Hilary Bricken
In a major turn of events last week, the Department of Justice (DOJ) announced it will finally drop its four-year long legal battle against Harborside Health Center (and its landlords) to seize the commercial properties in which Harborside operates in Oakland and San Jose, California. The DOJ’s opting to dismiss its own case before going to trial in the Northern District of California federal court is a major victory for both Harborside and the cannabis industry.
The DOJ’s dismissal comes on the heels of the Marin Alliance for Medical Marijuana (MAMM) civil case in which the DOJ chose to drop its appeal against MAMM. In that case, MAMM successfully argued that Section 538 of the 2014 federal Appropriations Rider (the “Rohrabacher-Farr amendment“) prevents the DOJ from shutting down state-law compliant medical marijuana operators. As of the writing of this post, I checked the docket on the Harborside case (case number 3:12-cv-03566-MEJ in the Northern District of California), and no Motion to Dismiss has been filed yet. So, we can’t know for sure that Section 538 was the catalyst for letting that case go, but chances are good it was a main motivator.
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The DOJ’s abandoning of its MAMM appeal, combined with this most recent DOJ dismissal, means the following for this country’s cannabis industry:
- The DOJ seems to realize that Section 538 has sharper teeth than it originally thought. I blogged earlier about how the DOJ had sent a memo to its attorneys instructing them to treat a Section 538 criminal defense as a joke. The DOJ’s unwillingness to take its chances in the Ninth Circuit Court of Appeals in MAMM or in trial in the Northern District of California against Harborside seems to say that the DOJ no longer considers Section 538 a joke.
- Neither the MAMM decision nor the Harborside dismissal are binding on federal courts in other jurisdictions and other federal courts are unpersuaded that Section 538 should block federal prosecution of state-law abiding medical marijuana operators. This likely will mean we will continue to get inconsistent federal court rulings on this issue.
- The MAMM and Harboside cases should give commercial landlords (especially in California) greater confidence in renting their properties to state-legal medial cannabis businesses. Nonetheless, do not forget that leaseholds in the cannabis business are not your regular, boilerplate leases. So proceed with caution regardless of Section 538.
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- Neither the MAMM decision nor the Harborside dismissal mean anything for those states with recreational marijuana regimes since Section 538 deals with only medical marijuana states. Recreational states must still rely mostly on the 2013 Cole Memorandum.
Section 538 doesn’t change the federal Controlled Substances Act and it doesn’t decriminalize marijuana on the federal level even for medical use. But it does appear to have already brought about significant positive change for the cannabis industry.
Hilary Bricken is an attorney at Harris Moure, PLLC in Seattle and she chairs the firm’s Canna Law Group. Her practice consists of representing marijuana businesses of all sizes in multiple states on matters relating to licensing, corporate formation and contracts, commercial litigation, and intellectual property. Named one of the 100 most influential people in the cannabis industry in 2014, Hilary is also lead editor of the Canna Law Blog. You can reach her by email at [email protected].