dollars hidden on their property with connected to that of their own evidence showed that they had sold marijuana since at least two thousand yet other things the defendants had no sales permits sales permits made no efforts to obtain said had filed for it and had no profit and loss documentation they were not in strict compliance with california medical marijuana law and they should not be able to escape sentencing in this case do you need a permit before you actually say oh well two things your honor they are that simple answer is yes or no and then you can explain  since two thousand and ten and yet they had no sales from it's related to those sales now that shows two things one with respect to the conspiracy here i think the district court should have concluded that they were not stood quite still for medical marijuana but even of obtaining sales permits and in fact an argument by defense counsel at the macintosh hearing that the sales permit requirements didn't apply to them at all so i think that the by a preponderance standard here the district court should have found it even if we take its own standard as the correct one that the defendants were not likely to come into at the time of them so again the burden was on the defendants and they came forward with no evidence that they had ever tried to obtain sales permits that they were in the process of some phase of its maturation on the land and you're not selling at that point if you don't need a sales from mad then what are you in violation of at that point while your honor your again if we apply the district court standard here that it was the burden on them to show that they were likely to come into compliance so i am agreeing that with respect to the three hundred and twenty seven plans again in response to judge w question not waiving the argument that we could look backward here based on their conspiracy plea but for purposes of your question the other three hundred and twenty seven plants i think the district court could not really find  by a preponderance that they were likely to obtain before those cells and that's the standard that the district court itself do you need one of those one of the other questions that lurks in this case is obviously this collective situation because you have individuals with appropriate documentation for medical marijuana purposes for i think it's ninety nine plants is that right on the individuals well i think those are two sort of separate issues that i'm saying that you have that and then you have the collective right so let's start with the individuals and to they have authorization for the ninety nine plans well i think if we that they grew these plans the benefit of someone else and it would be transferred at there's no profit there right and if that's the case then how does the board of the station well profit and sales are two separate things your honor of that individual even if we take ourselves out of the marijuana context for a moment an individual can make a sale or a transaction at a loss it is still a sale it's still a sale for purposes of the sales permit and it's still a sale for purposes of work reporting sales tax now i will point the court to e r one hundred and eighty eight dollars which is the attorney that attorney general guidelines and those guidelines purport to explain the board of equalization requirement and what they say is that the board of equalization has determined that medical marijuana transactions not just profit transactions but transactions are subject to sales tax regardless of whether the individual or g profit and those engaging him again transactions involving medical marijuana must obtain a seller's permit i think that that's black and white and the court didn't respect to the district court in grapple with that other than to say remember that well i don't i don't think that means the person necessarily made a profit i think even if an individual cells at a loss if he if he or she engages in a transaction and he or she has to report for sales tax purposes they may not have the sales tax payments to make if they sold as at a loss but they were still required to file sales tax reports that was the undisputed testimony or under budget testimony i should say at the macintosh hearing by the guy and then brings you back again to this question of timing because i think as i understand the lot says if you do not obtain a seller's permit prior to the date the st tax return is due then you're subject to p so it seems that you need to have in your possession either at the time of sale or at the time you your tax return is due this permit do you agree with that characterization well i'm i'm not sure to admit that the laws are that my my reading of it is when the penalty becomes applicable in terms of the repercussions of not having a  my reading of the law is that a seller's permit has to be obtained before the st sale now what the board of equalization does to you retrospectively if you did not obtain that in terms of penalties i think that's what the phrase you for then no that makes and but then my question is if you're sitting there growing three hundred some plants and the number that are charged here but you haven't made a sale why do you need a permit at that point what if they all died when if you had a hurricane or an earthquake and all the plants died you never actually could sell them when you need a permit between the time you planted them and the time something catastrophic happened on your own i think on slightly different facts it might not be clearer for a district court to say ok you don't have a sales permit yet so you are in i'm going to find that you are in compliance with with state law but we have here is no indication of any effort to obtain sales permits no applications for sales permits people work for sales permits and again quite to the contrary and i know that defense counsel arguments are not necessarily evidence but i think they they can be honor but i think if a district court is looking at the moment in time and whether this these defendants are in compliance more likely to to come into compliance by the time of the sale of these properties these marijuana and again the defendants admitted in their plea agreements that they intended to sell this marijuana this was not a question of well they might never sell it i mean we have to take their plea admissions as established and they admitted that they intend to sell this marijuana property and if that's