Like a lot of Californians, Stockton businessman Matt Davies, 34, expected that when Barack Obama was elected in 2008, the new administration would not prosecute medical marijuana dispensaries operating under a law passed by California voters in 1996. After all, as a candidate, Obama contended that he saw federal enforcement against medical marijuana as a waste of resources.
On Oct. 19, 2009, Deputy Attorney General David Ogden released a memo that instructed the Department of Justice not to focus federal resources "on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana." Davies took that memo as a green light to join the "green rush" and use his MBA expertise to run a taxpaying enterprise to distribute what he refers to as "medicine" to sick people.
Now that he faces a minimum sentence of seven years in prison if he pleads guilty, the father of two understands that he should have read the memo more carefully. "Looking back and reading that now, you can drive a Mack truck through that," Davies told me in a meeting with his wife, Molly, and attorney Steven Ragland. In fact, the Ogden memo clearly stated that Obama's Department of Justice would consider "prosecution of significant traffickers of illegal drugs, including marijuana," to be a "core priority."
Ah, but the heart wants what the heart wants. Davies says his grandfather died a painful death from stomach cancer. He wanted to help others avoid excruciating pain.
But he also had seen people run dispensaries the wrong way — for example, not paying their fair share of taxes — and he thought his experience running a bistro and property management firm would enable him to show how medical marijuana dispensing could be done right. It clicked. "It was that whole Silicon Valley culture," he recalled. His workers felt they were "part of something."
Paradise started to crumble Sept. 22, 2011, when a burglar alarm went off. A California Highway Patrol officer stopped Davies and partner Lynn Smith, and Davies told the officer that the two were on their way to check on a Sacramento facility where they stored marijuana. In July, when a grand jury returned a two-count indictment for cultivating marijuana against Davies, Smith and Robert Duncan, 29, federal prosecutors reported that Davies' candor with the CHP started an investigation. Davies thinks they included that detail to make him look stupid.
Seen in another light, however, Davies argued, his honesty shows that he believed his Medizen Collective was legit. After all, if his business were not legal, would Sacramento have allowed him to apply for a $5,000 medical marijuana dispensary permit? Would Sacramento have registered him as an "established operation"? Would Lloyd's of London have insured his marijuana stock?
"It didn't used to be a crime to believe your government," attorney Ragland intoned. Davies' other crime is standing up to federal prosecutors' excesses. Davies' two co-defendants are pleading guilty in return for expected terms of three and five years, respectively. But U.S. Attorney Benjamin B. Wagner proposed a seven-year minimum sentence for Davies. Wagner even wrote that seven years would be "extremely lenient" in light of Davies' "very significant commercial operation." One of Davies' several dispensaries alone grossed more than $3 million annually.
Davies' attorneys have appealed to Attorney General Eric Holder to stop this travesty. On probation, Davies could continue to meet the payroll for his other businesses. He could pay taxes and contribute to Stockton's ailing economy.
In prison, Davies can serve as a testament to one truth alone: When you believe a politician, read the fine print.