California pot sellers pursue higher prices in other states, face arrest

Police outside California say more and more marijuana is drifting into their territory – as the Golden State’s burgeoning medical marijuana trade has pushed down prices here and prompted growers to seek more lucrative business across the country.

In a recent string of high-profile arrests in places like Michigan, Ohio, Utah and Illinois, Californians have been caught with large hauls of marijuana. Kansas highway patrol officers also recently arrested two men from California after a traffic stop yielded $260,000 worth of pot.

“The whole United States has seen marijuana that’s being grown in California being transported all over the country for sale,” said Kirk Simone, a recently retired lieutenant who worked with the Kansas Highway Patrol for 30 years. “We’ve seized anywhere from 750 pounds down to one pound. It’s not uncommon to find hundreds of pounds.”

In Milford, Mich., police arrested a man suspected of receiving regular shipments from California to his UPS Store mailbox; he was caught with 15 pounds of pot, police said.

A traffic stop in Emery County, Utah, led to the arrest of an Auburn man, whom police described as “extremely nervous.” Police allegedly discovered 75 pounds of marijuana in his rented SUV. And in the Chicago area, two men from Redding were arrested after police found 80 pounds of marijuana the men were accused of delivering to a third man at a DuPage County motel.

Simone has been involved in sting operations in which marijuana seized in Kansas has been traced back to California. He said that in his experience, people are “growing a lot more than they’re supposed to be, and it’s not for medical marijuana use.”

The arrests and prosecutions come as federal authorities have stepped up efforts aimed at California’s pot industry. This summer, Operation Full Court Press will unleash hundreds of local, state and federal agents into the Mendocino National Forest, targeting illegal growers who have set up large-scale growing operations.

The price of marijuana in California has taken a dip over recent years, and that has motivated some to sell their cash crop out of state. As with most goods and services, pot prices are determined by supply, demand and quality.

A pound of the highest-quality marijuana could bring a grower $2,500 if sold to a dealer in Fresno, but as much as $5,500 to a dealer in Greensboro, N.C., according to the National Drug Intelligence Center, which looked at prices in mid-2010. Interviews with pot growers and others in the industry suggest the California wholesale price is closer to about $1,500 a pound if sold here.

Simone said the farther east you go, the more people are willing to pay. James Benno, director of Nor-Cal NORML, which advocates for marijuana users, doesn’t disagree.

“I’m not going to deny that kind of stuff goes on,” he said. “A lot of people are in this for the money. If you can get $4,000 for a pound in New York and $1,500 here in California, it stands to reason that people who are in this for the money are going to take it where the money’s at.”

Just last week, a Los Angeles man was sentenced to four years in federal prison for conspiracy to distribute more than 2,000 pounds of marijuana in Ohio. Christopher Cash, 33, was among six people who have either pleaded guilty or indicated they’ll plead guilty since the distribution scheme was stopped, the Associated Press reported.

The plan unraveled last year after Cash’s accomplice, model and former actress Lisette Lee, arrived in Columbus on a private jet with 13 suitcases full of marijuana and was arrested. She was sentenced last month to six years in federal prison.

Another bust in Tennessee about three months ago resulted in the arrest of two more California men. This time, about 17 pounds of marijuana was confiscated. The men were reportedly charged with possession for resale.

But Sgt. Greg Roberts of the Tennessee Highway Patrol said that for him, a bust like this is the exception, not the rule. Most arrests yield “relatively small amounts as loads of marijuana go. I mean anywhere from a few ounces to a few pounds, usually. There is the occasional larger load of 20 pounds or more.”

Roberts said the majority of people smuggling pot into Tennessee are not from California. But he said there has been an increase of people from California caught with medically prescribed marijuana. A lot of what he comes across is commercially packaged and bought from dispensaries. To someone in California, this might suggest personal use.

But Roberts said he believes most of the pot that officers confiscate is for resale. And, as he pointed out, “in the state of Tennessee, anything over a half-ounce is a felony.”

States’ laws, punishments vary

In Alabama, officials are pretty serious, too. Michael Lapihuska got three years for possession of 5 grams of marijuana. Lapihuska served more than a year and in 2009 made parole.

Immediately upon his release, he moved to California, where he had no trouble getting a prescription for medical cannabis. In Alabama, Lapihuska had been diagnosed with numerous psychological afflictions for which doctors had prescribed him about a half-dozen different medications. But he said medical cannabis was far more effective than any of the traditional drugs he’d taken in the past. Although it did have one big drawback: going home for the holidays.

By Christmas of that year, Lapihuska had bought a plane ticket back to Alabama to visit family. He’d also packed away some medicine for the trip.

“The lady at the dispensary said you should have no problem on the plane; just wrap your recommendation around the outside. I flew out of Oakland, had no problem flying out of Oakland with a pound of Grape Ape,” he said.

A week into his stay, Lapihuska was caught by police with a gram of medicinal cannabis in his pocket. He showed the officer his prescription, but it didn’t get him any sympathy. A judge threatened him with 10 years, but several advocacy groups and a good lawyer came to his rescue. In the end, he got probation. But before he could return to California, he had to spend a year in Alabama attending a drug rehabilitation program.  

“So I didn’t have a supply of marijuana anymore. So I had to start taking Xanax again. It helps me, but I don’t like it at all. I’d much rather use marijuana,” he said.

It’s impossible to know how much smuggled pot is reaching patients and how much is being used recreationally. Morgan Fox, spokesman for the Marijuana Policy Project, said there is legitimate demand for pot as medicine.

“There are definitely people who want to take advantage of the benefits of medical marijuana in the states that don’t have it legalized yet,” he said. “They have to do what they have to do to get their medicine.”

But Fox also recognizes another situation called diversion – a technical term for the process by which marijuana, ostensibly grown for medical purposes, finds its way onto the black market. In these cases, he believes California is one of the biggest offenders.

“I think in places like California, Washington and Oregon, there will be more diversion than in places like Maine, New Jersey and Rhode Island, where dispensary systems are being set up along strict guidelines. That just speaks to the need for regulation in these states that are going to allow medical marijuana. They just need to be clear and unambiguous.”

In 2008, then-Attorney General Jerry Brown recognized the problem of diversion and issued guidelines to clarify SB 420. The guidelines state that dispensaries and growers are legally obliged to operate within a “closed circuit,” or what has come to be known as a “closed loop.”

This system attempts to restrict dispensaries from getting their marijuana from anywhere but the members of their collective. The guidelines state: “To help prevent diversion of medical marijuana to nonmedical markets, collectives and cooperatives should document each member’s contribution of labor, resources, or money to the enterprise. They also should track and record the source of their marijuana.”

Dale Gieringer, director of California NORML, thinks medical marijuana’s effect on the national market is grossly overstated. He said most of the marijuana grown in California is grown illegally.

“Medical marijuana is a small percentage of the California market,” he said. “The medical marijuana that’s being grown for the dispensaries is generally being done by patients in a fairly closed loop. I’m not going to say there’s no leakage there, but it’s insignificant compared to the enormous amount that’s being produced in non-medical markets.”

Whether it’s a real problem or not, diversion is a political football. Some dispensary owners couldn’t care less about the issue, while others take it more seriously.

Stephen DeAngelo, executive director of the Harborside Health Center, a dispensary in Oakland that promotes its closed-loop status, said all his growers are certified patients and provide medicine only to his dispensary.

“It means,” he said, “we’re in strict compliance with California state law.”

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