SAN FRANCISCO -- U.S. Attorney General Eric Holder's announcement that the federal government will no longer raid medical-marijuana dispensaries was cheered by California dealers as well as state legislators who seek to legalize and tax sales of the drug.

Under the Bush administration, the Drug Enforcement Agency raided dispensaries across the country. Such seizures were especially common in California, which in 1996 became the first state to legalize marijuana sales to people with doctor's prescriptions -- in opposition to federal laws banning any use of the drug.

The attorney general signaled recently that states will be able to set their own medical-marijuana laws, which President Barack Obama said during his campaign that he supported. What Mr. Obama said then "is now American policy," Mr. Holder said.

"We may be seeing the end of an era," said Rob MacCoun, a law professor who studies drug policy at the University of California, Berkeley. "It's not likely to be a priority for the Obama administration."

That news relieved Kevin Reed, who owns the Green Cross, a medical-marijuana-delivery service in San Francisco. He said he wasn't too concerned about raids because they usually target large dispensaries that "get out of control" with high traffic and cash flow. But federal seizures were constantly "in the back of your head," Mr. Reed said.