAMPBELL: We can't show where his farm is. He's scared criminals may come and steal his crop, but the police know all about it.

MATT COHEN: [Northstone Organics] This is a very well known cannabis growing area and we now have very detailed regulations on how one can legitimately operate a medical cannabis co-operative.

CAMPBELL: Cohen operates through a large, voter driven loophole in California's drug laws. In 1996 a referendum allowed marijuana, also known as cannabis, to be grown and sold for medical reasons.

MATT COHEN: You have to go through some twenty five different hoops you've got to jump through, in order to do that - criminal background checks and you know you have to be operating a not for profit entity - a complete accountability for every gram of medicine that is produced.

CAMPBELL: His cooperative supplies hundreds of members who have doctors' recommendations to take it. Angel Raich is a self-described soccer mum in San Francisco. She smokes a potent mix of cannabis, head and extract often every two hours.

ANGEL RAICH: I'd be dead without it. I have severe chronic pain. I have arthritis. I also have a life threatening wasting syndrome. I don't get hungry at all. I.... basically without cannabis I will drop a pound a day. I'd literally deteriorate. My body cannot function, I can't move. I can't eat. I can't sleep. It really is a full physical, medical breakdown. I don't get high from cannabis at all. It's really boring. I really honestly don't like using it. I do it because I have to.

CAMPBELL: Back in the 60's marijuana was seen as something only freaks and hippies took. San Francisco's Summer of Love, based in the scenic Haight-Ashbury district terrified America's leaders and media.

REPORTER: [Archive footage] The movement appears to be growing. Use of drugs appears to be spreading. There's a real danger that more and more young people may follow the call to turn on, tune in, drop out.

Well they're the hippies. They make you uncomfortable.

CAMPBELL: A couple of generations on, public attitudes have changed radically. Haight-Ashbury, along with the rest of the city, now has legal shop front dispensaries for medical marijuana. Thirteen other states have followed California's lead. Even Washington DC allows marijuana for patients and in a few months Californians will ponder the biggest change of all. They will vote on whether to end nearly a century of prohibition.

Now as prevalent as marijuana is, it's still illegal in every State to use it for recreation but the November referendum could change that. It would mean anyone over 21 could have an ounce of cannabis and grow it themselves. What's more, it would open the way for it to become a legal cash crop, giving local governments the power to regulate its sale and tax. Not surprisingly many of today's younger generation see it as a no-brainer.

STUDENT #1: Marijuana is the cash crop of California.

STUDENT #2: I thought it was corn.

STUDENT #1: No.

STUDENT #3: I thought it was oranges.

STUDENT #1: No it is marijuana and if you were to legalise it, it would be like three, no something ridiculous like two billion dollars in revenue.

STUDENT #4: As long as there are regulations on it I think why, why not? If you can regulate it like alcohol it's not any more dangerous.

CAMPBELL: But what do your parents think? Is there a bit of a generation gap?

STUDENT #4: Oh my parents would be completely against it.

CAMPBELL: But many parents do agree. Latest polling suggests a slim majority of Californians plan to vote yes. Not because they want to smoke it, but because they want to tax it.

TOM AMMIANO: [Member, California Assembly] We have an entity here called the Board of Equalisation and they are kind of our tax body. So they've estimated that maybe two to three billion for the State budget. Now that's not going to resolve a twenty billion dollar deficit which is what we have, but it could go a long way you know towards many things that people are seeing being pared down.

CAMPBELL: Democrat legislator Tom Ammiano is a long time advocate of marijuana reform. His ideas have moved from the fringe to the mainstream since the US recession sent California close to bankruptcy. He says even Republicans are privately admitting they can't afford to keep it illegal.

TOM AMMIANO: [Member, California Assembly] I think the violence that surrounds marijuana now and how sixteen billion bucks a year is the industry, the biggest cash crop in California, I think people are you know become more and more aware of the hypocrisy of pretending that doesn't exist and I think the mantra is prohibition is chaos and regulation is control.

CAMPBELL: California is already slashing public spending. Schools, hospitals, even police departments are being cut to the bone. Taxing marijuana could be just what the doctor ordered.

ANGEL RAICH: You know our economy right now in California's so bad. You know our kids can't get schoolbooks, they can't get the things that they need. They're talking about firing and laying off more teachers left and right and now they're talking about getting rid of the welfare system. Anything that we can do in this country at this point to create jobs, is a good thing.

