Embattled Pot Shop Must Stay Open, Oakland Says

SAN FRANCISCO (CN) - Forfeiture proceedings against a medical marijuana dispensary should be stayed while a federal judge considers claims that such regulation belongs to the states, the city of Oakland claims in court.

Oakland has asked the court to block civil forfeiture proceedings against Harborside Health Center's locations in Oakland and San Jose. The U.S. Attorney's office accused both dispensaries of selling marijuana in violation of the Controlled Substances Act in July. While medical marijuana is legal in California, it is still illegal under federal law. The dispensary was featured on the television show "Weed Wars."

Joined by the U.S. government, landlords Anna Chretien and Concourse Business Center have since asked the Northern District of California to restrain Harborside from growing, possessing and selling marijuana on their respective properties.

But Harborside CEO Steve DeAngelo says the owners lack standing to enforce the Controlled Substances Act as private parties.

Now Oakland has asked the court to stay proceedings in the forfeiture action until conclusion of its October lawsuit against the government.

In twin motions for stays, Oakland says its action aims to "challenge the defendants' wrongful conduct and to protect its unique public interests and the health, welfare and safety of its residents."

The forfeiture action "seeks to undermine Oakland's efforts," according to the motion, which notes that the city has a "comprehensive framework regulating the sale of medical cannabis."

"Those regulations effectuate state law and ensure safe and affordable access to medical cannabis for patients who suffer from chronic and acute pain, life-threatening and severe diseases, and significant injuries," the motion continues.

Oakland argues that the government's forfeiture action "is illegal because it exceeds the federal government's authority and is barred by the statute of limitations and the doctrine of equitable estoppel."

It says the landowners' motions for orders prohibiting unlawful use of defendant property are "based exclusively on the government's representation that the use of the property violates federal law and because 'the government has indicated it wants [them] to take all expeditious steps to halt Harborside's activities.'"

"Indeed, were it not for the federal government's pressure and illegal filing of the Harborside Action," the landlords "would have no reason to pursue" their motions," Oakland added.

The motions should be stayed until Oakland has the chance to "discover the facts, develop the records, and present its case," the city says.

Chretien and Concourse have raised "issues that overlap with Oakland's claims - including whether the federal government exceeded its authority by initiating the civil forfeiture action[s] and whether it is likely to succeed on the merits," Oakland says.

"A premature resolution of those issues on an inadequate record through [the landlords'] motion[s] may affect Oakland's claims and potentially prejudice Oakland in [the present] action," it added. "If Oakland is correct that the federal government exceeded its authority in filing the Harborside Action, [the landlords'] motion[s] will likely be moot as the impetus underlying [their] motion[s] would be eliminated. Indeed, through [the landlords'] motion[s], the government is attempting to do through the back door, i.e., immediately shutter Harborside, what it is unable to do directly through its illegal forfeiture action.

"Staying [the landlords'] motion[s] until the final adjudication of the merits of Oakland's action, on the other hand, will enable Oakland to present its case prior to the resolution of [the landlords'] motion[s], will avoid multiple briefings and repeated litigation of the same or similar issues, and will avoid the possibility of inconsistent results."

A stay will not prejudice any party either, Oakland says.

Harborside Medical Center complies with all state and local laws and should remain open, according to the motion.

Earlier federal crackdowns had focused on dispensaries close to schools or parks, but U.S. Attorney Melinda Haag focused on Harborside because of its size.

Oakland claims that Haag's actions contradict promises made by the federal government not to circumvent state laws concerning medical marijuana.

After the 2008 election, Attorney General Eric Holder had said that the "policy is to go after those people who violate both federal and state law."

Oakland claims such promises led it to "further legitimize the medical cannabis industry by taxing its revenue and allocating this increased revenue to the general fund."

The city estimates the shops will bring in over $1.4 million in business tax revenue in 2012, noting the revenue is "sufficient to pay for a dozen additional police officers or firefighters, or even more librarians, park directors, or other essential municipal services." Oakland levies a voter-approved 5 percent gross sales tax against the shops.

Though the U.S. government allegedly knew about the existence of Harborside since 2006, and even earlier for other dispensaries, it did not take action until this year, according to the complaint.

Thus, Oakland says that the five-year statute of limitations on civil forfeiture proceedings has lapsed.

Shuttering Harborside will allegedly cause the city to suffer irreparable harm in the form of the lost tax revenue, patient suffering and increased crime.

"Instead of obtaining medicine from a city-regulated dispensary located in a commercial area with ample lighting and security, medical patients, including the elderly and disabled, will have no option but to seek medical cannabis from street level drug dealers," the complaint states. "This will increase crime and divert scarce Oakland Police Department resources from addressing the violent crime, illegal guns, and other public safety crises that are causing the loss of many lives in Oakland."

Oakland added: "Well-regulated dispensaries provide affordable medical cannabis in a controlled setting, which decreases the market for illegal marijuana. Closing dispensaries will not reduce the demand for medical cannabis, but will instead create a distribution vacuum that likely will precipitate price increases, crime and street violence."

City Attorney Barbara Parker said the lawsuit "is about protecting the rights of legitimate medical patients."

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