Releaf Magazine

Marijuana Businesses May Get Good Banking News In Early 2014

by Matt Ferner
marijuana banking
Marijuana businesses may not yet get a full green light on the banking rights that non-marijuana businesses already enjoy, but they are likely to get a "yellow light" as soon as the new year, Jack Finlaw, Colorado Gov. John Hickenlooper's (D) chief legal counsel, said on a joint call Thursday.

"What we're being told," Finlaw said on the call hosted by Drug Policy Alliance, "is probably in the first quarter of 2014 there will be some guidance issued that's comparable to the Cole memo from the Department of Justice that will give, maybe not a green light, but a yellow light to banks to allow them to do business [with marijuana businesses] -- to take deposits, to set up checking accounts, to set up small business loans, to allow these businesses to accept purchases through debit cards or credit cards, to allow what normal businesses are allowed to do."

Last week, the Bank Secrecy Advisory Group had a closed-door meeting in Washington, D.C., to begin talks about reforming banking regulations so that banks can legally engage in services with marijuana businesses.

Currently marijuana businesses aren't allowed to set up legal bank accounts because the federal government still considers marijuana to be illegal. Worried banks fear that they could be implicated as money launderers if they offered traditional banking services to the pot businesses.

"It's my understanding that the ball is in the court of the Department of Treasury," Finlaw added. "The Department of Justice having issued the Cole memo and having signaled to Treasury that they would be willing to see some accommodation in the banking regulations, is working with FinCEN in Treasury."

FinCEN is a bureau of the U.S. Department of Treasury that analyzes financial data to mitigate against illicit use and money laundering.

Even if the DOJ and Treasury give the "yellow light" to banks, there would also continue to be some oversight by the banks to ensure that the marijuana businesses they work with are not a front for illegal activity, Finlaw said.

Thursday's news follows a DOJ announcement in August that it is "actively considering" how to regulate interactions between banks and marijuana shops that operate within state laws and don't violate other federal law enforcement priorities.

Although official regulations have not been set, for now, financial institutions and other enterprises that do business with marijuana shops that are in compliance with state laws are unlikely to be prosecuted for money laundering or other federal crimes that could be brought under existing federal drug laws, as long as those pot businesses don't otherwise violate the DOJ's enforcement priorities, a senior Department of Justice official said.

"My understanding is there is a discussion in Washington about how much of this can be accomplished administratively through FinCEN, Treasury and Justice, and how much Congress needs to do something," said Ethan Nadelmann, executive director of Drug Policy Alliance, on Thursday's joint call. "It may be the reason for putting out a yellow light instead of a green light, [it] may have to do with some constraints in federal law and the administrative agencies trying to figure out how far they can accommodate these legitimate needs for access to legal banking while staying within the constraints of federal law."

Finlaw also noted that no one in Washington had given timing on the release of a marijuana business banking memo, but that the first quarter was the hope and expectation based on how the process has been working thus far and how long it took for the DOJ's Cole memo to be released.

"The hope is that we can get this resolved in early 2014," Finlaw said.

Dan Riffle, director of federal policies at Marijuana Policy Project, told The Huffington Post that the hope is that the banking issue is resolved before recreational marijuana retail shops open in Washington in Colorado in 2014.

"This raises obvious safety concerns and tax compliance issues, and one of the primary reasons Colorado and Washington voters approved initiatives to regulate marijuana was to reduce the risk of violence and ensure sales of marijuana are taxed appropriately," Riffle said. "It's imperative that Treasury, FinCEN, and the DOJ work together to resolve this issue as soon as possible in order to honor the will of voters in those states."

Messages to DOT and DOJ regarding the possibility of a first-quarter announcement were not immediately returned.

Colorado's first recreational marijuana shops are expected to open on Jan. 1, 2014, with Washington state's opening later in the new year.



