August 26, 2009

On August 18, 2009, the Fourth District Court of Appeal, issued an opinion in the case of People vs. Hochanadel, et al. holding, among other things, that the medical marijuana dispensary, CannaHelp, did not qualify as a “primary caregiver” nor was it a “cooperative” or “collective” under the Compassionate Use Act (CUA) or Medical Marijuana Program Act (MMPA).

Factual Background

In October 2005, defendant opened the marijuana dispensary in the City of Palm Desert which was ultimately named “CannaHelp.”  He filed a certificate of use statement with the State and obtained a business license from the city of Palm Desert to operate a medical marijuana dispensary.  The Court noted that a customer would present a “medical marijuana prescription,” which was then verified by employees of CannaHelp.

(The Court refers to a “prescription” but in fact doctors never issue prescriptions for medical marijuana since that would be a felony under federal law.  Doctors instead issue “recommendations” and the Court improperly refers to them as “valid prescriptions.”)

Prior to purchasing marijuana customers completed paperwork designating CannaHelp as their primary caregiver.  The defendants who owned CannaHelp all had medical referrals for the use of marijuana and were themselves qualified medical marijuana patients under the CUA.  CannaHelp also contacted law enforcement authorities when someone attempted to illegally purchase marijuana.

Subsequently, it was determined, as a result of police surveillance, that an individual named Gary Silva supplied marijuana to CannaHelp.  Federal agents ultimately executed a search warrant on Silva’s home where they found that marijuana was being grown, there were 69 marijuana plants, growing equipment, numerous loaded firearms, and several canisters of dried marijuana for sale.  Thereafter, a police officer, with a recommendation for marijuana from a physician, purchased marijuana at CannaHelp and, based upon all of the above, a Court issued a search warrant for the CannaHelp location.

The defendants brought a motion to quash the warrant arguing that CannaHelp qualified as a primary caregiver and that the search warrant was invalid due to the lack of the detectives’ qualifications to execute the search warrant.  The trial court granted the Motion to Quash finding that CannaHelp was a valid primary caregiver and that the detective was incorrect in his conclusion that it operated at a profit.

Primary Caregiver

The Court of Appeal noted that “under the CUA, a “primary caregiver” is defined as the individual designated by the person exempted under this section who has consistently assumed responsibility for the housing, health, or safety of that person.”

The Court of Appeal also noted that recently the California Supreme Court, in People vs. Mentch(2008) 45 Cal.4th 274, held that “to be a primary caregiver…an individual must show that he or she (1) consistently provided care giving, (2) independent of any assistance in taking medical marijuana,     (3) at or before the time he or she assumed responsibility for assisting with medical marijuana.”

The Supreme Court in Mentch also concluded that a person does not qualify as a primary caregiver merely by having a patient designate him or her as such, or by the provision of medical marijuana in itself.  Rather, the Supreme Court stated, “the person must show a care taking relationship directed at the core survival needs of a seriously ill patient, not just one single pharmaceutical need.”

Cooperatives or Collectives

The Court of Appeal noted that the MMPA added section 11362.775 to the California Health and Safety Code which provides, in part, that “qualified patients… and the designated primary caregivers of qualified patients… who associate within the State of California in order collectively or cooperatively to cultivate marijuana for medical purposes, shall not solely on the basis of that fact be subject to State criminal sanctions…” for the possession, cultivation, sale, use, storage or distribution of marijuana.

Referring to an earlier Court of Appeal decision, in People vs. Urziceanu (2005) 132 Cal.App. 4th 747, the Hochanadel court stated that the CUA contemplated the formation and operation of medicinal marijuana cooperatives.  In discussing what constituted a cooperative or a collective, the Court of Appeal noted that “the MMPA also specifies that collectives, cooperatives or other groups shall not profit from the sale of marijuana.”

Attorney General Guidelines

The Court noted that the California Attorney General issued guidelines pursuant to Health and Safety Code Section11362.81.  Among other things, the Attorney General’s Guidelines reiterated that, in order to be a primary caregiver, one must consistently provide for the health, safety, or housing of a qualified patient.

The A.G.’s Guidelines noted that “someone who merely maintains a source of marijuana does not automatically become the party who has consistently assumed responsibility for the housing, health or safety of that purchaser.”

