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July 30, 2014

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Shadow network of marijuana dispensaries still operate in legal gray area

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Christopher DeVargas

A billboard in support of legalizing and regulating marijuana in Nevada is shown, Tuesday March 19, 2013.

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Nevada Assemblywoman Michele Fiore inspects the product and learns about the different uses for and varieties of marijuana during a trip to a dispensary in Arizona on Friday, March 22, 2013.

Operating out of an unassuming strip mall on West Charleston Boulevard, Sin City Co-Op provided marijuana to patients who had a legal right to use it as medicine under state law.

But after an undercover officer obtained marijuana from the co-op as part of a series of valley-wide stings on medical dispensaries in 2011, Sin City Co-Op was shut down and its owners arrested.

The raids temporarily wiped out a fledgling industry of medical marijuana dispensaries that operated on the fringes of the law. Although a constitutional amendment passed by voters in 2000 guaranteed citizens a right to use medical marijuana with a doctor’s prescription, no formal system for obtaining the drug legally was ever established.

The Legislature began to fix the system during its past session; starting next spring, patients should have a variety of licensed and legal dispensaries at which to shop.

For now, though, a shadow network of delivery-based medical marijuana businesses have stepped in to fill the void left by the once-prohibited and now soon-to-be-legal storefront dispensaries.

A search on website weedmaps.com reveals at least 40 delivery operations scattered throughout the valley bearing names like Super Buds North, Kush Heaven and MMJ Express with listed phone numbers and user reviews.

These businesses were reluctant to reveal much information about themselves when called by the Sun.

“Everything’s in a gray area. It just doesn’t make sense to draw attention to ourselves,” said one delivery operator.

While many of these medical marijuana delivery businesses will likely lack the $250,000 in capital required to apply for a state dispensary license, at least a few are looking at going legitimate.

“We are in the process of going forward to become legal,” said the owner of LV Green Care, who does business under the pseudonym Jason Pappas. "I have my lobbyists and lawyers we’re paying. I have my big-money investors who are looking to move into it as well

Pappas said as far as he can tell, the entire medical marijuana industry in Las Vegas is based on delivery services. He said he tries to operate within the bounds of the law as they are currently written, working only with licensed cardholders and by taking donations instead of outright selling the marijuana.

“It says ‘free’ on our bottles and we ask for a small donation in return. Sometimes we get it and sometimes we don’t...there’s a lot of people in this town who are just doing it wrong. They’re just thugs off the street,” said Pappas, who also provides marijuana to cardholders from Arizona and California when they visit Las Vegas.

The 10-month gap between the passage of the state’s dispensary laws and when they go into effect has made policing dispensaries and medical marijuana businesses more difficult, said Chuck Calloway, Metro Police’s director of intergovernmental services.

“It's not that we’re turning a blind eye to that and not enforcing it. It's more that there's the gray area there with medical marijuana so we are focusing more of our attention to the actual grow operations we've seen,” he said.

The opening of legal dispensaries next year will likely push out many of these illegal operations, Calloway said, and make it easier for police to target those that remain.

“Once the legitimate dispensaries are up and running, it'll be much more black and white for us. You’re either following the law or not,” he said.

Schwingdorf Bail Hearing

Leonard Schwingdorf appears during a bail hearing in District Court Wednesday, September 28, 2011. Schwingdorf is among defendants facing charges in connection with distributing medical marijuana.  . Launch slideshow »

The change in law does little good for Sin City Co-Op co-owner Leonard Schwingdorf and the roughly 20 other people arrested in the 2011 stings who now face federal and state charges for distributing illegal narcotics.

“Not only is he being prosecuted, he’s facing a life sentence,” said Schwingdorf’s lawyer Gary Modaferri.

Schwingdorf and co-owner Nathan Hamilton, who both held state medical marijuana cards, operated their dispensary as a cooperative, pooling the marijuana plants each member was allowed to grow and then redistributing it, Modaferri said.

The state argued Sin City Co-Op sold the marijuana, a violation of state narcotics statute's while Modaferri has argued that the co-owners merely asked for a donation.

“There was no demand for money,” Modaferri said.

A Clark County District Court judge threw out the case against Schwingdorf and Hamilton in 2012, calling the state’s medical marijuana law unconstitutional because it doesn’t provide a way for qualified customers to interact with qualified distributors.

The case was appealed and is now awaiting a decision from the Nevada Supreme Court after oral arguments were made in September.

Modaferri said laws aren’t applied retroactively, so the Legislature’s recent action probably won’t do much good for his client or the other Las Vegas dispensary workers still facing prosecution.

“It depends, it’s really fact specific when prohibited conduct later becomes legal,” he said. “Hopefully the supreme court will let the sleeping dogs lie and keep the charges dismissed.”

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