Oakland sues U.S. government to stop Harborside medical marijuana seizures

The city of Oakland filed a complaint Wednesday against the federal government, to stop officials from seizing the nation’s largest medical marijuana dispensary, claiming the government took too long to take legal action against Harborside Health Center and that the federal statute of limitations regarding seizures has expired.

Harborside, a medical marijuana dispensary in East Oakland, specializes in providing cannabis for people with certain medical conditions who carry a valid California prescription card.

The center currently has a city-issued operating permit, but in July a forfeiture action against the property was filed by Melinda Haag, U.S. Attorney for the Northern District of California, alleging that Harborside is operating in violation of federal law prohibiting marijuana distribution. As a result of the forfeiture action, the property could be taken over by the federal government, forcing Harborside to close its doors to some 112,000 customers.

Wednesday’s suit claims the government is too late in filing a seizure against Harborside because a federal statue of limitations limits civil forfeiture actions to no more than five years after dispensaries have been operational.

According to the complaint filed on Wednesday, “Harborside Health Center has been dispensing medical cannabis at 1840 Embarcadero, Oakland since 2006. Defendants knew or should have known that Harborside Health Center has been dispensing medical cannabis for more than five years before defendants filed suit on July 9, 2012.”

“It’s too late for the government to bring this forfeiture action—the government should have known this business is operating,” said Oakland City Attorney Barbara Parker in a phone interview Thursday.

“The goal is stop the whole forfeiture from proceeding,” said Cedric Chao, partner at the San Francisco based law firm Morrison & Foerster LLP, which is representing Oakland in the suit against the government and working with the City Attorney’s Office.

The complaint names Haag and Attorney General Eric Holder, and does not seek monetary damages. A representative for Haag could not be reached for comment.

Harborside’s executive director, Steve DeAngelo, agrees that the federal government no longer has standing to seize Harborside’s property. “The government has waited too long,” DeAngelo said. “We have been here for six years.”

DeAngelo said he found the support from the city in filing the lawsuit “heartening” and “encouraging.”

The ongoing legal battle is part of the struggle between local and federal governments over medical marijuana. California was the first state to legalize medical marijuana in 1996 with the passage of Proposition 215, which allows patients to possess and grow marijuana for medical use. Some of the most common conditions that medical marijuana is used for are glaucoma, Alzheimer’s disease, HIV/AIDS and certain types of cancer.

In Oakland, city government has encouraged medical marijuana dispensaries to settle in the city. To ensure fair practices Oakland voters passed Measure J back in 2004 mandating that the city tax and regulate marijuana sales. The ordinance originally allowed for four dispensaries in the city, but in 2011 the number of dispensaries permitted in Oakland was expanded to eight. The ordinance also requires operators to share annual financial audits and personnel records with the city.

For Haborside, which serves 600 to 800 people a day, $1.2 million went back to the city of Oakland in taxes in 2011, and the dispensary earned $22 million in annual sales, DeAngelo said.

But marijuana is still illegal under federal law. Since October 2011, representatives from the U.S. Attorney’s Northern California office have sent letters to dispensary owners and landlords, threatening to crack down on facilities. That same year, Haag sent out 45-day eviction warning notices to three dispensaries in San Francisco, which have since closed their doors.

“They [the federal government] put pressure on the landlord to evict us,” DeAngelo said. “The U.S. Attorneys are threatening criminal prosecution on the property owners unless they do what they want them to do.”

In Oakland this April, federal agencies that included the Drug Enforcement Administration, U.S. Marshalls and the Department of the Treasury raided Oaksterdam University, a center in downtown Oakland that offers training for workers in the marijuana industry. After the raid Richard Lee, founder of Oaksterdam University, stepped down and was replaced by Dale Sky Jones.

“We got the snot knocked out us,” said Jones of the raid, speaking by phone on Monday. Jones said everyone thinks the school has been shut down since April, but in fact the school has reopened, just on a smaller scale. After the raid, Jones said, the university was forced to “rebuild everything” from class curriculum to restaffing employees.

“After the raid we were left with just desks and chairs,” said Jones.

Prior to the raid, the university boasted an average of 40 students, but now the school has about 25 students, Jones said. The school also does not currently have an affiliation with a dispensary.

City Attorney Parker said if the federal government seizes the Harborside building, it would undermine the local government’s authority. “If the federal government is successful in having this business shut down, it undermines the city’s ability to regulate medical cannabis,” Parker said.

For now, the case awaits a status conference that will allow the court to preview the case, determine how evidence will be gathered by both parties and determine how long it will take to prepare the case. That will happen “sometime in November,” Parker said.

The city of Oakland is also planning to ask for a jury to decide the case rather than a judge alone. “We will bring evidence that will show the government knew about the center for more than five years, and now it’s too late,” Parker said.