"The distribution of marijuana is a federal offense, and this place was making millions of dollars," said DEA Assistant Special Agent in Charge Michael Chapman.
Along with the Foothill Boulevard marijuana club, two residences in Hayward were raided and searched, authorities said. Northbound traffic on Foothill, between B and C streets, was halted during the police activity.
Shon Matthew Squier, 34, owner of the dispensary, and Valerie Lynn Herschel, 23, the manager, both of Hayward, were arrested on suspicion of conspiracy to distribute marijuana and the distribution of marijuana. Law enforcement agents had five federal warrants to search the facility, Squier's and Herschel's residences and their cars, according to authorities.
Squier and Herschel are scheduled to appear at 10 a.m. today in U.S. District Court in Oakland before Magistrate Judge Wayne D. Brazil.
Authorities said several vehicles were seized in the raid, including two Mercedes, a Hummer, a Cadillac Escalade, and Harley Davidson and Ducati motorcycles. Indoor marijuana growing equipment, an estimated 200 marijuana plants, and marijuana-laced cookies, brownies, popcorn and pies were also seized.
Cash confiscated by investigators from the dispensary and residences totaled $200,000, as well as another $2.1 million in associated bank accounts. The IRS routinely works with the DEA on the financial side of an investigation of this kind, a DEA spokesman said.
The maximum statutory penalties for charges of conspiracy to distribute and distribution of marijuana are
20 years' imprisonment, a $1 million fine and a three-year term of supervised release.
Federal agents were alerted to the activity of the dispensary during a separate investigation, and began looking into the operation in October 2005, according to the criminal complaint.
"At some point during their investigation, they contacted us and requested our help," Hayward Police Capt. Phil Ribera said. "We provided information from several observations we made concerning cultivation at the site and amounts of marijuana."
The dispensary, one of two in Hayward on the same block of Foothill Boulevard, was to be closed by local authorities at the end of this month for breaking its three-year agreement for operating within the city. City officials said the cooperative had more than
3 pounds of marijuana on the premises at one time, in violation of city regulations.
Hayward police inspected the club in September and said they observed 30 pounds of marijuana. Officers returned in November and said they observed 200 pounds.
Sticking to the 3-pound rule is impossible because of the volume of patients the club serves, an employee of the dispensary said in an interview earlier in the week.
The cooperative attempted to disguise the breadth of its criminal activity by claiming that it caters exclusively to people with medical illnesses, when in fact, people without any medical conditions could purchase marijuana at the retail establishment, the complaint states.
"There is no difference in the street price," said DEA public affairs officer Casey McHenry, pointing out that an ounce of marijuana at the club cost the same as on the street, between $300 and $320.
"This was a money-making business," she said.
The passage of Proposition 215 by California voters in 1996 allows doctor-approved medical use of marijuana. But McHenry said the distribution of marijuana is a violation of federal law and that the Supremacy Clause in the U.S. Constitution allows federal law to supersede state regulations.
"California has made a decision," said Tom Dolphin, communications director for Americans for Safe Access, a national grassroots coalition based in Oakland that works to protect the rights of patients and doctors to use marijuana for medical purposes. "We want the federal government to stop circumventing California law," Dolphin said.
A Hayward resident, who has a doctor's prescription to use marijuana for symptoms related to HIV and went to the dispensary once a week to fill his prescription, expressed frustration with the raid of the facility.
"They were very good to residents of Hayward," he said.
The dispensary gave a 10 percent discount to city residents. The man said he will probably start going to the dispensary nearby.
Alejandro Alfonso can be reached at (510) 293-2469 or firstname.lastname@example.org.