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These States Are Most Likely To Legalize Pot Next

By Nick Wing

marijuana legalization states

Attorney General Eric Holder gave a green light on Thursday to two states whose efforts to legalize marijuana had been locked in by legal uncertainty for more than nine months. With that announcement, Colorado and Washington -- both of which passed pro-pot initiatives at the polls last November -- can now proceed with establishing a framework for the taxation and regulation of legal weed for adults.

The administration's decision holds clear and immediate implications for the two states, both of which had been hesitant to act too quickly over concerns that the government might decide to enforce federal law, which still considers marijuana an illegal substance.

But the move also, and perhaps more importantly, throws open the gates for other states to pursue similar pot legalization efforts, so long as they include "strong and effective regulatory and enforcement systems." Experts on both sides of the issue have already said they expect to see movement come quickly.

A similar pattern held for medical marijuana. The movement made steady progress up until 2009, when the Obama administration announced it would allow states to implement medical pot laws without federal interference. That promise turned out to be heavily footnoted, but the pledge itself ushered in a flood of ballot and legislative activity that burst the medical marijuana dam over the next four years. Thursday's announcement can be expected to do the same.

Public support for legal pot has surged in recent years at both state and nationallevels, with a majority of U.S. voters now in favor. This suggests that legalization would be most viable in states that allow citizen ballot initiatives. State lawmakers could also potentially take the reins on legalizing cannabis as the issue becomes more mainstream, however, like they did in New Jersey in 2010 with the passage of a bill approving medical marijuana.

Political dynamics are at play, too. Democratic strategists hoping to goose youth- and liberal-voter turnout in 2014 are incentivized to put pot on the ballot, though weed advocates themselves are better off running campaigns during presidential years, when the electorate doesn't skew as elderly as it does during midterms.

Below, the states that are most likely to take the next steps toward legalizing marijuana:


Marijuana reformers in Alaska have been hard at work trying to make their state the next to legalize pot. In June, a ballot measure to tax and regulate pot and legalize it for adult recreational use was certified. Organizers must now collect at least 30,169 valid signatures of registered Alaska voters by December 2013, which would ensure that the initiative receives a vote in the primary election on Aug. 19, 2014.

Pot has already been decriminalized and legalized for medical use in Alaska. A survey of Alaska voters taken earlier this year by Democratic-leaning Public Policy Polling found that 54 percent supported legalizing marijuana.


In June, marijuana legalization proponents began a campaign to gather the 259,213 signatures they'll need in order to get the issue on the 2014 ballot. The language of the proposed measure is rather expansive, and also includes a system of state taxation and regulation.

Marijuana was legalized in the state for medical use in 2010 by ballot initiative. A poll taken earlier this year found that 56 percent of Arizonans supported legalizing some amount of cannabis.


A statewide initiative to legalize marijuana failed in California in 2010, but reformers are hoping to find success in 2014 and beyond. Earlier this month, organizers filed the California Hemp Act 2014, a measure that would legalize cannabis both in its standard and non-psychoactive forms. Beginning Oct. 1, the campaign will have 150 days to gather 750,000 valid signatures from California voters in order to get the issue on the 2014 ballot.

Marijuana has already been decriminalized and legalized for medical use in California. A poll taken earlier this year found that 54 percent of Californians support legalizing pot.


Marijuana advocates in Nevada have yet to mount a large-scale effort to get legalization on the ballot in an upcoming election, as most organizers in the statesee 2016 as their best chance for a push. The liberal bent of the state makes it a popular target for reformers, however, and it's not yet clear whether Thursday's DOJ decision could increase desire for more immediate action.

Nevada has legalized medical marijuana, and earlier this year the state passed a measure establishing a dispensary system to help increase access for sick citizens. According to a recent poll, 56 percent of Nevadans would favor legalizing cannabis for recreational use if the money raised went to fund education.


