The Medical Marijuana Fracas: The Toke Of The Town - Forbes
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Richard Levick, Contributor
I write about financial crises and corporate brands.
L E A D E R S H I P | 11/06/2013 @ 11:29AM | 460 views
The Medical Marijuana Fracas:
The Toke Of The
Town
Right now the City of Oakland is making a bit of history by legally challenging
the federal government’s right to shut down a Bay Area medical marijuana
dispensary. Along with gay marriage and Obamacare, it’s one of at least three
significantly newsworthy issues that involve ongoing tension between federal
and state powers.
The Oakland lawsuit is unique because it is the first time that a local public
entity has taken such action to keep a traditionally illegal substance available.
Cities obviously welcome federal efforts to close down their crack houses by
applying the very same forfeiture laws now being used against the Oakland
dispensary. The difference is equally obvious. Here the controlled substance is
not only consumed for legitimate medical purposes, but is prescribed under
the strictest state and local regulatory regime.
What’s less obvious is why this legal struggle is going on at all. In light of the
undeniable humane benefits at stake, it should be a slam dunk for Oakland,
notwithstanding any residual public resistance to legalizing marijuana for all
purposes. Instead, the legal struggle has been labyrinthine.
Oakland filed its complaint in U.S. District Court, seeking to stop the federal
government from shuttering the city’s Harborside Health Center, the nation’s
largest dispensary, serving 108,000 patients. In October 2011, California’s
four U.S. Attorneys announced an escalation against medical marijuana
providers; at that point, Harborside had already been in business for five
years.
DEA raids followed on, as did civil forfeiture cases to allow the confiscation of
property and assets from property owners who rent to dispensaries, including
Harborside. Several hundred California dispensaries closed after federal
prosecutors told their landlords, starting in October 2011, to evict them or
face property loss. (There remain four dispensaries in Oakland generating at
least $1.4 million in business tax revenue, not counting sales taxes.)
Pressure mounted on banks and credit card issuers; in fact, you can’t use a
check or card to buy from a cannabis dispensary. DEA spokesperson Karl
Nichols says the agency does not engage in organized efforts to get outside
parties to sever relationships with the dispensaries. But, he acknowledges,
DEA operatives will advise companies that contact them of the “hazards” of
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The Medical Marijuana Fracas: The Toke Of The Town - Forbes
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those relationships, including possible prosecution for money-laundering and
bank law violations.
The District Court ruled that the city has no standing to block the federal
government from shuttering Harborside; only the dispensary and its
landlords with a direct economic interest in the real property subject to
forfeiture can contest the forfeiture action. Oakland has appealed to the Ninth
Circuit, where a hearing is expected in early 2014.
Cedric Chao, a partner at DLA Piper representing the City of Oakland,
believes the appeal, and Oakland’s underlying claims, will make new law.
(Full disclosure: my firm has a business relationship with DLA Piper.) First,
he says, a relatively unknown, but nonetheless vibrant doctrine of equitable
estoppel has been used to block government action where the government
previously led others to believe that the conduct in question was acceptable
and others then acted in reliance on the government’s statements or actions.
According to Chao, the government has clearly reversed position since it did
green-light the Oakland dispensaries when they first opened in 2006. Yet
there’s so little applicable case law in terms of actually using equitable
estoppel against government entities that whatever decision is reached will be
precedential.
Second, existing forfeiture law affirms that only parties with an economic
interest in the real property being forfeited can file claims in the forfeiture
proceedings, which excludes Oakland in this case. But Chao noted that there
was no on-point case precedent in the Ninth Circuit holding, one way or
another, if Oakland could collaterally challenge the forfeiture proceeding as
an aggrieved party – i.e., injured by the forfeiture without a direct interest in
the property being forfeited – so he filed a separate lawsuit under the
Administrative Procedure Act (APA).
It’s the craft of business law brought to bear in a most incongruous context.
Chao, who is both a business litigator and international arbitration
practitioner, says that Oakland’s legal strategy took the Department of Justice
by surprise. The DOJ “protested bitterly that Oakland is doing an end-run
around the forfeiture statute and decades of settled case law.” He adds that
the DOJ even used scare tactics, claiming that, if Oakland prevails, the friends
and families of rapists and murderers will, likewise as “aggrieved parties,”
flood the courts on behalf of their convicted kin. Chao told the District Court,
however, that Oakland’s grievances were unique and significant, and that
Congress could not have intended that a major municipality and its 400,000
residents can be denied access to the courts to seek redress.
If it’s new law, it seems far more adherent to the spirit of the law than the
government’s position. Not only is that position inconsistent with the
government’s past inactions – not only does it, in effect, say that the 400,000
citizens of an American city do not have standing to redress their grievances –
it simply poses a public health hazard. If the DOJ wants to conjure up
menacing scenarios, how about the specter of innocent sufferers wandering
the mean streets of Oakland in search of untested marijuana to deaden their
pain?
Which brings us back to our original question: why is this dispute raging on
so? Twenty-one states and the District of Columbia have legalized cannabis
for medical purposes and opinion polls show decisive public opposition to
enforcing the Controlled Substances Act in cases of medical need.
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Government scientists themselves have persistently maintained that
marijuana has multiple medical uses. It was government scientists who
applied for U.S. and international patents for synthetic cannabis. The
Department of Health Human Services holds a patent for synthetic cannabis,
and HHS has licensed that patent to a bioscience company, KannaLife. For
what other reason than commercialization would it do so?
News analysts have suggested that, in fact, there is conflict on this issue
within the DOJ itself, and that DEA field operatives are actively ignoring
directives from Washington. One reason the government may be digging its
heels in is that some staffers at Harborside also favor legalization of
recreational marijuana. That’s a discussion the government doesn’t want to
have. (Recreational pot has been legalized in Colorado and Washington
State.)
More importantly, there’s a missing element here that likely allowed this issue
to fester. A sizable majority of Americans may well agree with Oakland’s
position but where is the groundswell of impassioned public opinion that
would force the government’s hand? At some level, medical marijuana is still
seen as an exotic nice-to-have, not a balm of significant value. Try searching
Google for “medical marijuana benefits” and you won’t really find the value
equation spelled out, and no compelling testimony that I can see from average
citizens who’ve benefitted from its availability.
Real emotions attach to the gay marriage issue, a concern for the people
whose lives are affected. That’s why the public finally overcame one of its
most deeply held antipathies. Here, the battle encompasses an even simpler
communications strategy, for we’re talking about nothing more complicated
than the regulated easing of human pain.
Morphine is readily available as needed, isn’t it?
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Richard Levick, Esq., Chairman and CEO of LEVICK, which provides public
relations and communications counsel to companies throughout the world
on public affairs and litigation-related issues. Mr. Levick was honored for
the past four years on NACD Directorship’s list of “The 100 Most Influential
People in the Boardroom,” and has been named to multiple professional
Halls of Fame for lifetime achievement. He is the co-author of three books,
including The Communicators: Leadership in the Age of Crisis, and is a
regular commentator on television, in print, and on the most widely read
business blogs.
This article is available online at:
http://www.forbes.com/sites/richardlevick/2013/11/06/the-medical-marijuana-fracas-thetoke-of-the-town/
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