Filed 5/15/13; pub. order 6/13/13 (see end of opn.)




              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                  SECOND APPELLATE DISTRICT

                                                DIVISION SIX


THE PEOPLE,                                                    2d Crim. No. B238099
                                                         (Super. Ct. Nos. 1331260, 1333860,
     Plaintiff and Respondent,                                   1364838, 1365541)
                                                              (Santa Barbara County)
v.

JUAN CARLOS SOLIS et al.,

     Defendants and Appellants.



                  Juan Solis, Sinthia Martinez, and Rudy Lopez operated what purported to
be a medical marijuana collective serving some 1,700 members. In defending against
various marijuana charges, they invoked the defense provided by the Medical Marijuana
Program (MMP)1 for qualified patients who associate to collectively or cooperatively
cultivate medical marijuana. The defense does not apply, however, if the operation does
not meet the definition of a "collective or cooperative" and marijuana has been sold for a
profit. Here, all of the collective's excess income—purportedly about $80,000 a year—
was simply treated by Solis as his personal "salary" without any accountability or
disclosure to the collective's membership. Moreover, the collective was not registered as
a nonprofit and appellants admitted purchasing marijuana from individuals who were not

       1 (Health & Saf. Code, § 11362.7 et seq.) All further undesignated statutory
references are to the Health and Safety Code.
members of the collective. Because there was no evidence to raise a reasonable doubt
whether the collective operated for profit or was otherwise lawful, the MMP defense did
not apply.
              Solis was convicted following a bench trial on three counts of possessing
marijuana for sale (§ 11359), and a misdemeanor count of selling or transporting
marijuana (§ 11360, subd. (a)). The court further found that appellant committed one of
the possession counts while released from custody on bail (Pen. Code, § 12022.1, subd.
(b)). Martinez was found guilty on one count of possessing marijuana for sale. Lopez
was convicted on one count each of possessing marijuana for sale and selling or
transporting marijuana. Appellants were each granted three years probation and ordered
to serve time in jail with credit for time served. They contend their convictions must be
reversed because the evidence raised a reasonable doubt as to whether their activities
were protected under the MMP. We affirm.
                        FACTS AND PROCEDURAL HISTORY
              Pursuant to the parties' agreement, the case was tried on the record of the
preliminary hearing and additional stipulated facts. On February 6, 2010, over 20 pounds
of marijuana was found in Glen Mowrer III's vehicle during a traffic stop. Mowrer told
the police he routinely sold marijuana to several local medical marijuana dispensaries,
including The Healing Center (THC), which Solis and Martinez operated out of a
storefront at 1437 San Andres Street in Santa Barbara.
              On February 17, 2010, search warrants were executed at THC, Solis's
residence at 1107 San Andres Street, and his adjoining residence at 701 West Carrillo
Street. During the search of the residence at 1107 San Andres Street, officers found a
marijuana growing operation with live plants, processing tools, and packing materials.
Solis and Martinez were at the residence when the warrants were executed and were both
arrested.
              At THC, officers found a large quantity and variety of marijuana products
along with sales receipts and patient records. Several customers who arrived during the
search reported they became "members" of THC by filling out a form and that their only

                                             2
involvement in the collective consisted of purchasing marijuana. None of the members
knew how THC operated or gave any input in that regard.
             Solis and Martinez told the police they had been operating THC, which had
about 1,700 members, for the immediate past three years. Martinez often worked at
THC, did the bookkeeping, and occasionally bought marijuana from vendors. She did
not know how much money she or THC had made over the past year. Solis said he and
Martinez made all the business decisions for THC and provided no services to the
customers other than selling marijuana. Solis admitted that THC was not registered as a
nonprofit. He also admitted receiving about $80,000 in income from THC in the past
year, which he spent on family expenses and entertainment. Every week he bought
approximately one pound of marijuana and resold it to THC customers for double the
price he paid. He did not have any information regarding the source of the marijuana he
purchased. Any vendor could walk in, sign up for membership, and immediately sell
marijuana to THC. He knew that some of the vendors provided false names in order to
avoid potential "legal problems."
             When Solis was arrested, the police told him that THC was being operated
illegally and that he was prohibited from conducting any further business. Nine days
later, Solis was operating THC again and had put a sign in the window that said, "Yes We
Are Open." During a subsequent search and related investigation conducted in May
2010, the police verified that someone had purchased marijuana from THC that same
month. On June 3, 2010, the police conducted a controlled purchase at THC through a
confidential informant who possessed a doctor's recommendation for medicinal use of
marijuana. When the informant stated he was a new customer, he was simply told to fill
out some paperwork without any discussion as to how the collective operated.
             On June 11, 2010, the police responded to an alarm at Solis and Martinez's
residence at 710 West Carrillo and found another marijuana growing operation inside the
residence. On June 23rd, the police executed another search warrant at THC and arrested
Solis. When Solis was interviewed, he said that he planned to continue reopening THC
every time the police shut it down.