Medical marijuana legalization advocates in Oregon have already announced plansto campaign for an initiative to be placed on the ballot in 2014. An earlier legalization effort, which was poorly coordinated and widely mocked inside the state, failed in 2012. Organizers believe there is plenty of room for improvement.

Oregon has already decriminalized marijuana and legalized it for medical use. According to a poll taken in May, 57 percent of likely voters in Oregon support a proposal to tax, regulate and legalize marijuana for recreational use.


The Marijuana Policy Project, a pro-pot advocacy group, has announced Maine as one of its top targets for legalization in upcoming election cycles. An initiative circulating through the state Legislature fell painfully short in a state House vote earlier this year, but MPP has announced plans to help coordinate a grassroots campaign to get a legalization measure on the ballot in 2016.

Marijuana has been decriminalized and approved for medical use in Maine. According to a PPP poll released this week, 48 percent of registered voters in Maine believe pot should be legal for recreational use.


The deep-blue New England state is being eyed as a prime opportunity for legalization, with marijuana reform advocates pointing to high margins of support for previous pro-pot initiatives. No official campaign for a ballot initiative has been launched yet, though many predict it is only a matter of time.

Massachusetts has decriminalized marijuana and just last November passed a ballot measure legalizing it for medical use. A February PPP poll found that 58 percent of the state's residents would be in favor of legalizing, taxing and regulating cannabis.


Montana has had a checkered history with marijuana laws. Voters passed an initiative legalizing cannabis for medical use in 2004, but opponents have since taken various steps to amend the measure or repeal it all together. Reform advocates remain hopeful that voters will support full legalization. They wasted no time following the 2012 election, filing a ballot question in hopes of putting the issue before voters in 2014.

There are no recent statewide surveys to gauge current support for pot legalization, though previous polls have showed a majority of Montana voters supporting the decriminalizing of marijuana.

Rhode Island

Marijuana advocates have high hopes that Rhode Island will be one of the first in the next round of states to legalize. This could come through a ballot initiative, but Rob Kampia, the executive director of MPP, recently said the issue could be ripe for state lawmakers to take on. While there's not yet a high-profile campaign to get legalization on an upcoming ballot, the state Legislature did consider a bill on the matter last session. While lawmakers debated the legislation and invited witnesses to testify on its merits, they never held a vote.

Rhode Island recently decriminalized marijuana and passed legalized medical marijuana around 2007. A PPP poll taken in January found that 52 percent of voters in the state support legalizing pot for recreational use.


Vermont has made strides to scale back marijuana prohibition over the past year, with a successful measure to decriminalize and a separate bill to establish a system of dispensaries for the state's medical cannabis patients. Observers see the state's strong support for the recent reelection of Gov. Peter Shumlin (D), an advocate for marijuana reform, as a sign that voters could get behind a ballot initiative to legalize. There is no large-scale effort toward this end yet, but a legalization bill was introduced in the state Legislature last session. It didn't receive a vote.

Polls have consistently shown Vermonters to be supportive of efforts to scale back prohibition on marijuana.



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Either the begining….or the end….

Holder promises marijuana verdict coming 'soon'

Wait, I thought we already told them, IT'S LEGAL NOW. -UA

Attorney General Eric Holder promised Washington and Colorado state attorneys general on Tuesday that the Justice Department would issue its verdict “soon” on how it plans to treat the states’ recent moves to legalize marijuana.“We’re still in the process of reviewing both of the initiatives that were passed,” said Holder, speaking at the National Association of Attorney General annual conference in Washington, D.C.“You will hear soon. We’re in the last stages of that review and we’re trying to make a determination as to what the policy ramifications are going to be, what our international obligations are — there are a whole variety of things that go into this determination — but the people of [Colorado] and Washington deserve an answer and you will have one soon.”

Holder was responding to Colorado state attorney general John Suthers, who asked the nation’s top law enforcement official when the DOJ would be weighing in on the state laws that have been in effect for nearly two months.

