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U.S. Wins Bid to Dismiss Oakland Suit Defending Pot Clubs

Feb. 14 (Bloomberg) -- The Obama administration won the dismissal of a lawsuit by the city of Oakland, California, defending permits for medical marijuana clubs, including a local pot “superstore” federal prosecutors are trying to shut.

U.S. Magistrate Judge Maria-Elena James in San Francisco ruled that courts don’t have jurisdiction over the claims in the lawsuit, according to a court filing today. Even though the city can’t challenge the government’s forfeiture proceeding against the club’s landlord, because it has no interest in the property, Oakland’s lawsuit still had to be tossed, she said.

Oakland sued the federal government after prosecutors filed a forfeiture case to seize property housing the Harborside Health Center, a six-year-old dispensary with annual gross revenue of $20 million that offers more than 70 types of marijuana and cannabis concentrate such as hashish, as well as home delivery and product promotions.

Prosecutors called the center a “superstore” serving 100,000 customers in violation of federal drug laws. Oakland said it permits pot sales after relying on repeated statements by the government in recent years that it wouldn’t interfere with those who comply with state laws that allow medical marijuana sales.

Closing the dispensary would send patients into the streets to buy from dealers, harming public safety, the city argued. The city sued under a 1946 law that lets courts review federal actions.

Crack House

The circumstances of Oakland’s lawsuit are highly unique, said Cedric Chao, the city’s attorney. When the U.S. government files civil forfeiture lawsuits based on violations of federal criminal law, as it did with Harborside, cities usually support the action if it involves a crack house, Chao said.

“Who would fight that? But this is not great. There is no case law, because this is medical cannabis, not heroin,” he said in a phone interview. “It is impossible that Congress meant that a major city with 400,000 people has no access to the courts.”

Chao said he would review the ruling with the city.

Harborside is one of hundreds of such stores in California that have operated since voters approved the state’s Compassionate Use Act in 1996. The law legalized marijuana as a medical treatment for pain and ailments.

The case is City of Oakland v. Holder, 12-05245, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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