Federal raids of Washington state medical-marijuana dispensaries this week are raising concerns among state officials and entrepreneurs that recreational-marijuana may be similarly targeted when the market opens in the state early next year.

Drug Enforcement Administration spokeswoman Jodie Underwood said agents executed several search warrants involving “marijuana storefronts” Wednesday, but she declined to comment on why they were targeted or whether recreational pot shops might get the same treatment.

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A person familiar with the raids said agents went after four medical-marijuana dispensaries related to a 2011 investigation into allegations of money laundering and illicit marijuana sales.

Residents in Colorado and Washington voted to legalize recreational marijuana last year. But federal authorities haven’t said how they will address these new state-regulated markets for marijuana, which remains illegal under federal law. Washington and other states allow medical marijuana, but this is also illegal under federal law, and federal authorities have raided dispensaries around the country.

Washington officials said this week after the raids that they were pushing forward with plans to permit recreational-marijuana production facilities and retail shops. But in light of the raids, coming months before the state rules on recreational marijuana take effect, state officials reiterated the need for guidance from the U.S. Department of Justice.

“We would welcome clarity from the federal government on how they expect to address Washington state’s emerging recreational system,” said Brian Smith, a spokesman for the Washington State Liquor Control Board, which has been charged with regulating legal pot. “With a lack of clarity, you’re always operating in an area of risk.”

Allison Price, a spokeswoman for the Justice Department, said the “department is continuing to review the legalization initiatives passed in Washington and Colorado.”

Bayside Collective in Olympia, Wash., was one of the dispensaries agents raided Wednesday, said Bayside office manager Addy Norton. Ms. Norton said she had just opened at 10:30 a.m. when DEA agents came with guns drawn. Ms. Norton said the DEA agents threw a search warrant on the floor when she asked to see it and they wouldn’t say what they were looking for.

“They said we are part of a two-year ongoing investigation,” Ms. Norton said, adding that agents took “all of our medicine” as well as documents from another medical-marijuana dispensary that Ms. Norton and her partner operated before it closed.

Ms. Underwood declined to comment on details of the raids or names of the dispensaries.

The raids put entrepreneurs set to enter the legal pot market on edge. “It’s really tough, the federal government hasn’t been clear about what their position is and all of us are just waiting, hoping and crossing our fingers,” said Jamen Shively, a former Microsoft executive who is planning to open retail pot shops in Washington and Colorado with his company Diego Pellicer Inc.

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“Right now it’s impossible for me to tell whether this is part of a bona fide sting operation with cannabis crossing state lines or something like that, or is this more like sending a message?”

Source: Wall Street Journal (US)
Author: Zusha Elinson and Joel Millman
Published: July 25, 2013
Copyright: 2013 Dow Jones & Company, Inc.
Contact: [email protected]
Website: http://www.wsj.com/