Oakland Can’t Meddle in Feds’ Pot-Club Seizure

SAN FRANCISCO (CN) - Oakland cannot challenge the government's forfeiture action against a medical marijuana dispensary because its collateral attack would "impermissibly disrupt" forfeiture framework, the Ninth Circuit ruled Thursday.

The U.S. Attorney's Office accused Harborside Health Clinic's two dispensary locations in Oakland and San Jose of selling marijuana in violation of the Controlled Substances Act in July 2012. Although medical marijuana is legal in California, is still illegal under federal law.

In late 2012 the dispensary pleaded with its landlord to stop upending the business amid the forfeiture proceedings.

The City of Oakland challenged the government by - rather than filing a claim in the forfeiture action - doing an end-run and seeking a declaratory judgment that the government has no right to seek civil forfeiture of the property based on alleged CSA violations.

A federal judge dismissed Oakland's claims, finding that they lacked standing and the court lacked subject matter jurisdiction to hear the case.

The Ninth Circuit's three-judge panel granted that Oakland does have standing, but it still upheld the lower court's decision to dismiss the action.

Oakland claimed that forfeiture against the dispensary would cost the city tax revenue, create a rise in crime, divert police resources toward the sale of "black market cannabis" and injure the city's "proprietary interest in regulating and taxing medical cannabis and providing patients safe and affordable access to medicinal quality cannabis in accordance with California law."

In the panel's 14-page opinion, U.S. District Judge Stephen Joseph Murphy - sitting in by designation from the Eastern District of Michigan - wrote that the city's projection of a $1.4 million loss in tax revenue was sufficient to establish standing.

But Oakland's challenge to the government skirts a congressionally designed framework that permits only certain parties to bring claims, and "allowing collateral attacks to disrupt that framework by giving third parties a greater ability to initiate challenges," Murphy wrote.

A prior Supreme Court ruling allowed a collateral attack by a third party because the plaintiff was bringing a different claim and seeking different relief, and Oakland argued that it was doing the same because its grievances - public health and safety, tax revenues and its regulatory scheme - are different from the dispensary's.

"The argument fails, however, because both parties do in fact seek the same relief: to stop the forfeiture," Murphy wrote.

Since the government's decision to file the forfeiture action is committed to agency discretion by law, he said, "allowing the suit to proceed would impermissibly disrupt the existing forfeiture framework."

Barbara Parker, Oakland's city attorney, told Courthouse News that she had two reactions to the panel's opinion.

"We are very pleased that the court recognized that the forfeiture action could cause significant and egregious injury to the city," she said.

"But on the other side, the court's ruling that there is no remedy is of concern. We really think we have a viable action here."

She said the city will pursue further review of the forfeiture's potential injuries to Oakland.

"We obviously respect the court, but we disagree," she said. "The court needs to address these wrongs."

The government's counsel could not be reached for comment on Thursday.

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