                                           3
              On June 25, 2010, Solis was arrested at THC along with THC employee
Lopez. The police seized 28 marijuana plants and two scales. Solis was released four
days later on the condition that he refrain from reopening THC or otherwise possessing
marijuana.
              On October 4, 2010, the police found a marijuana vendor receipt signed by
Lopez that was issued to THC on September 24, 2010. The vendor, David Ziemer, told
the police he had sold six ounces of marijuana to THC on that date. No documentation of
Ziemer's membership was included in the records the police had previously seized from
THC.
              On October 27, 2010, the police executed another search warrant at 1107
San Andres and 710 West Carrillo. When the police entered the residence at 710 West
Carrillo, Lopez fled through the rear of the property and was later arrested at 1107 San
Andres. Along Lopez's flight path, officers found a brown paper bag containing bottles
filled with marijuana. In an outdoor area between the two residences, they found a shed
that contained a "makeshift office" with a safe, marijuana products, papers indicating
marijuana sales, a scale, and marijuana packaging materials. Inside Solis's residence at
1107 San Andres, the officers found numerous marijuana sales receipts and receipt books
containing the signatures of both Solis and Lopez. Many of the documents appeared to
indicate that THC had begun delivering marijuana to customers.
              In rejecting appellants' MMP defense at trial, the court concluded there was
no evidence to raise a reasonable doubt whether THC was operating on a nonprofit basis.
The court reasoned: "Nothing in the statutes or the AG [MMP] Guidelines provides for
monetary payment for services rendered to the collective or cooperative – certainly not
on the order of $80,000 per year to the self-described 'operator' and business decision
maker of the collective, who provided no services to the members of the dispensary other
than selling them marijuana. Monetary reimbursement that members provide to the
collective or cooperative is limited to an amount necessary to cover overhead costs and
operating expenses. Defendants have provided no evidence of actual overhead costs or


                                             4
expenses that had to be reimbursed. Rather, the reimbursement amount or, as Solis
described it, pricing was simply double the amount [THC] paid for [the] marijuana."
              In disposing of Solis's claim that THC members "pooled money" to
collectively grow marijuana, the court stated, "there is no evidence of such 'pooling.'
There is no evidence demonstrating that money paid pursuant to the set prices listed on
boards at THC went into collective cultivation of marijuana. To the contrary, the only
facts are that funds went to two destinations: 1) vendors, two of whom appear not to be
collective members, and others whose identity and source of marijuana are unknown; and
2) Juan Solis' entertainment and living expenses." The court also found the evidence
failed to create a reasonable doubt whether THC was operating as a "collective" or
"cooperative" as contemplated by the MMP.
                                      DISCUSSION
              Appellants contend their convictions must be reversed because the evidence
compels a finding that their activities related to the operation of THC were protected
under the MMP. We conclude otherwise.
              To determine whether a conviction is supported by substantial evidence, we
review the entire record in the light most favorable to the prosecution "to determine
whether it contains evidence that is reasonable, credible, and of solid value, from which a
rational trier of fact could find the defendant guilty beyond a reasonable doubt." (People
v. Silva (2001) 25 Cal.4th 345, 368.) In applying this test, we do not resolve credibility
issues or evidentiary conflicts. Instead, we presume in support of the judgment the
existence of every fact the jury could reasonably have deduced from the evidence.
(People v. Boyer (2006) 38 Cal.4th 412, 480.) "A reversal for insufficient evidence 'is
unwarranted unless it appears "that upon no hypothesis whatever is there sufficient
substantial evidence to support"' the jury's verdict." (People v. Zamudio (2008) 43
Cal.4th 327, 357, quoting People v. Bolin (1998) 18 Cal.4th 297, 331.)
              In 1996, the California electorate approved Proposition 215 and adopted the
Compassionate Use Act (CUA) (§ 11362.5), which provides an affirmative defense to
prosecution for the crimes of possession and cultivation where the marijuana is used for a

