Overview: A California appellate court recently rejected the compassionate use defense invoked by three California growers claiming to operate a medical marijuana collective serving 1,700 members. Under the Medical Marijuana Program (MMP), the Compassionate Use Act (CUA) only applies to qualified patients and caregivers who collectively cultivate marijuana for medical purposes pursuant to a physician’s recommendation. Citing the $80,000 a year profit treated as “personal” income with no accountability to members, the court found that the defendants’ business did not qualify as a nonprofit “co-op” entitled to protection under the CUA.

Training Points: This case provides useful guidelines for departments handling the arrests of people claiming the CUA defense. To operate as a collective under the CUA, the organization must meet stringent requirements, including:

• File articles of incorporation with the state;
• Operate as a non-profit enterprise;
• Operate for the mutual benefit of its members (i.e., prices should be no more than necessary to cover general overhead expenses and no excessive salaries to operators);
• Report individual transactions to all members annually;
• Track the source of all marijuana received;
• Acquire marijuana only from patient and caregiver members; and
• Document each member's contribution to the collective.

When deciding whether a collective or cooperative is truly operating as a non-profit enterprise, the court will consider the size of the collective's membership, its operating procedures, any financial records, the entity's accountability to its members and evidence of a high volume of business.

Summary Analysis: In People v. Solis, a driver transporting over 20 pounds of marijuana told police that he routinely sold marijuana to The Healing Center (THC), a pot growing operation operated by Juan Solis and two others. They were convicted of possessing marijuana for sale. The defendants invoked the CUA defense, claiming that they operated a “co-op” under the MMP. The court disagreed, finding that THC did not qualify as a “collective or cooperative” that grew marijuana for medical use. THC was not registered as a nonprofit organization and failed to provide financial records supporting the defense. Solis also admitted buying marijuana from non-member vendors and spent all THC profits on himself. Based on these facts, the court concluded that THC was a for-profit business, not a medical marijuana co-op to which the defense applied.