Judge Tosses Claims of a Berkeley Pot Monopoly

SAN FRANCISCO (CN) - A federal judge has thrown out claims that the city of Berkeley and three dispensaries conspired to corner the market on medical marijuana.

Private dispenser Christopher Smith sued Berkeley, its city council and Medical Cannabis Commission, and dispensers Berkeley Patients Group, Berkeley Patients Care Collective and Cannabis Buyers Club of Berkeley under the Racketeer Influenced and Corrupt Practices Act, known as RICO.

Smith said in a September 2015 complaint that the city imposed a three-dispensary cap and has handpicked the three to operate as "for-profit" organizations, in violation of state law, to corner the market on medical marijuana - which has hyperinflated patient costs.

"Although California law prohibits medical marijuana organizations from operating on a for-profit basis, the government of the city has knowingly allowed for-profit organizations to operate as the 'authorized dispensaries' exclusively allowed to sell marijuana to cannabis patients who need the medicine, and to grossly inflate the prices of this medicine to line the pockets of these organizations' owners."

Smith also claimed the city has blocked efforts to shine the light on its actions, which include placing individuals associated with the three dispensaries in "key government" positions to help steer city code on medical cannabis law and to shield the organizations from state law.

He claimed, for example, the city's Medical Cannabis Commission is comprised "solely" of members representing the city's three chosen dispensaries.

"Daniel Rush, a sitting member of the city's Medical Cannabis Commission, has already been indicted for taking $600,000 in 'loans' from dispensaries," Smith claimed in his 26-page complaint.

He said he was forced to sue because "the city has joined with the unlawful organizations to prevent lawful nonprofit cannabis organizations from serving medical cannabis patients in Berkeley" and that "the city attorney of Berkeley, in particular, is complicit" in the scheme.

At a hearing held in Federal Court earlier this month in San Francisco, Berkeley City Attorney Zachary Cowan told U.S. District Judge William Alsup that the complaint lacked specifics.

"One can generate a conspiracy theory, but you really have to say who's involved and how the parties connect," he said. "The closest they've come is to say that in some manner the Medical Cannabis Commission was doing bidding upon the dispensaries because the dispensaries prevailed upon the city council to appoint a majority of the commission. But they haven't identified one member of the commission who's connected to a dispensary."

Alsup responded to the claims with a degree of derision, expressing astonishment over Smith's move to sue in Federal Court over what he said is an illegal act under federal law.

"Mr. Smith deals in an illegal drug under federal law," Alsup said during the hearing. "All the people over there deal equally in an illegal drug under federal law. This is a Federal Court, of course. The city of Berkeley isn't doing anything illegal. Mr. Smith wanted to be one of the illegal drug dealers but he got cut out of the action, and now he's suing under RICO."

He added, chuckling, "I'm just smiling because it's so hard to imagine this circumstance to me. If you've lived long enough, reality is better than fiction."

The judge nonetheless gave the parties four days to file a five-page brief addressing whether a federal judge should entertain a request for relief based on federal law "when the underlying activity or way in which the plaintiff has been injured itself is inherently in violation of a different federal law."

Citing federal drug law, Alsup said in a 5-page order issued on Monday that "Smith's claims all flow from his own interest in cultivating, distributing and selling medical marijuana - acts that violate the federal Controlled Substances Act. It is a longstanding maxim of law that 'no court will lend its aid to a party who founds his claim for redress upon an illegal act.'"

He added that the only exception, one in which an important public interest is served, does not apply in this case.

"Here there is no overriding public interest that warrants protecting Smith's private suit," Alsup wrote. "Smith seeks to eliminate alleged racketeering and corruption from an industry that is undisputedly illegal, no different in that regard from a murder-for-hire business.

"This court will not lend aid to Smith's efforts to operate an illegal business."

Alsup also said amending the complaint would be "futile," and instructed the court clerk to "please close the file."

Courthouse News was unable to obtain a working phone number for Smith's attorney, G. Whitney Leigh, to ask questions about the case.

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