The Feds Close a School

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In the early morning hours of April 2, federal agents of the Drug Enforcement Agency (DEA) and the IRS, in full battle gear, swept down on 1600 Broadway in Oakland, CA and did the unthinkable: they closed a school. When the Feds left later that same day (under the protection of the local Oakland Police Department), they carted away several office computers, file cabinets, and dozens of marijuana plants.

Oaksterdam University had been operating legally in Oakland since 2007. The brainchild of entrepreneur Richard Lee, Oaksterdam was a trade school of sorts whose part-time professional faculty provided educational services that detailed the science, law, and commercial opportunities associated with cannabis (marijuana). Over 15,000 students had paid tuition for such services over the years and the thriving university community had contributed mightily to the revival of downtown Oakland.

Let’s be clear. Oaksterdam was NOT a drug or marijuana dispensary (there are several licensed dispensaries in Oakland) and never sold cannabis. The pot plants that the DEA hauled away were being grown and displayed solely for educational purposes related directly to the curriculum. The instructors who taught at Oaksterdam were engaged in a legitimate educational activity with students who paid tuition for those services. Nonetheless, the IRS and DEA agents came in with guns (and yet to be undisclosed federal warrants) and the school, for all practical purposes, has now been shuttered. Where is the ACLU?

The raid at Oaksterdam (and the simultaneous raid by the IRS at Richard Lee’s private residence where records and bank accounts were seized) was not totally unexpected. Indeed, the federal authorities over the past several months have displayed an increasing hostility to the public’s growing acceptance of the availability of medical marijuana and to the commerce associated with supplying it to patients.

Despite the fact that medical marijuana is legal in 16 states, the DEA has recently seized or threatened to seize the assets of hundreds of landlords in California who rent facilities for the dispensing of medical marijuana. Richard Lee, the owner of Oaksterdam, and an outspoken advocate and financial "angel" for marijuana law reform in California, is simply the latest victim of an overall federal pushback to silence the growing movement to rationalize cannabis consumption in the U. S.

The chilling effect of federal harassment is already working. Lee, who was already under the gun with a 2010 IRS audit for alleged improper business deductions, has now severed his relationship with Oaksterdam and has publicly stated that he is "stepping back" from several cannabis related activities. And as the fear of asset seizure closes dozens of cannabis dispensaries in California, the reform mood clearly has turned gloomy.

Several important legal questions beg to be answered. First, since California had long ago legalized the "cultivation and possession" of cannabis for medical purposes (Prop. 215, 1996), under what authority can the Feds threaten local licensed medical dispensaries that are operating consistent with the intent of state law? Secondly, why hasn’t California’s attorney general Kamala Harris brought immediate suit against the Feds to halt the asset seizures and general harassment of local businessmen?

Finally, in the case of Oaksterdam University, why don’t private schools, licensed by the city, have the right to exist (without federal interference) and determine their own curriculum and display native plants as part of a legitimate educational experience? And if they don’t have these basic rights, what sort of country do we really live in?

Dom Armentano is Professor Emeritus at the University of Hartford (CT) and the author of Antitrust and Monopoly (Independent Institute, 1998) and Antitrust: The Case for Repeal (Mises Institute, 1999). He has published articles, op/eds and reviews in The New York Times, Wall Street Journal, London Financial Times, Financial Post, Hartford Courant, National Review, Antitrust Bulletin and many other journals.

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