                                             5
patient's personal medical purposes pursuant to a physician's recommendation. The
Legislature subsequently enacted the MMP to clarify the scope of the application of the
CUA. (See People v. Kelly (2010) 47 Cal.4th 1008, 1014.)
              A defendant invoking the MMP as a defense bears the burden of producing
evidence in support of that defense. (People v. Mower (2002) 28 Cal.4th 457, 477-481;
People ex rel. City of Dana Point v. Holistic Health (2013) 213 Cal.App.4th 1016, 1025-
1026 (Holistic Health).) Because the prosecution bears the burden of proving the
defendant's guilt, the defendant need only produce evidence that raises a reasonable doubt
whether his or her acts were protected under the MMP. (Ibid.)
              Under the MMP, qualified patients and their designated caregivers are
entitled to "associate within the State of California in order collectively or cooperatively
to cultivate marijuana for medical purposes[.]" (§ 11362.775; City of Claremont v. Kruse
(2009) 177 Cal.App.4th 1153, 1172.) Although the MMP does not expressly define what
it means to "collectively or cooperatively cultivate marijuana," the Attorney General
guidelines (guidelines)2 provide that "[a] cooperative 'must file articles of incorporation
with the state and conduct its business for the mutual benefit of its members. [Citation.]
No business may call itself a "cooperative" (or "co-op") unless it is properly organized
and registered as such a corporation under the Corporations or Food and Agriculture
Code. . . . Further, '[c]ooperatives must follow strict rules on organization, articles,
elections, and distributions of earnings, and must report individual transactions from
individual members each year.' [Citation.]" (Hochanadel, supra, 176 Cal.App.4th at p.
1010.) A collective is defined as "'"a business, farm, etc., jointly owned and operated by
the members of a group." [Citation.]' [Citation.] Thus, 'a collective should be an



      2 The guidelines were issued pursuant to the Legislature's directive that "the
Attorney General shall develop and adopt appropriate guidelines to ensure the security
and nondiversion of marijuana grown for medical use by patients qualified under the
[CUA]." (§ 11362.81, subd. (d).) While we are not bound by these guidelines, we give
them considerable weight. (People v. Hochanadel (2009) 176 Cal.App.4th 997, 1011
(Hochanadel), quoting Freedom Newspapers, Inc. v. Orange County Employees
Retirement System (1993) 6 Cal.4th 821, 829.)
                                              6
organization that merely facilitates the collaborative efforts of patient and caregiver
members—including the allocation of costs and revenues.'" (Ibid.)
              The guidelines further direct that medical marijuana cooperatives and
collectives must be nonprofit operations that "'acquire marijuana only from their
constituent members, because only marijuana grown by a qualified patient or his or her
primary caregiver may be lawfully transported by, or distributed to, other members of a
collective or cooperative . . . . Nothing allows marijuana to be purchased from outside
the collective or cooperative for distribution to its members. Instead, the cycle should be
a closed-circuit of marijuana cultivation and consumption with no purchases or sales to or
from non-members. To help prevent diversion of medical marijuana to non-medical
markets, collectives and cooperatives should document each member's contribution of
labor, resources, or money to the enterprise. They should also track and record the source
of their marijuana.' [Citation.]" (Hochanadel, supra, 176 Cal.App.4th at p. 1010.) In
addition, "'. . . [a]ny monetary reimbursement that members provide to the collective or
cooperative should only be an amount necessary to cover overhead costs and operating
expenses.' [Citation.]" (Id. at pp. 1010-1011.)
              In determining a marijuana collective or cooperative is a nonprofit
enterprise, the size of its membership and its operating procedures are relevant. (People
v. Jackson (2012) 210 Cal.App.4th 525, 530 (Jackson).)3 An organization's registered
nonprofit status and any financial records are also relevant, "including in particular any
processes or procedures by which the enterprise makes itself accountable to its
membership. An operator's testimony as to the nonprofit nature of the enterprise is of


        3 Lopez asserts that "[t]he trial court's statement of decision contains reasoning
and tone indicating an undue reliance on the legal fallacy that the CUA and [MMP]
disallowed profit." He claims the law is ambiguous in this regard and that therefore "the
rule of lenity favors a reversible in this criminal matter. [Citation.]" In support of his
assertion, he refers to a purported "open letter" written by the now-retired state senator
who co-authored the MMP. This evidence is not part of the record, nor has Lopez
requested judicial notice of it. Moreover, the MMP expressly indicates that profit is not
allowed. (§ 11362.765, subd. (a); see also Jackson, supra, 210 Cal.App.4th at p. 539.)
The rule of lenity thus does not apply.