The DOJ is charged with enforcing the federal prohibition on marijuana, and the state laws run counter to the long-existing ban, creating a debate over which law should be enforced and which law is most responsive to the will of the people.

Marijuana has been a centerpiece of the federal government’s “war on drugs,” aimed at cracking down on drug use in the United States. But the growing number of people who support the decriminalization of pot — which is still legally classified nationally in the same category as heroin — has some policymakers in Washington, D.C., rethinking their approach.

On Monday, nearly a dozen House Democrats introduced several bills that would decriminalize marijuana and remove the drug from the list of controlled substances, while requiring the federal government to regulate it and impose penalties on tax-evaders.

Holder has met or talked with both governors and attorneys general from Colorado and Washington during the DOJ’s review process, posing a series of questions to the state leaders, such as how they plan to prevent marijuana produced in the state from being trafficked to other states where the drug is not legal.

Read more:
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The people have spoken

 Washington, Colorado Allow Recreational Use of Marijuana

Nov. 7 (Bloomberg) -- Washington and Colorado voters legalized recreational use of marijuana, making them the first U.S. states to decriminalize the practice.

Washington will allow those at least 21 years old to buy as much as one ounce (28 grams) of marijuana from a licensed retailer. Colorado’s measure allows possession of an ounce, and permits growing as many as six plants in private, secure areas. Oregon voters rejected a similar measure.

“The voters have spoken and we have to respect their will,” Colorado Governor John Hickenlooper said in a statement. “This will be a complicated process, but we intend to follow through. That said, federal law still says marijuana is an illegal drug so don’t break out the Cheetos or Goldfish too quickly.”

Support for marijuana’s recreational use built on measures that allow it for medical purposes in one-third of U.S. states. Previous attempts to legalize pot through ballot measures failed in California, Alaska, Oregon, Colorado and Nevada since 1972, according to the Denver-based National Conference of State Legislatures.

A spokesman for the U.S. Attorney’s Office in Colorado said federal law was not affected by the vote.

“The Department of Justice’s enforcement of the Controlled Substances Act remains unchanged,” said Jeff Dorschner in a statement. “We are reviewing the ballot initiative and have no additional comment at this time.”


New Leaf


Washington, Colorado and Oregon were among six states with marijuana on their ballots. In Massachusetts, residents approved a measure to allow medical use, while Arkansas voters rejected such a proposal. Medical-marijuana use is already permitted in 17 states and the District of Columbia. In Montana, a proposal to restrict the use of medical marijuana was leading, 57 percent to 43 percent, with 65 percent of ballots counted, the Associated Press said.

“It’s very monumental,” said Allen St. Pierre, executive director of the National Organization for the Reform of Marijuana Laws, a Washington-based group that advocates legalization. “No state has ever done this. Technically, marijuana isn’t even legal in Amsterdam.”

The approval of recreational pot goes a step beyond its acceptance in medical use. California was the first state to permit medical-marijuana when voters approved it in 1996. Federal prosecutors cracked down on the medical-marijuana industry in California last year, threatening landlords with jail if they didn’t evict the shops.


Looking Askance


“Regardless of state laws to the contrary, there is no such thing as ‘medical’ marijuana under federal law,” according to the White House Office of National Drug Control Policy.

U.S. Attorney General Eric Holder released a letter a month before California voters considered a ballot measure to legalize recreational use of marijuana in 2010, saying the Justice Department would “vigorously” enforce federal law. The initiative failed.

A Justice Department spokesman, Dean Boyd, declined to comment yesterday when reached by telephone.

In Washington state, decriminalization and new rules on driving under the influence take effect Dec. 6. The state liquor control board must adopt rules by Dec. 1, 2013 for licensing producers, processors and retailers.

The Washington measure may generate as much as $1.9 billion in revenue over five fiscal years, according to the state’s Office of Financial Management.


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Economy fix?

