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San Diego Medical Marijuana Dispensaries Shut Down

By Caleb Groos on September 11, 2009 | Last updated on March 21, 2019

Is profit forbidden under California's medical marijuana laws?

More than two dozen people were arrested and 14 medical marijuana dispensaries shuttered late this week by local authorities in the San Diego area.

According to the San Diego Union-Tribune, District Attorney Bonnie Dumanis emphasized that the string of arrests "has nothing to do with legitimate medical marijuana patients or their caregivers."

Instead, authorities claim that the busts targeted dealers operating dispensaries in alleged violation of state medical marijuana laws and the Attorney General's Guidelines on enforcing them.

The round-up reiterates that although California has seem many medical marijuana store-front operations, only those operating as cooperatives or collectives are technically allowed under California law.

Here are the full Guidelines from the Attorney General's office surrounding the dispensing and use of medical marijuana in California. The primacy of whether a dispensary is operating for profit comes from a California statute stating that patients and primary caregivers may "associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes."

This is important because "cooperatively" here means not simply working together, but rather being organized as a specific type of legal business entity - a cooperative, which by definition cannot operate for its own or its members' profit.

Under California law, cooperatives are "democratically controlled and are not organized to make a profit for themselves, as such, or for their members, as such, but primarily for their members as patrons." Cooperatives must register as such with the state.

"Collectives" are a bit less clear. State law does not define them, but the Attorney General's guidelines state that they should be jointly owned and operated by their members, and not involve selling to or purchasing from any non-members.

All of this is completely aside from other legal requirements such as paying taxes on the sale of medical marijuana and having local business licenses and/or sellers' permits in place.

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