Furthermore, the Attorney General’s Guidelines provided a definition of “cooperatives” and “collectives.”  The Guidelines stated that “a cooperative must file articles of incorporation with the State and conduct its business for the mutual benefit of its members.”  Furthermore, it must “be properly organized and registered as such a corporation under the Corporations or Food and Agriculture Code.”  The A.G. Guidelines reiterated that cooperatives shall not be profit making operations and “must report individual transactions from individual members each year.”

The A.G. Guidelines also addressed what constitutes a collective by stating it is “a business, farm, etc., jointly owned and operated by the members of a group.  Thus, a collective should be an organization that merely facilitates the collaborative efforts of patient and caregiver members – including the allocation of costs and revenues.”

The Attorney General also stated that “the collectives should not purchase marijuana from, or sell to, non – members; instead, it should only provide a means for facilitating or coordinating transactions between members.”

The A.G. Guidelines emphasize that “nothing allows marijuana to be purchased from outside the collective or cooperative for distribution to its members.  Instead, the cycle should be a closed circuit of marijuana cultivation and consumption with no purchases or sales to or from non – members.”

The A.G. Guidelines also address the issue of “dispensaries.”  The Attorney General stated that “while dispensaries, as such, are not recognized under the law, a properly organized and operated collective or cooperative that dispenses medical marijuana through a storefront may be lawful under California law, but dispensaries that do not substantially comply with the guidelines [covering collectives and cooperatives] are likely operating outside the protections of the CUA and the MMPA….”

The A.G. Guidelines also state that “dispensaries that merely require patients to complete a form summarily designating the business owner as their primary caregiver – and then offering marijuana in exchange for cash “donations” – are likely unlawful.”

Motion to Quash

The Court of Appeal concluded that the trial court made error in quashing the search warrant for several reasons.  Among those reasons included the fact that Officer Garcia’s search warrant affidavit provided probable cause to believe that the defendants were engaged in criminal activity.  Furthermore, the Court of Appeal determined that CannaHelp did not qualify as a primary caregiver nor was it a collective or a cooperative under the CUA.

The Court of Appeal noted that “we express no opinion as to whether defendants were in substantial compliance with Section 11362.775 and the A.G. Guidelines, and whether, as inUrziceanu, there is sufficient evidence for defendants to raise section 11362.775 as a defense at trial.  Rather, our only task is to determine whether the facts, as known to detective Garcia at the time the search warrant was issued, demonstrated probable cause to believe defendants were not in compliance with the CUA and MMPA.”

The Court of Appeal also stated that “nothing in Section 11362.775, or any other law, prohibits cooperatives and collectives from maintaining places of business.  If defendants can produce facts sufficient to show they were operating a true cooperative or collective, and that they were otherwise in substantial compliance with the CUA and MMPA, they may be able to raise section 11362.775 as a defense at trial.  However, our analysis is confined to the facts as described in the search warrant affidavit.”


The mere fact that one is operating a store front dispensary to provide medical marijuana to qualified patients, does not, in and of itself, prove that it cannot meet the requirements of the CUA or MMPA.  However, the operators of such dispensaries must prove several things in order to be protected under Health and Safety Code Section 11362.775.

Those dispensaries must be operating as legitimate cooperatives or collectives and meeting all of the requirements set forth above.  Additionally, the cooperative or collective must be the primary caregivers of those to whom they are providing marijuana for medical purposes. The cooperative or collective must also be able to prove that it is not securing the marijuana from anyone who is not a legitimate member of that cooperative or collective.

Additionally, they must be able to prove who are the members of the cooperative or collective and that an existing established relationship, distinct from merely providing medical marijuana, exists between the owners of that dispensary, cooperative, or collective and its members.

There is nothing in the law which prevents law enforcement from legitimately conducting investigations to insure that these operations are in compliance with State law.  It is imperative to remember that Proposition 215 did not legalize marijuana but merely created an exemption from prosecution under State law for those who are either qualified patients or qualified caregivers.

It is essential that you confer with your department’s legal advisor before attempting to undertake any investigation in accordance with State laws regulating the cultivation, use, and dispensing of medical marijuana.


As always, if you wish to discuss this case in greater detail, please feel free to contact either of us at (714) 446 – 1400 or via e-mail at mjm@jones-mayer.com.