Chaos Descends on California Pot Industry as Feds Launch Widespread Crackdown

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The federal government is taking aim at the medical marijuana community in California, warning landlords that provide space to dispensaries to end the sale of marijuana on their properties in the next six weeks or potentially face jail time. The attorneys have sent letters to some landlords and will hold a news conference later this morning to further outline their plans.

It’s yet another blow to an industry that has been battered in recent months. The Obama administration is looking to rein in a business that government officials feel has grown too big, too quickly. In addition to recent raids, the government has clarified its stance on medical marijuana dispensaries  – warning owners in the spring that they could face prosecution. The IRS has come down hard against one of the leading dispensaries in the country, a move that could have repercussions for medical marijuana centers across the nation, and banks have more or less shut out MMC owners completely.

It appears the latest crackdown will be limited to California, at least for now. And it could just involve dispensaries that are violating state law.

But it will likely have a chilling effect on the industry nationally, particularly if  landlords get spooked. Many dispensaries already have hard time finding property as it is given the nature of the business and its questionable legal status. Landlords likely will take the same view of the industry as banks have, and many won’t want to accept the risks of doing business with shops that are illegal federally.

The mere threat of prosecution is often enough. The government has issued similar warnings in the past and failed to follow through on the threats, yet it was still able to get the desired result.