Feds to Target Newspapers, Radio Stations That Run Marijuana Ads

From California Watch

Federal prosecutors are preparing to target newspapers, radio stations and other media outlets that advertise medical marijuana dispensaries in California, another escalation in the Obama administration's newly invigorated war against the state's pot industry.

This month, U.S. attorneys representing four districts in California announced that the government would single out landlords and property owners who rent buildings or land where dispensaries sell or cultivators grow marijuana. Now, newspapers and other media outlets could be next.

U.S. Attorney Laura E. Duffy, whose district includes Imperial and San Diego counties, said marijuana advertising is the next area she's "going to be moving onto as part of the enforcement efforts in Southern California." Duffy said she could not speak for the three other U.S. attorneys covering the state, but noted their efforts have been coordinated so far.

"I'm not just seeing print advertising," Duffy said in an interview with California Watch and KQED. "I'm actually hearing radio and seeing TV advertising. It's gone mainstream. Not only is it inappropriate – one has to wonder what kind of message we're sending to our children – it's against the law."

Federal law prohibits people from placing ads for illegal drugs, including marijuana, in "any newspaper, magazine, handbill or other publication." The law could conceivably extend to online ads; the U.S. Department of Justice recently extracted a $500 million settlement from Google for selling illegal ads linking to online Canadian pharmacies.

Duffy said her effort against TV, radio or print outlets would first include "going after these folks with ... notification that they are in violation of federal law." She noted that she also has the power to seize property or prosecute in civil and criminal court.

William G. Panzer, an attorney who specializes in marijuana defense cases, said publishers may have a reason to worry. Federal law singles out anyone who "places" an illegal ad in a newspaper or publication. Nevertheless, Panzer said he is not aware of a single appellate case dealing with this section of the law.

"Technically, if I'm running the newspaper and somebody gives me money and says, 'Here's the ad,' I'm the one who is physically putting the ad in my newspaper," he said. "I think this could be brought against the actual newspaper. Certainly, it's arguable, but the statute is not entirely clear on that."

Panzer said the penalty for a first offense is a maximum four years in prison and eight years for someone with a prior felony conviction.

In the federal law, an exception is made for ads that advocate the use of illegal drugs but don't explicitly offer them for sale or distribution. Newspapers, Panzer said, could argue that they have a right under the First Amendment to run the ads, and any "prior restraint" before publication is itself illegal.

Duffy said she believes the law gives her the right to prosecute newspaper publishers or TV station owners.

"If I own a newspaper ... or I own a TV station, and I'm going to take in your money to place these ads, I'm the person who is placing these ads," Duffy said. "I am willing to read (the law) expansively and if a court wants to more narrowly define it, that would be up to the court."

Seven states, including California, allow for medical marijuana to be distributed in dispensaries, though more than 200 California cities and nearly two dozen counties have bans or moratoriums in place on storefront pot businesses. The industry has otherwise exploded in recent years, including a marked increase in delivery services.

Ngaio Bealum, publisher of West Coast Cannabis, described as "the Sunset magazine of weed," said he receives a significant portion of his revenue from dispensary ads, though he has tough competition from alternative newspapers and even The Sacramento Bee, which began running print advertisements for dispensaries this year.

Bealum said it was "misguided for the Department of Justice to come after people who are following state law and doing well for the economy in a recession." He disputed the notion that marijuana ads target children.

"We're just in doctor's offices and cannabis collectives, where you have to be 18 years old or where you have to be a patient," he said. "We're not targeting anyone but cannabis patients."

Duffy said Proposition 215, also known as the Compassionate Use Act, passed by California voters in 1996 has transformed from an effort to supply marijuana to sick people through nonprofit groups into a profit-making industry. She said the advertising is part of that – and "it's illegal."

Duffy said she's seen marijuana stores advertise coupons, bring-a-friend deals, extra samples for buying a certain amount of marijuana, magazines devoted entirely to the industry, T-shirts for sale, marijuana linked to video games – all things, she said, "in large part directed at our youth and children."

"The good intentions behind that law," she said, "have almost completely been taken over by people who are trying to use that permission law to get rich, to distribute marijuana and traffic drugs to people who aren't sick, to our youth and to people who are using drugs on a recreational basis."

It's clear that alternative newspapers throughout the state have benefited from the increased business, even as other advertising sources have dwindled.

In April, the Sacramento News & Review published a special supplement devoted exclusively to marijuana dispensaries. "This year’s edition includes more than 100 regional medical-cannabis dispensaries, physicians, and med-delivery and hydroponics shops for the 2011 Green Pages," the newspaper wrote. Marijuana dispensary ads, which have in the past cost $2,000 for a full page, allowed the News & Review to hire additional reporters.

"I don’t see how the News & Review running medical-marijuana ads is any different from TV stations running massive amounts of commercials for pharmaceutical companies selling drugs," Jeff vonKaenel, CEO and majority owner of the News & Review, wrote in aMay 2010 column about the advertising.

In an interview about Duffy's statement, vonKaenel said he was "stunned by that interpretation of the First Amendment." He said his publications "receive quite a bit of revenue from (dispensaries) and it would have a detrimental impact" if he was forced to stop publishing the ads.

Panzer said he doesn't think the federal government can effectively shut down the marijuana industry, even if it makes short-term gains by targeting high-profile dispensaries and newspapers. Given the government's lack of resources and the huge size of the marijuana industry, Panzer said officials' efforts are "a losing proposition."

"The government is trying to put the genie back in the bottle," Panzer said.

Circumventing the law on advertising the sale of illegal drugs can bring expensive consequences. In August, Google agreed to pay a $500 million settlement for accepting illegal advertisements from online Canadian pharmacies. Employees of the company had been working with pharmacies to bypass Google's own internal controls, even as Google executives testified before Congress, claiming the company had clamped down on the illegal ads.

The fine was one of the largest ever from a U.S. company. At the time of the settlement, Google said in a statement that "it's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place."

California is not the only state struggling with the issue of marijuana ads. In Colorado, the city of Boulder recently voted to ban medical marijuana ads that target young people or recreational users. Now, the city clerk will decide if the tone of the ads crosses the line.

The federal government's recent crackdown on the marijuana industry coincides with a February 2011 memorandum written by the state’s four top federal prosecutors, outlining a uniform approach to enforcing federal marijuana laws in California. The document, reviewed by California Watch, places an emphasis on federal investigations that target “leaders and organizers of the criminal activity as opposed to lower-level workers.”

The memorandum sets thresholds that make investigations more likely to be prosecuted. Those include distributors caught with at least 200 kilograms of marijuana, including distribution near schools, playgrounds and colleges; cultivators with gardens of at least 1,000 plants that are not on federal land and at least 500 plants on federal or tribal land or where there is significant damage; and dispensaries that sell more than 200 kilograms or 1,000 plants annually.

Related:

• California U.S. Attorneys Target Pot Growers, Retailers (News Fix)

Michael Montgomery is an investigative reporter with KQED News and California Watch. Read more from California Watch here.