Yes, it is still federally illegal, but the DEA doesn't exactly run raids. I read in the news that the DEA no longer invades the Berkeley/Oakland medical marijuana clubs (I think this is by executive fiat of the president, BHusseinO).
Still technically illegal...I think the major law enforcement operations concentrate on "guerrilla growers" or illegal aliens hired to run "guerrilla" grow ops' in national parks, and forests, wilderness, etc. And of course, smuggling (BC, Mexico, etc.). These are the big operations, the ones that bring in the multiple pounds of bud. I have heard of people getting caught stoned/with weed in California, driving even, and if they were not doing anything really "wrong" they have been let go without any penalty, just told to "drive safe" or "go home". For all intensive purposes, it is legal in the city of Berkeley. I have been walking to class and smelled it in the middle of the day, right on a city street (usually a homeless person). And there is no shortage of Berkeley police driving around dealing with all the bums and their stupid antics (unleashed dogs, litter, public harassment, and more serious drugs).
Medically: Marijuana doesn't act on the brain stem, at all. This means that all autonomic functions like breathing and heart beat are not affected directly (although heart rate can be increased indirectly by a release of adrenaline from other parts of the brain). There is no "lethal index" (LD50) for marijuana, unlike alcohol, which has a very low lethal index (ie., can shut your brain off and you will die).
Marijuana deaths in 2000: 0
Alcohol-related deaths in 2000: 85,000
Journal of the American Medical Association, Jan. 19, 2005, Vol. 293, No. 3, p. 298.
from :
http://drugwarfacts.org/cms/?q=node/30
I think marijuana should be regulated like cigarettes are now, by the FDA, not the DEA. It certainly poses less risk to the public than tobacco. But, even legalized, it does seem to make you pretty dull/boring/stupid/lazy for a couple days at a time, which makes it not very much worth it without legal penalties. JMHO.