CAMPBELL: But much can change between now and November. The departing Governor, Arnold Schwarzenegger, is opposing the bill despite his youthful dabbling with the drug. Many insist marijuana is a problem, not a solution.

DR ROBERT DUPONT: It's a major cause of substance dependence in the United States. It's a leading cause of going into treatment in the United States. It's a leading cause of highway fatalities.... rivals alcohol in the United States. It's a very serious health problem and especially I would say for youth.

CAMPBELL: Dr Robert Dupont was the White House drug czar in the 1970s. His work led to a toughening of drug laws in the 1980s. Dupont believes the move to medical marijuana in the 90's opened a back door to abuse.

DR ROBERT DUPONT: [White House Drug Chief 1973-78] They're not treating HIV, they're not treating cancer, they're not little old ladies, they're mostly young men and what are they treating? Insomnia, backache, depression, anxiety - that's not a sick population, that's a drug abusing population.

CAMPBELL: America has been thrashing out the same arguments about prohibition versus regulation for more than forty years.

MATT COHEN: Well you can't beat it (laughs). You know all these years of prohibition haven't accomplished anything really except a massive amount of crime and a huge illegal trade. There's no easy answer, you know there's no quick fix.

CAMPBELL: Matt Cohen believes the best system would be licensed cafes serving gourmet cannabis to responsible adults. Forget your backyard dope plant, to ensure consistency and quality for patients he grows products as varied and carefully tended as wine.

MATT COHEN: We only work with pedigree tested clones and it's the same with all the vineyards across the street. You know it's the same pinot noir clone. In here we have some edible storage. This is all medicated edibles, different varieties.

CAMPBELL: So not everyone smokes the marijuana.

MATT COHEN: No, not at all. Yeah there's tinctures, sprays, capsules, lozenges, a wide variety of gourmet baked goods..... truffles.

CAMPBELL: And the orange down there, what's that?

MATT COHEN: Oh they're the carrots.

CAMPBELL: The only problem he sees is the druggie sounding names by which they're currently known.

MATT COHEN: So the names of these strains are we have like, LA Confidential, Bubba Kush, KC Jones, Blue Dream, Cannon Dog - I think they'll be thinking more in the terms of non counter-culture related names because it will be a legitimate industry and probably start coming up with more appropriate names.

CAMPBELL: Starbucks type names.... more gourmet.

MATT COHEN: Call this the Frappucino or something? I don't know.

CAMPBELL: The medical dispensaries in San Francisco are already going down this path. Many look more like trendy bars than pharmacies.

Once you show your doctor's recommendations, there's a bewildering array of legal cannabis.

[WOMAN BUYING CANNABIS IN SHOP]

DR ROBERT DUPONT: The reason people want to do this is the idea of sort of taming marijuana to make it look okay. That has a bad effect on the public health because it increases the willingness to use the drug and the legitimacy of using the drug and in fact that's the reason the pro marijuana people are leading with medical marijuana because they exactly want to change that image of the drug.

CAMPBELL: The law allows people to buy marijuana for any condition a doctor believes it could help. Angel Raich's doctor Frank Lucido, sees it as something of a wonder drug.

DR FRANK LUCIDO: It seems to be at the roots of you know a lot of our physiology. We hear about endorphins and you know the endogenous morphine's, but we have the endorphin system, but I mean we have the endocannabinoid system so the only, the scientists are only scratching the surface of what the endocannabinoid system can do.

CAMPBELL: Even so many of the people buying marijuana for supposed health reasons, look remarkably healthy. But Dale Clare insists you shouldn't judge by appearances. She's an activist for the referendum and works for a medical dispensary group. She's also a marijuana patient.

DALE CLARE: I suffer vomiting attacks and when I start to throw up I can't stop - and when I say that, I mean full blown dry heaves for twelve, fourteen, sixteen hours. You know if I walked in or out of any dispensary, I look as about as healthy as they can get. I am about as healthy as they can get - but every once in a while I'll go into a cycle that's almost killed me several times in my life and this is the only thing that I've found that can prevent me from having to go to the hospital.

