Medical Pot Club Avoids Boot From CA Landlords

     SAN FRANCISCO (CN) – Landlords cannot use a federal drug law to shut down the medical marijuana dispensary to which they leased property, a federal judge ruled.
     The U.S. government is using the Controlled Substances Act against Harborside Health Center in forfeiture proceedings, but it has not sought injunctive relief to shut down Harborside’s locations in Oakland and San Jose, Calif., during the case.
     Harborside became famous nationwide when it was featured on the Discovery Channel show “Weed Wars.” According to lawsuits filed in July 2012 by the U.S. Attorneys’ Office, the dispensary claims to be the largest retailer of marijuana on the planet, serving more than 100,000 customers.
     Anna Chretien and Concourse Business Center, as respective landlords to Harborside in Oakland and San Jose, thus stepped in to shut down dispensary operations.
     U.S. Magistrate Judge Maria Elena James concluded Monday, however, that they are not authorized to enforce the Controlled Substances Act.
     “As Harborside points out, courts have consistently held that there is no private right of action under the CSA to force compliance,” James wrote.
     Citing the governing subdivision of the federal rules of civil procedure, the judge said that “only the government qualifies as a proper movant for purposes of Rule G(7)(a)” in the face of an alleged CSA violation.
     Though the government had joined in the landlords’ motions, James stayed firm.
     “Simply joining in claimant’s motions does not confer standing on claimants to bring the motions in the first instance and does not relieve the government of its burden to make a sufficient showing to entitle it to an injunction,” she wrote.
     James also rejected the landlords’ arguments that they were “not seeking to enforce the federal drug laws per se,” but rather “seeking to stop the use of [their] property in a criminal offense as asserted by the U.S. attorney.”
     Though the government’s case implies that the property has been used in a criminal offense, James noted that “the court cannot protect the property from criminal use that has already occurred.”
     “Here, claimants urge the court to restrain Harborside from engaging in the same conduct that gave rise to the forfeiture proceedings – conduct which all parties acknowledge began years ago,” James wrote.
     But the judge found “there is nothing in the record indicating that Harborside’s continued operation compromises the existence, value, or title of either the Oakland or San Jose property.”
     Harm is also not apparent since Harborside still pays rent to each landlord, and the business is still profitable, according to the ruling.
     Forfeiture of the property to the government could hurt the landlords, but they will have the opportunity to fight such claims in the federal proceedings, James added.
     The landlords have said that they are taking all reasonable measures to stop Harborside from engaging in illegal activity to minimize the risk of forfeiture, but James said the argument “rings hollow.”
     “It is undisputed that until the government filed the forfeiture actions, neither Concourse or Ms. Chretien had take any action or sought government assistance to stop Harborside’s operations,” he wrote. “Rather, both of the respective lease agreements recognized Harborside’s intended use of the defendant properties. Since the execution of the lease agreements, claimants have collected rents – and in Ms. Chretien’s case, provided and charged for additional security services – thus profiting from Harborside’s alleged illegal use of the defendant properties.”
     James said she understood the landlords’ concerns but that their legal maneuver “is not a means to sever a business relationship when they suddenly prove risky or to demonstrate cooperation with the government.”
     The city of Oakland had wanted to stay resolution of the landlords’ motions, but James shot that request down in another section of the same ruling.
     James also refused to stay the forfeiture proceedings, but approved a schedule that coordinates simultaneous discovery and dispositive motions.
     In a related case, Oakland is suing the government for abandoning its alleged promises not to interfere with a state’s plan to regulate medical marijuana shops.
     Medical marijuana is still illegal under federal law, 17 years after California became the first state to establish a medical marijuana program. In 2012, voters even legalized the recreational use of marijuana by adults in Washington and Colorado.
     Chretien is represented by Arthur Hartinger of Meyers, Nave, Riback, Silver & Wilson in Oakland. Jeanine DeBacker of McPharlin, Sprinkles & Thomas LLP in San Jose represents Concourse Business Center.
     Harborside is represented by Henry Wykowski of Henry G. Wykowski & Associates in San Francisco. Oakland is represented by Cedric Chao of Morrison & Foerster, also from San Francisco, in the forfeiture proceedings. Amber Rose Macaulay of the City Attorney’s Office represents it in the separate lawsuit.
     Lead attorney for the federal government in the suit filed by Oakland is Kathryn Wyer with the U.S. Department of Justice.

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