When federal agents raided Oaksterdam University, Richard Lee’s downtown Oakland, Calif.-based trade school, earlier this month, it wasn’t simply a crackdown on a local pot business, it was one of the highest-profile moves in the Obama administration’s nationwide assault on medical marijuana.
DEA and IRS agents hauled away computers, files and pot plants, leaving behind little more than office furniture. They did not disclose the reason for the raid and have not charged Lee with any crime as of yet. In an exclusive interview with The Huffington Post, his first since the raid, Lee, 49, blasted the federal crackdown as a senseless act of intimidation. “This is one battle of a big war,” said Lee, “and there’s thousands of battles going on all over.”
“Before he was elected, [President Barack Obama] promised to support medical marijuana and not waste federal resources on this,” Lee said. “About a year and a half ago, the policy seemed to change. They’ve been attacking many states, threatening governors of states to prevent them from signing legislation to allow medical marijuana. They’ve been attacking on many fronts.”
Lee was a vocal advocate behind California’s Proposition 19, a 2010 ballot question that sought to legalize marijuana. He put more than a million dollars behind the effort, which was opposed by the Obama administration and ultimately went down to defeat.
Medical marijuana is currently legal in California and 15 other states, plus the District of Columbia, and during his campaign for president, Obama vowed to stop the raids on medical marijuana users that were prevalent under George W. Bush, saying raiding patients who use marijuana for medicinal purposes “makes no sense.”
It was in that political climate, in the fall of 2007 that Oaksterdam was founded by Lee, who started using medical marijuana for pain control more than 20 years ago, after a work accident left him paralyzed from the waist down. Often referred to as “the Princeton of pot,” the school has offered classes to would-be medical cannabis caregivers and patients in subjects ranging from horticulture to business to the finer points of running a dispensary.
About 15,000 students have graduated from Oaksterdam to date, according to Dale Sky Jones, the school’s executive director. On October 15, 2010, however, Attorney General Eric Holder announced that federal authorities would continue to prosecute individuals for marijuana possession, even in states that have legalized it. That “threw a wet blanket” on enrollment at Oaksterdam, Jones said.
Then, last June, the Justice Department went even further. Deputy Attorney General James Cole argued in a memo that “caregiver” protections applied only to “individuals providing care to individuals with cancer or other serious illnesses, not commercial operations cultivating, selling or distributing marijuana.” That meant pot shops, even those operating legally under state law, were vulnerable again.
Since then, the administration has unleashed an interagency cannabis crackdown that goes beyond anything seen under the Bush administration, with more than 100 raids, primarily on California pot dispensaries, many of them operating in full compliance with state laws. Since October 2009, the Justice Department has conducted more than 170 aggressive SWAT-style raids in 9 medical marijuana states, resulting in at least 61 federal indictments, according to data compiled by Americans for Safe Access, an advocacy group. Federal authorities have also seized property from landlords who rent space to growers, threatening them with prosecution, and authorities have even considered taking action against newspapers selling ad space to dispensaries.
“There’s no question that Obama is the worst president on medical marijuana,” Rob Kampia, executive director of the Marijuana Policy Project, told Rolling Stone in February.
The IRS has joined in the attack, invoking an arcane tax code provision originally intended to stymie druglords. That law, known as IRS Code Section 280E, is an uncontroversial measure aimed at preventing criminals from deducting the costs of their illicit activities from their taxable income. But the IRS has interpreted it to apply to medical marijuana dispensaries in such a way that they can no longer deduct the cost of salaries, rent, inventory and other operating expenses. Few brick-and-mortar businesses are able to survive under those terms, as taxes end up being substantially larger than profits.
Lee told HuffPost he thinks the tax issue is where the school may have run into trouble with the authorities.
“It may have something to do with the 280E taxes we’ve been forced to pay,” he said. “It was impossible to pay them on top of the other taxes we’re forced to pay: $60,000 to the City of Oakland for the permit fee, $130,000 for the Oakland Business Tax, 10 percent state sales tax, state income tax, federal income tax, unemployment insurance, workman’s comp insurance, health insurance.”
“Our income tax more than doubled because payroll, rent and other tax deductions were disallowed,” he added. “On top of this, the federal government has been closing our bank accounts, making it more difficult for us to operate as a normal business and pay our taxes.”
Jones said she’s almost surprised the raid didn’t come sooner. “There’s just no way we can afford the building as it is,” she said. “We always half expected it.”
The IRS used the same provision in late 2011 to pursue Oakland’s Harborside Health Center, one of the largest and most respected dispensaries in the state, demanding $2.4 million in taxes, a full $2 million more than the 83,000-member dispensary actually paid for the year. “Federal prosecutors are not trying to clean up the regulated medical cannabis industry, they are trying to destroy it,” said Harborside President Steve DeAngelo at a press conference in San Francisco in October.
“This is not just an attempt to tax us,” he explained earlier this year. “It’s an attempt to tax us out of existence.”
Harborside has filed a petition in tax court to protest the IRS’ assessment, which Harborside has characterized as “a dagger pointed at the heart of medical cannabis.”
U.S. attorneys have repeatedly claimed that the decision to crack down on medical pot establishments was their own decision and not the result of any directive from Washington.
“The actions taken by U.S. attorneys are solely in response to concerns expressed in their communities and by law enforcement about the proliferation of large-scale grow facilities and distributors that clearly fall outside of the definition of individual caregiver,” Justice Department spokesperson Laura Sweeney said.
Deputy attorney Cole has argued that the memo speaks for itself and has refused to say whether the crackdown in California represents a shift in federal policy that could lead to raids in other states.
It wasn’t the policy that shifted, according to Sweeney, but rather “the landscape has evolved,” she said, citing “industrial-scale marijuana operations planned in several states.”
With the apparent disconnect between Obama’s 2007 campaign promises and the actions of his administration over the last four years, voters may be skeptical of any statements out of the incumbent in the course of the coming election. The issue itself has growing and wide-spread support among the electorate. Gallup has found that a full 70 percent of Americans favor the legalization of prescription marijuana to reduce pain and suffering. In Colorado, a key swing state, two-thirds of voters favor legalizing medical marijuana.
If Lee is charged, Jones says she hopes his case goes before a jury. “If they bring a fight, Richard is prepared to take it all the way,” she said. “They can come after the guy in the wheelchair, and he’ll stand up for his rights and the rights of the rest of us.”
“It makes me irate that this is how we’re spending our resources right now,” she said of the federal raids. “And to watch them try to take down a school that’s teaching everyone how to do it right, it just puts the exclamation point on it.”
Oaksterdam, which will cease operations at its current location at the end of the month, “will have to start from scratch,” said Jones, who is looking for a smaller, more affordable home.
Lee, for his part, is largely stepping away from Oaksterdam and is planning to focus his efforts on campaigns in Colorado and Washington state, where legalization initiatives are on the ballot this year.
As for the administration’s murky position on drug legalization, Lee takes a dim view. “They can’t have their cake and eat it, too,” he said. “They can’t keep it illegal and tax it. No more taxation without legalization.”
Carly Schwartz contributed reporting.