Bloomberg News

U.S. Asks Judge to Toss Case Defending Pot Superstore

January 31, 2013

The Obama administration asked a judge in San Francisco to dismiss a lawsuit by the city of Oakland defending its ability to issue permits for medical marijuana dispensaries.

Oakland sued the federal government after U.S. prosecutors filed a forfeiture case to seize property housing the city’s Harborside Health Center. Prosecutors called the center a “superstore” serving 100,000 customers in violation of federal drug law.

Oakland says it permits pot sales after relying on repeated statements by the government in recent years that it wouldn’t go after those who comply with medical-marijuana laws. Closing Harborside would send patients into the streets to buy from dealers, harming public safety, the city argues.

The city sued under a 1946 law that lets courts review federal actions. Using the law to stop a forfeiture is improper, said Kathryn Wyer, a Justice Department lawyer. Oakland’s only remedy is to file a claim in an existing U.S. forfeiture case against the property owner leasing space to the dispensary, she told a judge.

U.S. Arguments

“The only thing at issue is that the city is trying to halt the forfeiture,” which is under way in a separate case, Wyer told U.S. Magistrate Judge Maria-Elena James. Allowing Oakland’s case to proceed would open the floodgates to similar suits, Wyer said.

Cedric Chao, Oakland’s lawyer, said Oakland is facing “the perfect storm” if Harborside closes: increased crime, illegal pot sales and an understaffed police force. Forfeiture laws don’t address these problems, while the 1946 Administrative Procedures Act is for parties facing U.S. Government actions for which the only remedy is judicial review, he said.

“What the government is asking the court to do is take an unprecedented and extreme view of the APA,” Chao told James. “They want a party, a city of 400,000 people, to stand down. You have grievances, you have harm? Too bad.”

Store Products

The six-year-old dispensary, which has annual gross revenue of $20 million and offers more than 70 types of marijuana and cannabis concentrate such as hashish, home delivery and product promotions, is one of hundreds of such stores in California that have operated since voters approved the state’s Compassionate Use Act in 1996. The law legalized marijuana as a medical treatment for pain and ailments.

Medical use of marijuana is permitted in 17 states and the District of Columbia. Voters in Colorado and Washington approved ballot measures in November legalizing the possession of up to one ounce (18 grams) of marijuana. The drug remains illegal under federal law.

President Barack Obama said Dec. 14 that federal law enforcement authorities have “bigger fish to fry” than prosecution of marijuana users in Colorado and Washington.

U.S. Attorney Melinda Haag in San Francisco said in July that she was targeting superstores like Harborside because “the larger the operation, the greater the likelihood that there will be abuse of the state’s medical-marijuana laws, and marijuana in the hand of individuals who have a demonstrated medical need.”

James didn’t say when she would decide whether to dismiss Oakland’s lawsuit, filed in October.

The case is City of Oakland v. Holder, 12-05245, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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