                                              7
course also relevant. [¶] However, by the same token the absence of fairly complete
financial records and any accountability to members will also be relevant, especially
when combined with a large number of members and evidence of a high volume of
business. In the latter circumstance a trier of fact could reasonably conclude that,
notwithstanding an operator's testimony, a large membership, high volume enterprise
was in fact operated for profit." (Id. at p. 539, fn. omitted, italics added.)
              Here, substantial evidence supports the trier of fact's finding that appellants'
evidence failed to raise a reasonable doubt whether THC was a cooperative or collective
as contemplated by the MMP.4 Indeed, the evidence was lacking on virtually every
point. THC was not registered as a nonprofit. Although the police found various sales
and purchase receipts, the financial records were not complete and there was no
accounting of THC's total income and expenses. Solis merely offered that he bought
about a pound of marijuana every week for some unspecified price and sold it for double
what he paid. He also admitted receiving about $80,000 in personal "income" from THC
in the past year, no accounting or other record of which was ever produced. He further
admitted he had purchased marijuana from two vendors for whom there were no
membership records, and that he knew other vendors had given false names. This
evidence is insufficient to raise a reasonable doubt whether THC either operated for
profit or otherwise qualified as a collective or cooperative under the MMP.
              Appellants claim it is improper to consider Solis's $80,000 "income" as
evidence that THC operated for profit because nonprofit organizations are entitled to
have paid staff. (See Holistic Health, supra, 213 Cal.App.4th at p. 1033 [quoting Food &
Agr. Code, § 54147, for the proposition that "'[a]n association may provide a fair
remuneration' for 'time . . . actually spent . . . in its service'"].) The MMP guidelines
make clear, however, that "[a]ny monetary reimbursement that members provide to the

       4 Although appellants uniformly characterize THC as a collective, we assume for
the purpose of our analysis that it could be characterized either a collective or a
cooperative. (See People v. Colvin (2012) 203 Cal.App.4th 1029, 1036, fn. 8 (Colvin)
["We refer broadly to cooperatives, collectives, and dispensaries without distinguishing
between technical differences that may exist between them"].)

                                               8
collective or cooperative should only be an amount necessary to cover overhead costs and
operating expenses." (Jackson, supra, 210 Cal.App.4th at pp. 535-536.) Even if Solis's
claimed income could be construed as either "fair renumeration" or part of the
organization's "operating expenses," Solis never claimed that he merely received a salary
commensurate with his efforts that was a component of THC's reasonable expenditures.
Instead, he admitted that he simply took all of THC's profits and spent them on himself
and his family. It is also undisputed that THC had no accountability whatsoever to its
members, who paid for the marijuana from which the profits were derived. Under the
circumstances, any inference that Solis paid himself a "salary" of $80,000 as reasonable
compensation for services he actually rendered would be insufficient to raise a reasonable
doubt whether THC sold marijuana for profit. (Id. at p. 539.)
              Appellants' citations to recent case law are unavailing. In Jackson, which
was decided after the opening briefs were filed, the Court of Appeal reversed the
appellant's jury trial convictions for selling and possessing marijuana on the ground that
the trial court had erroneously prevented him from offering evidence to establish he was
entitled to an MMP defense and had refused to instruct the jury on the defense. The trial
court based its ruling on the fact that only a few of the collective's 1,600 or so members
had actually participated in the cultivation of marijuana. The court also found that it
lacked sufficient information to determine whether the collective operated for profit, and
thus did not rely on that factor in reaching its decision. (Jackson, supra, 210 Cal.App.4th
at p. 532.)
              In reversing, the Court of Appeal rejected the People's argument that the
MMP defense does not apply unless there is evidence that all of a collective's members
actively participated in the cultivation of marijuana. The court reasoned that "[s]uch a
strict limitation" was inconsistent with both the MMP and the guidelines. (Jackson,
supra, 210 Cal.App.4th at p. 537.) The court went on to state that while "the relatively
large size of a collective or cooperative will not per se take it outside the scope of section
11362.775, in any given case the size of an enterprise may nonetheless be quite relevant


