City Can’t Block Medical Marijuana Club Seizure

SAN FRANCISCO (CN) - The city of Oakland lacks standing to challenge an attempt by the U.S. government to seize a medical marijuana dispensary, a federal judge ruled Thursday.

While medical marijuana is legal in California, and voters have approved the recreational use of marijuana by adults in Washington and Colorado, it is still illegal under federal law.

The U.S. government initiated forfeiture proceedings against Harborside Health Center's locations in Oakland and San Jose, Calif., in July, claiming the clubs sell marijuana in violation of the Controlled Substances Act.

Oakland reacted by suing the government for abandoning its alleged promises not to interfere with a state's plan to regulate medical marijuana shops.

The government said the action could not survive because only parties named in forfeiture actions have standing to challenge them.

At a recent hearing, the city's attorney, Cedric Chao with Morrison & Foerster, said that the forfeiture proceedings put Oakland in a "twilight zone" where it could not challenge an action that purportedly holds dire consequences for public health and safety.

Chao said Oakland's sole remedy lay within the Administrative Procedures Act. "That is what the APA is for, when you have no other remedy," he argued.

Seizing and closing the dispensary in Oakland will harm "tens of thousands of patients who are now accustomed to medical cannabis," Chao said. "Their need will not go way when Harborside is shuttered. They will go out onto the streets."

He also claimed that Oakland, with its understaffed police force, is "uniquely unprepared to deal with the increase in crime."

Justice Department attorney Kathryn Wyer responded that Oakland was "asking for the exact same relief" as could be requested in the forfeiture action. She said that framework offers a remedy to challenge the forfeiture proceedings.

Granting standing to Oakland gives anyone who does not have a property interest a right to file a separate lawsuit, Wyer said.

"That could not possibly be Congress' intent," she added.

U.S. Magistrate Judge Maria James agreed with Wyer and dismissed the case Thursday.

"The relief Plaintiff seeks - specifically, a dismissal of the forfeiture action - is available through the claims procedure established by Rule G(5)(a)(i)," she wrote. "Congress has therefore created a mechanism for individuals to raise challenges to a forfeiture proceeding and to protect their interests as they relate to the defendant property, and in doing so, has also demarcated the class of individuals who are authorized to raise such challenges. That plaintiff falls outside of the scope of that class does not render the remedy provided in Rule G(5)(a)(i) inadequate; rather, it simply demonstrates that the interests plaintiff has identified - while significant and wide-reaching - are too far removed from the defendant property to give it standing to challenge the in rem proceeding. Stated another way, the forfeiture proceeding is focused on the defendant property and only those with specific interests in that property are authorized to participate in the proceeding."

Allowing a nonparty like Oakland to challenge forfeiture proceedings "would vitiate both the standing and time-limit restrictions in Rule G(5) and grant plaintiff greater ability to challenge a forfeiture proceeding than those who Congress identified as having the strongest interests in the defendant property," she added.

The forfeiture proceeding did not constitute a final agency action that gave Oakland an avenue under the Administrative Procedure Act (APA), according to the ruling.

"First, the filing of a civil action does not fit within the APA's definition of agency action: it is not a rule, order, license, sanction, form of relief, or failure to act," she wrote. "Second, the filing of a civil forfeiture complaint does not meet the criteria for finality. Even assuming the filing of a forfeiture action amounted to the consummation of the DOJ's decision-making process, filing the complaint did not determine any rights or obligations and has not resulted in any legal consequences."

Any determination as to the propriety of forfeiture is "will flow from the court's and jury's findings and decisions, not a decision by the DOJ. At most, the government's conduct merely initiated that process, which it is authorized to do."

Accepting Oakland's reasoning would mean that "every civil or criminal lawsuit an agency filed pursuant to federal law would represent that agency's final determination that it has authority to take such action, and thus bring the agency's decision within 704 of the APA," the ruling states. "The court sees no basis to support such an expansive definition of 'final agency action' or application of the right to judicial review provided in 704."

This decision clears the path for the government to continue its forfeiture proceedings against Harborside's Oakland and San Jose locations. James scheduled a case-management conference in the San Jose case for March 14.

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