the case i think it was incumbent on the district court to say well what have you done to come into compliance with all the medical marijuana because as we stand here now you are in violation of federal law and so to gain the benefit of this medical marijuana writer you've got to show us that you are taking steps to come into compliance or at the very least that you have come into compliance with sales and there was no show in that regard by these defendants if you do have when you go  know with what can turn a general says we should look for and what the schedules are i'm not aware of a case on that your honor now i will note that the n p a itself has a provision that requires the attorney general to issue guidelines clarifying the law and so in that sense they are issued under a statutory directive now are the guidelines themselves do they have the force of law or are they binding i will not go that fa do think they go quite a bit quite a bit ways in explaining the law to you state you cite to us authority that you say it has the force of law yet leave our brief cites to the a provision in the medical marijuana program act that requires the attorney general to issue the guidelines that the attorney general of the nation and not but we don't have a case or anything else that says what the force of those guidelines since they were written and they have no force of law they're just simply i glance from two thousand and eight so i wouldn't rely on them at all there's been many many subsequent statutes including point seven hundred and seventy five of the health and code which provides immunity in addition your question a judge wallace on the standard california has a very liberal standard which is much different than the th circuit standard of strict construction strictly construing th test and so we were able to meet the th circuit standard and we had the burden of proof we actually argued those things in the district court but the district court held us to the highest standard and what's critical which my friend over here omitted was that the parties agreed that the strict clients with california law can only be assessed as of the date of the charge conduct july th two thousand and twelve and that's at e r s seven that's in the judge's order so even though my friend over here was not at the hearing all the council agreed that the operative drug was the three hundred and twenty seven plants because there was no evidence of prior sales that wasn't part of the hearing about the tampa sound i mean he said you know he got it so we were not in an odd situation federal plea agreement simply to sell it didn't say sell illegally under state law it what happened is the day before the sentencing president obama indicated he was going to sign it watershed statute in the judge in order to seek justice withheld the sentencing so the defendants would possibly have the benefit of all the arguments that we've seen coming forward so as you know it's much more difficult after sentencing so the issue and the plea agreement why it was not a factor in the hearing was that simply was a technical admission that any distribution was in violation of federal law but the lands the judge was looking at hearing was whether there was compliance with state law which is right the tax permit argument is really a red herring because these plants could have been eviscerated by mold by theft by fire as you see just on t v there's been many increased crops in northern california and you don't need a permit to sell is a grower if you're selling to a collective and then the collective is selling to a retail person that testimony was thoroughly cross examined aided by both of us at the hearing and the person from the franchise tax board conceded that you don't need a permit for a hypothetical sale or a future intended sale and many growers because of simplicity or just at the time or the climate in two thousand twelve it was much easier for them to simply if they had a product to sell the one collective and there was no requirement that you audit each member you know prospect of lee or in the future seems to me that that puts an entirely different book on this i don't see it that the district court saw that started talking about what the future is going to happen whether that be true but the conspiracy took place manners earlier and that's the key issue how does that fit in with your i q i can address that head on in that as you know in a in a federal conspiracy you just need an agreement like you said over in this case the  conspiracy was to grab the three hundred and twenty seven dollars plants there was no other evidence in this case that was part of the charge plea agreement that's the critical difference so you know he has actually said that this is a plan  would not be able to come in and say by the way there's some other marijuana we want to charge you with this was a negotiated information by the way this case you know about it and it really has nothing to do with what's going to happen in the future and that the district co through july th two thousand and twelve the date of the seizure of the plants so it so there that it's very typical in that in their resolution and in federal court if there's a conspiracy to limit the conspiracy to a specific drug weight or a specific amount of plants so you would know the guideline analysis so you could properly advise your client of the exposer i could tell you between my colleague you know i know i have the plea agreement in front of me for the specific amount of plants it's on page two line twenty it's thirty two kilograms consisting of two thousand three hundred and twenty dollars plants that's the only thing the defendants admitted to so that's one thing that's right so if you do i know that the word you know conspiracy is the prosecutor darling in every case but in this case it has no reality it has no prejudice or impact to the defendants because this plea agreement cabin the government the three hundred and twenty dollars plants and that that was it was an infant was a super like the rule i just was almost like a rule eleven plea where the court where there was no way the defendants could be have an exposure greater than the three hundred and twenty dollars plants that's why the broad language of relevant conduct was used in the stipulated facts so there wasn't going to be a situation where then the government or probation would pour it on at the sentencing hearing and talk about other