Legalizing marijuana could bring windfall to state, if feds don't object

Legalizing marijuana would bring Washington state a windfall in new tax dollars — if the federal government doesn't object.

By Jonathan Martin

Seattle Times staff reporter

The initiative to legalize, tax and regulate marijuana in Washington was estimated on Friday to raise up to $1.9 billion in new tax revenue over five years — or zero.

The wild swing, included in an analysis by the state Office of Financial Management, reflects broad uncertainty about the potential federal intervention in an initiative that would set up the nation's first regulated market for recreational marijuana use.

The sky-high revenue estimate, which was previously disclosed in March, is based on an assumption that 363,000 customers in Washington would consume 187,000 pounds of marijuana in new state-license retail shops if Initiative 502 were approved in the Nov. 6 election.

If it does pass, I-502 would earmark $227 million a year of new marijuana taxes for the state's basic health plan and $113 million a year for drug research, prevention and treatment.

Statewide administrative costs, covering such things as training police and licensing, would be more than $16 million a year.

But the fiscal analysis makes clear the "significant uncertainties related to federal enforcement of federal criminal laws" outlawing marijuana. The analysis says that federal law enforcement could possibly target state-licensed growers and retailers, which "may prevent the development of a functioning marijuana market."

Attached to the analysis is a 2010 letter from U.S. Attorney General Eric Holder, sent as California voters were considering legalizing marijuana, vowing to "vigorously enforce the CSA (Controlled Substances Act) against those individuals and organizations that possess, manufacture and distribute marijuana for recreational use, even if such activities are permitted under state law."

Alison Holcomb, campaign manager for I-502, said the federal response may depend on the margin of victory. She noted that the federal government has only sporadically intervened in the medical-marijuana industry, and usually only when operators appear to be abusing state law.

"Voters need to know that the federal government is giving us the room to show what we want to do," she said.

This analysis tried to tally some costs and savings for legalized marijuana but lacked data to estimate savings from fewer drug prosecutions. In 2011, 9,308 charges were filed in local and superior courts statewide for possession of less than 40 grams, which would be legal under I-502.

A new DUI threshold for marijuana — a provision deeply unpopular with medical-marijuana patients — would likely raise nearly $4 million in fees from drivers charged under the provision.

On Friday, the state Official of Financial Management also released an analysis of Initiative 1240, which would allow the creation of charter schools. I-1240 would cost $3.1 million over five years, mostly to establish an application process, and to run an oversight commission.

The initiative would authorize as many as 40 charter schools, which are free, public, independent and can hire nonunion teachers. They would be funded the same way as traditional public schools, on a per-student basis.

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Extra investment

Marijuana initiative gets $1.25 million in new donations

The money will allow the state campaign to legalize pot to launch a TV-advertising blitz in August.


An initiative to legalize and tax marijuana was buoyed this weekend by $1.25 million in new donations, allowing the campaign to place a big TV ad buy for August.

Initiative 502, the first marijuana-legalization initiative to make the state ballot, raised the money from just four donors, including $450,000 donations from Progressive Insurance founder Peter Lewis and an arm of the New York-based Drug Policy Alliance.

The donations will pay for a $1 million TV-ad blitz in August, before other campaigns saturate the airwaves, said I-502 campaign manager Alison Holcomb.

I-502, on the November ballot, would legalize possession and sale of up to 1 ounce of marijuana. It would impose a steep excise tax on marijuana and cannabis-infused products at new state-licensed marijuana stores, and would allow state-regulated grow farms.

The tax-and-regulate approach to marijuana legalization has drawn strong support from such longtime drug-reform advocates as Lewis, of Ohio. Before the weekend's contributions, I-502 had raised $1.7 million.

A new statewide poll, paid for by KING 5, finds 55 percent support for I-502 versus 32 percent opposition.

Previous polls found firmer opposition, but Holcomb said attitudes change when voters understand I-502's safeguards, including a ban on marijuana sales to people under 21.