DR ROBERT DUPONT: It's been a few years since we've approved medicines on the basis of anecdotes (laughs). That is a fool's game. I understand there are a lot of people who find all kinds of things helpful to them and they can present very compelling testimonies, but this is not science.

CAMPBELL: The controversy over dispensaries is nothing compared to the controversy over growers. When the 1996 referendum was passed, politicians ran a mile, refusing to set State-wide regulations on how medical marijuana should be grown. It's been left to local governments to work out what is and what isn't legal. Fourteen years on, communities are still arguing about it.

COUNTY SUPERVISOR: [Addressing meeting] And we sent out a letter to every member of Congress and even to the White House. I think we got one response back from one of them. It's still an issue they want to ignore.

CAMPBELL: On a Friday night in Mendocino County dozens of cannabis growers have come to a town hall meeting with the county supervisors. Many are trying to grow marijuana legally for medical use but they're not happy with the rules the county has set.

WOMAN: One of the twenty three hoops you have to jump through requires five acres of land and I live on four point two acres. That means that my collective of ten is reduced to two and a half plants per person.

SHERIFF TOM ALLMAN: I'm very sorry for your four point two acres Pebbles, isn't a correct size to fall within the law, but....

CAMPBELL: The man caught in the middle is the elected Sheriff, Tom Allman, a one time warrior in the war on drugs.

SHERIFF TOM ALLMAN: Unfortunately from the start of 1996 of prop 215, there's always been a huge grey area in the law.

CAMPBELL: The simple principle of medical marijuana has become a legal minefield for enforcement.

SHERIFF TOM ALLMAN: I started law enforcement where if you had an ounce of marijuana you went to jail. So now if you have an ounce of marijuana, in Mendocino County if you have an ounce of marijuana my deputies wouldn't give you a second look. I mean if somebody told me that there were six plants growing across the street right now, I probably wouldn't get up out of my chair and walk over there because even if we went over there and even if a person said yes I'm growing this illegally and I'm going to sell all of it, it wouldn't go anywhere in court. The courts would say, we're not going to prosecute six plants.

CAMPBELL: Sheriff Allman's problem is that most people aren't trying to follow the law, they're trying to bend or break it - from home invaders to international drug syndicates.

Their job is to try to eradicate the big players while regulating the small ones.

A short drive with Deputy CJ Denton shows how prevalent marijuana is.

Young growers have flocked here from all over America, many on the assumption that anything goes..... and everyone claims they're only growing it for medicine.

DEPUTY DJ DENTON: You contact young people, you know they'll be 18 or 19 and they'll have a medical card, say they've got a bad back. I would say yeah, me too! (laughs) Some people they don't even research the law. They just say, oh I thought it was legal.

CAMPBELL: But unless you're a legal expert, it can be hard to know what's allowed. Every county has different laws and they're constantly changing.

Eugene Denson, an ex-hippie turned attorney, travels from county to county defending would be medical growers charged with commercial cultivation. The 1996 referendum has kept lawyers like him busy.

EUGENE DENSON: The Bill is very short and very simple. Like all of the major good things of mankind, the golden rule, the Bill of Rights, the 10 Commandments, short and sweet. What it means is that it leaves a lot open to be filled in, interpretation and those sorts of things. So very frequently I find clients who are completely compliant with the law who are nevertheless charged with felonies.

CAMPBELL: So what thoughts do you have as the referendum approaches for legalising marijuana overall?

EUGENE DENSON: I'll never be out of work. That's my thought.

SHERIFF TOM ALLMAN: I'd love to have some State legislators, some State senators who really and truly have the intestinal fortitude to say this is what's right and this is what's wrong cause the laws we have right now say neither. They say well this is what we, how we feel and this is what should happen. Well I don't go to a philosophy job, I enforce the law and I don't want to enforce philosophy.

CAMPBELL: If the experience of medical marijuana is anything to go by, regulating commercial growing would be a brave leap into the unknown, but this is a pioneering State in a country founded as a great experiment. In November California will decide whether to take it even further, creating an unalienable right to life, liberty and the pursuit of cannabis.

EUGENE DENSON: You know Allen Ginsberg said to me in the late 1960's marijuana will be legal in five years. Well you know he's died, marijuana's not legal. I don't think I'd get into the prediction business. I would say that it is now closer than it's ever been in my lifetime, but I don't know what's going to happen.