transactions and that's also why our colleague in san francisco stipulated  agreed that the only operative marijuana was the three hundred and twenty seven dollars plants and that the judge found that in the order that's what that's why the part that's what he says the parties that's agree defenestrate compliance can only be assessed as the date of the charge conduct so even the counsel on my left is writing his briefs he can't change the chairs that were in the courtroom that day that was the agreed upon evidence and that's why the conspiracy frankly is irrelevant because the conspiracy could be just for one day the conspiracy was the curse of ate the three hundred and twenty plants in violation of federal law and intent to sell the conspiracy that they that the government made is they want savvy enough to understand that the marijuana in this case was young in the church plants and there was no documentation or evidence whether they were males or females and so what happened is at the time of the hearing there they were in in a position from an evidentiary standpoint to really articulate whether this marijuana was ever going to be usable or not because there were simply no detailed analysis of what was taken they basically took everything on the rez no state charges in this case and i believe they never were able to ever qualitatively analyze what they took so they were left with just simply young seedlings and it did not we will never know if that marijuana would ever become mature or not because it was destroyed so that's the factual record that the court had and that's what you know if you're sitting there with the field of marijuana what precludes the charge that you are revenge because they were in violation of federal law then the case was still weighed in the macintosh decision came out and then it turned out that if these were growers in compliance with state law which under eleven th dollars they have brought immunity from being charged under state law they were then entitle to the benefit of the macintosh decision and of the writer so it was an unusual case and that is when they pled they didn't know about this because it hadn't occurred on july of two thousand and fourteen it wasn't contemplated that you would have a defense to the case at that time and so the technical language of the plea agreement shouldn't be used and i think the district court was wise to disregard it because what we really did is focused on what are we dealing with and that was three hundred and twenty plants that were seized prematurely and then the question is do you need a permit to possibly sell in the future and the answer was of course no because a sales permit there's never been a criminal case in the history of california where someone's been charged criminally for not having a federal sales tax permit that simply something that could easily be ameliorated by paying the sales tax but in this speculation that a defendant would be required in the future to have to get him a sales permit you have to have there's no authority that the defendant that the defendants had to acquire the status of all the people that that may have bought me their marijuana in the future we were dealt with the evidence that we were presented it we wasn't the defendant's job to test the mail want to or do any investigations work prior sales but it was very apparent that after the government  california law right and we believe will apply a clearer standard which was affirmed by the evidence case that the judge found we strictly complied with that was the burden we used we had the burden ok we did i guess the judge said you met the preponderance standard of oh not exactly what the bank said this he called it set off the list suboptimal evidence but so in this case obviously the government does not have the burden and although i know they are nuances what district court what's thing i think you agree that on there evans and i think the district court agreed in advance that the defendants have the burden and you agree with that correct requiring defendants to sort of give a national proffer of what they were going to do and then you've seen you saw a way that case you were on that sometimes they don't meet the burden it comes up to the th circuit you send it back say maybe they get a hearing so there's been matters like this but in this particular case the defendants in the government agreed on the evidence the judge accepted most of it rejected some of it and then made his ruling so i don't see if you apply a clearer standard that the judge's ruling was implausible i mean w never getting into weighing the evidence the judge made a judgment call and i cited in the beginning of a brief many cases using the civil injunction standard which the government's appeal by the way is on a civil injunction appeal they appealed on the th day well past the criminal appellate limit and here seizure used all the time in injunctions and the record is more than enough to support if you applied a clearer standard a civil injunction standard to affirm on a preponderance of the evidence i people have to prove beyond a reasonable doubt that you don't comply with the statute it's that the people have all the burden in california the defendant has a much easier time in california it's not the opposite it's only in this unique federal analysis that the defendant has the burden once you raise a reasonable doubt that you qualify as either a caregiver a patient the burden shifts to the people to prove that that you do not have this immunity beyond a reasonable doubt and there's new that that's been the long california for many many years responsibility to prove that you're a compliance truck compliance with california statute is that correct that in california you do not there's no the word strict compliance or not even used under california law the california  were referring to the california law we said strict compliance with california law and you're saying that's a meaningless term no i was saying if you were a defendant in the state of california that the courts don't imply a strict construction standard strictly construe you're a defense or immunity that it's a much more liberal standard well that's fine and i think we're going to get matching that day or a little prosecution here with a mackintosh are would meet that they were in compliance with california law i was just responding to judge wallace's question that in the state of california in state court now marijuana