"People are getting more comfortable when they take a closer look," she said.

Holcomb said the new contributions, which will be officially reported by the campaign early next week, included $250,000 from Edmonds travel guru Rick Steves, who previously donated $100,000; and $100,000 from the ACLU of Washington.

The campaign has racked up blue-chip endorsers, including former federal prosecutors, judges and drug-abuse experts, as well as the state labor council.

The Washington Association of Sheriffs and Police Chiefs opposes the initiative. So do several prominent marijuana-legalization advocates and some in the medical-marijuana industry, who object to a proposed new limit on active THC in the bloodstream, arguing it would effectively criminalize driving by medical-marijuana patients.

Philip Dawdy, who previously ran a campaign to decriminalize marijuana, said he was helping organize opposition to I-502. A new group, Safe Access Alliance, would file with state campaign regulators this week, and will be fundraising soon, he said.

The excise taxes imposed by I-502 would dramatically increase costs on patients, said Dawdy.

"I-502 made a serious miscalculation," said Dawdy. "They calculated that getting the votes of soccer moms were more important than medical-marijuana patients."

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Washington decrim

Marijuana initiatives to be filed in 6 state cities

Initiatives to make prosecution for marijuana offenses the lowest law-enforcement priority are being promoted for Bellingham, Everett, Kent, Bremerton, Olympia and Spokane.

A group that promotes legalization of marijuana says it will file initiatives in six Washington cities to make prosecution for pot offenses the lowest law-enforcement priority.

Sensible Washington said Wednesday it would push the initiatives in Spokane, Olympia, Bellingham, Everett, Kent and Bremerton.

Seattle voters in 2003 passed an initiative making the investigation, arrest and prosecution of marijuana offenses, when the drug was intended for adult personal use, the lowest law-enforcement priority. Tacoma voters did much the same last year.

This fall, state voters will decide the fate of Initiative 502, which would create a system of state-licensed growers, processors and stores, and impose an excise tax at each stage. Those 21 and over could buy up to an ounce of dried marijuana; 1 pound of marijuana-infused product in solid form, such as brownies; or 72 ounces of marijuana-infused liquids.

Washington state already has a voter-approved medical-marijuana law that gives doctors the right to recommend — but not prescribe — marijuana for people suffering from cancer and other conditions that cause "intractable pain.

Photo credit:  MR. KIEFBOX

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Man caught with 10,000 marijuana plants to be deported

by Chris Bristol
Yakima Herald-Republic

Why are we spending the money to incarcerate him for 6 months? Send him home now. -UA


YAKIMA, Wash. -- A 27-year-old caught tending thousands of marijuana plants in a vineyard in the Harrah area is expected to be deported to Mexico after he serves out a six-month jail sentence.

Besitacion Guzman Marcial was sentenced Wednesday in Yakima County Superior Court after earlier pleading guilty to charges of delivery of a controlled substance and second-degree unlawful possession of a firearm.

The case stemmed from a raid this summer on a Campbell Road vineyard, where authorities reported destroying nearly 10,000 marijuana plants.

According to charging documents, the operation was discovered during a flyover by law enforcement on Aug. 11.

Drug agents visited the scene in the middle of the night a few days later, then came back the day of Aug. 23 and saw fertilizer and a water hose leading to a nearby home at 5490 Campbell Road.

Guzman was arrested Sept. 1 when authorities made a third visit to the property. He told authorities he was living in the house and was being paid $100 a day by someone named Juan to take care of the marijuana.

Agents said they found an AK-style assault rifle and two shotguns in the residence as well as a .380-caliber semiautomatic pistol in Guzman's pants pocket.

The Campbell Road raid was one of four large-scale marijuana grows that authorities reported they discovered last summer.

Seven men, all Mexican nationals, were arrested in those cases, which included separate grows in the Oak Creek Wildlife Area and one on state Department of Natural Resource land in the Tampico area.