                                              9
in determining whether a defendant's participation is protected . . . ." (Id. at p. 538.) As
we have previously noted, the court also reasoned that "the absence of fairly complete
financial records and any accountability to members" could lead a trier of fact to
reasonably conclude that "a large membership, high volume enterprise was in fact
operated for profit." (Id. at p. 539.) That is precisely the situation here.
              Holistic Health, which was decided after all the briefs were filed, is
similarly unavailing. In that case, the court reversed a summary judgment in favor of the
city of Dana Point in its action against a medical marijuana collective for nuisance
abatement and illegal business practices. The court reasoned that the collective presented
sufficient evidence to create a triable issue of fact whether the collective operated as a
nonprofit such that the MMP defense applied. That evidence included proof that the
collective was incorporated as a nonprofit, articles in incorporation identifying the
collective as such, and filed tax returns showing net negative income. (Holistic Health,
supra, 213 Cal.App.4th at p. 1027.) Appellants presented no such evidence.
              In Colvin, the defendant was arrested while transporting about a pound of
marijuana and was subsequently convicted by court trial of transporting marijuana and
other offenses. The trial court found that although the defendant was operating a lawful
marijuana collective, the MMP defense did not apply "because 'the transportation . . . had
nothing to do with the cultivation process.'" (Colvin, supra, 203 Cal.App.4th at p. 1036.)
In reversing, the Court of Appeal rejected the implication that the defendant's collective,
"with its 5,000 members and 14 growers, is simply too big to allow any 'meaningful'
participation in the cooperative process" such that it could not be deemed a "collective"
or "cooperative" as contemplated by the MMP. (Id. at p. 1039.) The court reasoned that
"this interpretation of section 11362.775 would impose on medical marijuana
cooperatives requirements not imposed on other cooperatives. A grocery cooperative, for
example, may have members who grow and sell the food and run a store out of which the
cooperative's products are sold. But not everyone who pays a fee to become a member
participates in the cooperative other than to shop at it." (Ibid.) The court went on to note
that the defendant's collective had complied with virtually all of the guidelines (e.g., it

                                              10
was registered as a nonprofit and maintained complete financial and membership records)
and the defendant had taken steps to comply with the local ordinances. (Id. at pp. 1040-
1041.)
              As we have explained, appellants offered no evidence that THC was
registered as a nonprofit. Moreover, their records are woefully incomplete and Solis
admitted purchasing marijuana from vendors who were not THC members. He also
admitted that he spent all of THC's profits on himself and his family. In light of this
evidence, the court reasonably found beyond a reasonable doubt that THC operated for
profit and did not otherwise qualify as a collective or cooperative under the MMP.
(Jackson, supra, 210 Cal.App.4th at p. 539.)
              The judgments are affirmed.




                                          PERREN, J.


We concur:



              GILBERT, P. J.



              YEGAN, J.




                                             11
                                 Frank J. Ochoa, Judge

                        Superior Court County of Santa Barbara

                          ______________________________




             Law Office of Joseph D. Allen, Joseph D. Allen and Alan Karow for
Defendant and Appellant Juan Carlos Solis.
             Law Office of Alan Karow, Alan Karow; Law Office of Joseph D. Allen,
Joseph D. Allen, for Defendant and Appellant Sinthia Alba Martinez.
             Esparza Law Group and Luis Esparza for Defendant and Appellant Rudy
Aragon Lopez.
             Kamala D. Harris, Attorney General, Dane R. Gillette, Chief Assistant
Attorney General, Lance E. Winters, Senior Assistant Attorney General, Michael R.
Johnsen, Supervising Deputy Attorney General, William H. Shin, Deputy Attorney
General, for Plaintiff and Respondent.




                                             12
Filed 6/13/13
                             CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              SECOND APPELLATE DISTRICT

                                        DIVISION SIX


THE PEOPLE,                                                2d Crim. No. B238099
                                                     (Super. Ct. Nos. 1331260, 1333860,
     Plaintiff and Respondent,                               1364838, 1365541)
                                                          (Santa Barbara County)
v.
                                                      ORDER CERTIFYING OPINION
JUAN CARLOS SOLIS et al.,                                 FOR PUBLICATION

     Defendants and Appellants.



THE COURT:

                  The opinion in the above-entitled matter filed on May 15, 2013, was not
certified for publication in the Official Reports. For good cause it now appears that the
opinion should be published in the Official Reports and it is so ordered.