is legal so this is a moot point but when they prosecuted medical marijuana defenses  once the defendant let's say showed their marijuana card our showed that they were growing for a collective immediately the burden shifted to the state authorities to disprove that beyond a reasonable doubt it was a very broad street the defend only had to raise the issue in the burden shifted it's much different than in federal federal is a much higher burden which we met in that case you if you wanted you said you wanted to th as evans confirmed that the defendants have the burden of by a preponderance and i think everybody agrees on that right that's that is the burden in federal court but i think we have your point about different others the other point about the plea agreement that when there's that add to the fact that we're talking about a specific quantity of plants because if you didn't have a specific quantity then you wouldn't have anything right well that's right but you know you need to link that with the quantity don't you well they they are charged with basically an admitted to basically running a marijuana growing but this in sort of common parlance that's what they're charged with that's what they pleaded guilty to now obviously they can only be sentenced for the number of plants that were found at a specific time and that's the three hundred and twenty seven dollars plants so yes we we could have presented evidence of additional sales over for relevant conduct purposes and we agreed not to do that in the so that's the importance of the sentence that my colleagues cited but that doesn't mean that this plea agreement means that they didn't engage in broader conduct and just over twenty seven plants and i think the point that underscores that is the fact that these defendants admitted that the four hundred and sixteen thousand dollars found on their property was connected with this offense now if they are only charged with plants that have not been sold yet then it would be impossible for them to admit that they had four hundred and sixteen thousand dollars on their property that was connected to the offense of growing marijuana with the intent to sell it so clearly they had either sold marijuana in the past or they had four hundred sixteen thousand dollars on their property for the purpose of cultivating growing it cultivating it transferring it conducting transactions that's what they admitted to so i would again the plea agreement is not limited to the three hundred and twenty dollars something i'd like to have your response to their interpretation of  salud the california law as to how they handle it i'm not sure that we have and i'm not sure that's a correct reading of the basic piece what your position your honor the state laws are relevant to the extent that they defer to speak up please i miss you know i'm sorry the state laws are relevant to the extent that they define what the applicable california medical marijuana law is so with case law and statutory law as well as state tax law all of those things go in the mix of setting forth what the applicable california medical marijuana law is now what mcintosh said and evans underscored is that in this context the defendants have to show that they strictly complied with all of that law so the california law provides the body of law the substantive law for example we cited two cases in our brief that say that if you if a defendant does not come forward with some profit and loss documentation that that might undermine their argument that they weren't profiting from marijuana sales but what mcintosh and evan say is that the defendants have to show that they strictly complied with all of these facets of state medical marijuana law so we only look to the state law to see what the out the global law is and i don't think here that there was any dispute about what the optical law what he's saying that there's a lesser burden of proof in a state's right and evans clearly rejects that notion i mean what would happen if the defendants had been criminally prosecuted in california state court is completely irrelevant here and evans makes that abundantly clear what they had to show in this case again they stand guilty of a federal offense what they had to show to escape sentencing was that they strictly complied with all of california's substantive medical marijuana law and i think that you know where you have like it's a black and white proposition i think the one you have to credit the way the district court categorized it and where we need to find cleaner air because the district court in reading the decision says we're kind of caught between them between with this situation we're not at a time of sales there's been no admitted sales here and they've explained their operation which is this collective plus the individual and then the district court makes a finding that they've shown enough to be in compliance at that moment and that because they're in this transition of we don't even not these plants are saleable at this thing or what they have the district court can't take it just simply in a moment that the plants were seized you have to kind of it or meld an end of that to the future and i think that's where neither side has really offered us any case law on that unless you can offer some now but that we do have the district court's construction and  findings i don't have any case or your honor this is a relatively new area but what i will say as a common sense point is and i know that my time is up so if i could just only just is that each under the district court's approach what we really have is a state of immunity for any defendant who is federally guilty of possessing with the intent to distribute if we take that the defendant's argument as correct because that defendant necessarily has not sold yet so we could have a defendant who is growing one hundred thousand plants for example this is a hypothetical and if that defendant says well i haven't sold these plants yet then they are immune from federal prosecution under this theory cannot be the case you know i understand your argument i do know that what the district court pointed to said is your case that might be a different case than the district so there could be other cases other hypotheticals other situations but they would be different  this one so we'll grapple with that so want to thank both counsel for your argument today the case of united states versus pisarski is submitted thank you thank you