The total haul of 30,556 plants represented a significantly smaller eradication effort than in recent years, including a total of 80,000 plants in 2009.

Last month, two defendants arrested in connection with one of the Oak Creek grows entered plea deals with federal prosecutors calling for 10-year sentences each.

Sentencing was delayed until February.

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What can legalization do for YOU?

Washington marijuana-legalization effort gains support

The Seattle Times' online letters to the editor

Transform liquor stores into marijuana stores

The state of Washington will be out of the liquor business by June 1, 2012, and now has a fortuitous opportunity. Consider this:

Law enforcement is devoting enormous amounts of effort, manpower and funds in a largely ineffective effort to stop marijuana use. So-called medical marijuana usage has soared, public opinion is shifting toward legalizing marijuana, crime syndicates reap large profits from marijuana sales and now former U.S. Attorney John McKay has spoken strongly in favor of legalization. [“He fought pot, now leads effort to make it legal here,” page one, Nov. 17.]

The day after the liquor stores close they could reopen as marijuana stores. Nine-hundred jobs would be saved and the state would have a new generous source of income, police efforts could be redirected to better serve the public, marijuana use would be controlled and crime profits would drop.

Of course, this would require quick, innovative and decisive action by a state Legislature not known for quick, innovative and decisive action.

— Harry Petersen, Bellevue

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Seattle MMJ Update

Seattle mayor signs medical pot regulations

Wednesday, July 27 By Laura L. Myers

SEATTLE (Reuters) - Seattle's mayor signed into law on Wednesday a licensing system for medical marijuana distribution, with the city's attorney vowing to show that pot regulation can be done "safely and humanely."

Seattle Mayor Mike McGinn, in a 40-minute signing ceremony, said that licensed medical marijuana suppliers must comply with city codes that govern everything from public nuisance complaints to plumbing and food-handling.

The City Council passed the ordinance unanimously on July 19, nearly three months after Washington's governor signed into law a statewide measure allowing cities to regulate and license production, processing and distribution of medical marijuana on a limited basis.

The state statute, which took effect on Friday, required storefront dispensaries and medical pot suppliers to reorganize as small, cooperative ventures that serve up to 10 patients.

Called "collective gardens," these businesses may grow as many as 45 plants, but no more than 15 per person.

Governor Christine Gregoire had vetoed provisions that would have established licensing for growing and distributing medical marijuana at the state level.

Although cannabis is listed as an illegal narcotic under federal law, 15 states and the District of Columbia have statutes decriminalizing marijuana as a medical treatment, according to the National Drug Policy Alliance.

Pot was first legalized as medicine in Washington state under a 1988 voter-approved initiative. The law Gregoire signed earlier this year was designed by supporters to bring greater order to a burgeoning medical marijuana supply chain that critics say had gotten out of hand.

Seattle has about 80 medical marijuana dispensaries but only about 50 currently are registered with the city. Meanwhile, about 25,000 of the city's 600,000 residents use prescribed cannabis for pain relief from illnesses such as cancer, AIDS and glaucoma.

"We hope that we can demonstrate a more sane approach in Seattle," McGinn said in signing the new ordinance, which takes effect in 30 days.

"Now patients do not have to buy their medicine from drug dealers," City Attorney Pete Holmes said, adding the measure "will show the world this will be done safely and humanely."

Storefront dispensaries -- neither explicitly banned nor permitted under the 1988 law -- have sprung up across the state in the two years since the Obama administration said it would no longer prosecute patients whose use medical marijuana, or shops that distribute it, in states where it was made legal.

In recent months, however, the Justice Department has taken a hard line against what it considers illegal drug trafficking conducted under the guise of state medical marijuana laws.

A federal grand jury indicted the operators of two medical marijuana dispensaries in Spokane, Washington, on July 20.

Seattle is the state's largest city. Several smaller municipalities have banned medical marijuana gardens outright.

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