Feds Seize Marijuana Icon Richard Lee's Money, Which He Owed The IRS Anyway
In these days of leaks, the federal government has bigger worries than drug war dissidents. But Uncle Sam hasn't forgotten about the marijuana movement.
Indybay.org The feds won Richard Lee's money... twice.
This week, the target of the biggest federal drug raid in recent Bay Area memory was finally brought to heel: the $180,000 in cash, found at the home and businesses of Richard Lee -- the Oaksterdam University founder and bankroller of 2010 legalization measure Prop. 19 - is now official U.S. government property, according to court records.
Lee, as much an icon as the California cannabis movement has ever had, has never been charged with a crime following the April 2, 2012 raid in downtown Oakland, though he has been put out of business and effectively sidelined as a legalization activist.
But in taking Lee's money, the Justice Department is putting other branches of the government out: the money, held in liquid currency because banks refused to do business with the state-legal marijuana trade, was Lee's tax payments, earmarked to the IRS and to the city of Oakland.
As we've reported before, the federal government is waging a sort of cold war against California's cannabis industry, which obeys state law but not federal. There hasn't been a federal raid on a licensed medical marijuana dispensary in the Bay Area since the Bush Administration (though Sacramento and Vallejo have seen raids by local police, and federal agents also raided a model legal Mendocino grow, though did not file charges).
President Barack Obama's Justice Department, while hardly the state law-respecting force the president promised, has instead cracked down mostly using the power of the pen. Eight dispensaries in the Bay Area have shut down after U.S. Attorney Melinda Haag's office sent letters warning of property seizures and prison terms unless the marijuana selling stopped. It's in a way the opposite of big-stick realpolitik: the biggest fish of all, Harborside Health Center, is still open for business almost 13 months after Haag filed suit to seize the dispensary's two locations in Oakland and San Jose, and more dispensaries are opening up in San Francisco and Oakland.
Still, the April 2, 2012 raid on Oaksterdam University and downtown Oakland medical marijuana dispensary coffee shop Blue Sky was an outlier. Here were the cops in Kevlar -- IRS agents, federal marshals - that had previously stayed away. They made only two few arrests - including the lone prosecution stemming from the raid, a protester who federal prosecutors say shoved an agent - but neither Lee nor anyone associated with his coffee shop Blue Sky dispensary or Oaksterdam University were charged with crimes.
The feds made the move in April -- on April 19, to be exact -- to seize the $180,000 Lee had in cash at the school and his apartment. And Lee didn't fight it in court -- because it was money the feds were due anyhow, he said Wednesday.
A section of federal tax code called 280E means marijuana businesspeople have difficult claiming business expenses on their federal tax returns. Lee had been hit with three years of back taxes -- and that, along with the $90,000 in permit and quarterly tax payments to the city of Oakland, was the money the feds took away.
Were the feds hoping for more? Lee's lifestyle is famously spartan, with a rented one-bedroom apartment near Lake Merritt. Lee has also said in the past that a big reason why he pushed for marijuana legalization in 2010 -- and spent his life savings, over $1 million -- to put Prop. 19 on the ballot was so he could spend his money before the feds could take it. And why -- or how -- can federal law enforcement conduct raids, seize property -- but not charge citizens with crimes?
Joshua Eaton, a spokesman for the Justice Department, did not respond to a telephone call seeking comment. Lee has his own theories.
"If there was enough to raid me, there should have been enough to prosecute me," said Lee, who noted that he's now broke and will likely settle his tax bills for "pennies on the dollar."
"I think they thought that I had millions of dollars in Swiss bank accounts," he said, "and then they found out that I didn't."
Many in the marijuana movement see the property forfeiture maneuver as a money game, policing for profit. In the end, the Oaksterdam raid will go down as deficit policing -- the cash seized was cash the feds were going to get anyway with accountants and briefcases rather than agents with sledgehammers and bullet-proof vests.