At the same time, the officials said, the government will still prosecute those who use medical marijuana as a cover for other illegal activity. The memo particularly warns that some suspects may hide old-fashioned drug dealing or other crimes behind a medical marijuana business.

...In particular, the memo urges prosecutors to pursue marijuana cases which involve violence, the illegal use of firearms, selling pot to minors, money laundering or other crimes.

...And while the policy memo describes a change in priorities away from prosecuting medical marijuana cases, it does not rule out the possibility that the federal government could still prosecute someone whose activities are allowed under state law.

While the feds seem to be taking at least a small step in the right direction, some states are tightening up the rules. The New York Times reported Sunday, Los Angeles will be intensifying prosecution efforts against dispensaries:

For the first time, law enforcement officials in Los Angeles have vowed to prosecute medical marijuana dispensaries that turn a profit, with police officials saying they expect to conduct raids. Their efforts are widely seen as a campaign to sway the City Council into adopting strict regulations after two years of debate.

Carmen A. Trutanich, the newly elected city attorney, recently persuaded the Council to put aside a proposed ordinance negotiated with medical marijuana supporters for one drafted by his office. The new proposal calls for dispensaries to have renewable permits, submit to criminal record checks, register the names of members with the police and operate on a nonprofit basis. If enacted, it is likely to result in the closing of hundreds of marijuana dispensaries.

According to Los Angeles District Attorney Steve Cooley,

“About 100 percent of dispensaries in Los Angeles County and the city are operating illegally...The time is right to deal with this problem.”

...But Police Department officials said they were expecting to be called on soon to raid collectives.

If they are operating illegally under CA law, then they are also not exempt from DOJ's new policy, which exempts only those operating "without a doubt in compliance" with state law. Take San Diego:

[l]ast month, San Diego police officers and sheriff’s deputies, along with agents from the Drug Enforcement Administration, raided 14 marijuana dispensaries and arrested 31 people. In an interview, Bonnie Dumanis, the district attorney for San Diego County, said that state laws governing medical marijuana were unclear and that the city had not yet instituted new regulations.

Ms. Dumanis said that she approved of medical marijuana clubs where patients grow and use their own marijuana, but that none of the 60 or so dispensaries in the county operated that way.

The "not for profit" requirement could eliminate CA dispensaries:

Marijuana advocates say that interpretation would regulate dispensaries out of existence and thwart the will of voters who approved medical cannabis in 1996.

Which seems to be the intent, particularly in Los Angeles:

Mr. Trutanich, the city attorney, went further, saying dispensaries were prohibited from accepting cash even to reimburse growers for labor and supplies. He said that a recent California Supreme Court decision, People v. Mentch, banned all over-the-counter sales of marijuana; other officials and marijuana advocates disagree.

It remains to be seen what effect the DOJ memo will have. At least in California, it seems, the courts will have to decide what compliance with state law means.

Here's an interesting description of how a dispensary in Oakland, which the city believes is in compliance with state law works:

Visitors to the low-slung building are greeted by security guards who check the required physicians’ recommendations. Inside, the dispensary looks like a bank, except that the floor is covered with hemp carpeting and the eight tellers stand behind identical displays of marijuana and hashish.

There is a laboratory where technicians determine the potency of the marijuana and label it accordingly. (Harborside says it rejects 80 percent of the marijuana that arrives at its door for insufficient quality.) There is even a bank vault where the day’s cash is stored along with reserves of premium cannabis. An armored truck picks up deposits every evening.

City officials routinely audit the dispensary’s books. Surplus cash is rolled back into the center to pay for free counseling sessions and yoga for patients.

The states that allow medical marijuana are: Alaska, California, Colorado, Hawaii, Maine, Maryland, Michigan, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont and Washington.