Thursday, May 26 , 2016, 2:32 pm | A Few Clouds 67º

Feds Targeting Property, Assets in Fight Against Marijuana Dispensaries

Under forfeiture laws, property owners may face loss of properties where storefront and growing operations are located

By Giana Magnoli, Noozhawk Staff Writer | @magnoli |

In their stepped-up battle against local marijuana dispensaries and growing operations that supply them, federal authorities are employing a powerful weapon: asset-forfeiture laws.

The U.S. Attorney’s Office this week filed legal complaints for forfeiture against the property owners of two South Coast medical marijuana storefront dispensaries and one indoor farm. They allege that the owners should have known what the buildings were used for — growing and/or selling marijuana, which the government considers illegal under both federal and California law, even if the marijuana is considered medicinal.

Citing past testimony that points to each establishment selling and/or buying marijuana products and making a profit off it, the properties were allegedly used to facilitate law violations and are subject to U.S. forfeiture laws, according to the complaints, signed April 20 by U.S. Attorney Andre Birotte Jr.

The cases will go through U.S. Central District Court.

Drug Enforcement Administration agents and local police raided the Pacific Coast Collective on Milpas Street and an indoor farm on Haley Street this week, and filed the forfeiture complaints and sent out enforcement letters to known marijuana-related operation in Santa Barbara County, authorities said.

No arrests were made.

The letters were very similar to those sent out in October, said Thom Mrozek, a spokesman for the U.S. Attorney’s Office.

The letters warn property owners that their buildings are being used by marijuana dispensaries, which violates federal law, and both the property and rent paid by the dispensary operator could be seized.

“Please take the necessary steps to discontinue the sale and/or distribution of marijuana at the above-referenced location within 14 days of this letter,” an October sample letter states.

Regardless of local laws, federal law — which doesn’t recognize medical marijuana — takes precedent, the letter states.

“Accordingly, it is not a defense to either the referenced crime or to the forfeiture of property that the dispensary is providing ‘medical marijuana,’” the letter says. “Even under these circumstances, an owner of real property with knowledge or reason to know of illegal marijuana distribution occurring on real property that he owns or controls may have his interest in the property forfeited to the government without compensation.”

Santa Barbara County has banned dispensaries while the City of Santa Barbara has an ordinance allowing up to four medical marijuana storefront dispensaries on the condition that they abide by strict operational standards and state law.

But state law regarding the dispensaries has been fuzzy, even with then-Attorney General Jerry Brown’s guidelines that left the door open for not-for-profit storefront collectives for qualified patients (with doctors recommendations).

The city’s permitted storefronts, including Pacific Coast Collective, sell marijuana to their members and have paid employees, but local court cases have shown the legality of an establishment often hinges on the amount of money coming in (covering overhead is acceptable) and where the product comes from.

Ventura County DEA agents loaded a van and a trailer with material confiscated Thursday from 305 E. Haley St. in Santa Barbara.
Ventura County DEA agents loaded a van and a trailer with material confiscated Thursday from 305 E. Haley St. in Santa Barbara. (Lara Cooper / Noozhawk photo)

According to the legal complaint, the Pacific Coast Collective at 331 N. Milpas St. is leased from property owner Matilija Investment Property LLC, with principals Jeffrey Becker of Ventura and William Jonker of Ojai. It’s managed by The Becker Group Inc. of Ventura.

The property was used as a “marijuana store” that distributed marijuana to its customers and accepted money for it in this type of business since at least 2008, the complaint alleges.

The storefront collective claims to be a medical marijuana dispensary abiding by Proposition 215, the Compassionate Use Act, but the DEA and the U.S. Attorney’s Office think otherwise.

Search warrants were served there in 2008 — when it was still Pacific Greens and owner David Najera was later convicted of drug-related charges — and 2010, when operator Charles Jeffrey Restivo was arrested and charged with felony cultivation and possession for sale of marijuana, according to the complaint.

Pacific Coast Collective was raided by the DEA and Santa Barbara police a third time on Wednesday, but no arrests were made. The establishment is one of four permitted by the City of Santa Barbara, but those permits are zoning-related and are conditional on the storefronts following state law.

The city sent cease-and-desist letters to the establishment, and Becker Group was sent a copy, and ordinance violation letters in 2008 and 2009. A police detective called Jeffrey Becker of Becker Group in 2010 and told him about the search warrants and resulting arrests, so the owner knew or should have known the property was utilized for illegal purposes, the complaint states.

Diane Norman is the property owner of 2173 Ortega Hill Road in Summerland and the operator of the Miramar Collective at that location. She has pleaded guilty to felony possession of concentrated cannabis as a result of a February 2010 raid, during which authorities found plants, packaged marijuana for sale and price sheets.

She told authorities at the time that her establishment sold plants, marijuana and edible products to members and she bought product from vendors and growers. Miramar Collective started making a profit in January 2010, according to the complaint.

Norman’s other business is the French Market antique store at the same property, and she said in a 2009 newspaper interview that she was trying to open dispensaries in the Santa Ynez Valley or elsewhere in the North County.

Senior Deputy District Attorney Brian Cota, who is assigned to most of the dispensary-related cases, said the federal government’s move to take property will likely have a chilling effect, with fewer landlords willing to rent to dispensaries.

“I wouldn’t want to lose a commercial property in Santa Barbara,” he said.

The 305 E. Haley St. property, which allegedly was used as an indoor marijuana grow by renter Steven Kessler, is owned by Janna and John Price, the complaint for forfeiture states.

The Prices own numerous properties on the South Coast, including gas stations and car washes.

The two-story building was used as a farm since at least October 2010, when neighbors complained of marijuana smells coming from the vents, and city code-enforcement and fire-inspector teams saw the plants during site visits.

They sent violation letters to the owners and Kessler over the unpermitted electrical and plumbing additions, which likely were made to support the marijuana-growing equipment, the complaint states.

The city inspectors observed plants in various stages of growth, and “the heat, humidity and marijuana odor inside the defendant property was overwhelming,” according to the complaint.

Architects were hired to help with the required renovations, and the property owner was in touch with city code-enforcement teams to provide updates on the plans for bringing the building into compliance.

In October of last year, according to the U.S. Attorney’s Office, Price called the city and said he wanted to evict Kessler, but it could take six months because of the lease. In January, his attorney called the city to ask about the pending code-enforcement action, the complaint states.

It appears the Harmony Wellness Cooperative is still cultivating and distributing marijuana at that location and so the property itself can be forfeited to the United States, the complaint says.

DEA agents and local police seized a trailer-full of pungent evidence Thursday from the Haley Street building during the raid, and also served a search warrant at Kessler’s house in Santa Barbara’s Mesa neighborhood.

Attempts by Noozhawk to reach the affected property owners were not successful Friday.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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