Medical cannabis businessesIn a major turn of events today, the Department of Justice (DOJ) announced that 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 huge deal for both Harborside and the cannabis industry. Thank you Steve DeAngelo for having the guts and the staying power to fight this lawsuit!

The DOJ’s dismissal comes on the heels of the Marin Alliance for Medical Marijuana (MAMM) civil case in which the DOJ decided to drop its appeal against MAMM. In that case, MAMM successfully argued that Section 538 of the 2014 federal Appropriations Rider (commonly, the “Rohrabacher-Farr amendment“) prevents the DOJ from shutting down state-law compliant medical marijuana operators. As of the writing of this post, we checked the docket on the Harborside case, 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.

What does the MAMM decision (and the DOJ’s abandoning of its MAMM appeal) combined with this most recent DOJ dismissal mean? A number of things, including the following:

  • The DOJ is beginning to realize that Section 538 has sharper teeth than it originally thought. We’ve blogged before about how the DOJ instructed its attorneys through a memo to deal with a Section 538 defense in the context of a criminal case. Namely, to treat that defense as a joke. It appears though that the DOJ (or, at least, the DOJ based in California), is lowering its arms for now in light of the MAMM decision. 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 says a lot about the effectiveness of Section 538. It’s no joke.
  • Neither the MAMM decision nor the Harborside dismissal are binding on federal courts in other jurisdictions. Federal judges are still going to be able to make their own decisions on how to interpret Section 538. And as we’ve already seen in other federal courts outside California, some federal judges remain unpersuaded that Section 538 should block federal prosecution of state-law abiding medical marijuana operators. As a result, we’re bound to continue getting inconsistent rulings from courts throughout the federal court system
  • These two decisions should give commercial landlords more confidence in renting out their properties to state-legal medial cannabis businesses across the country. As we are always reminding everyone, leaseholds in this business are not your regular, boilerplate leases. So proceed with caution regardless of Section 538.
  • Neither the MAMM decision nor the Harborside dismissal mean anything for those states with recreational marijuana regimes since Section 538 addresses only states with medical marijuana. The 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 the DOJ’s about-face is a significantly positive change for the cannabis industry.

  • Mark

    “Feds Announce They Will”???

    It seems they have not yet. I hope the Feds were merely pre-empted – see on CBS, etc.: “U.S. Attorney’s Office spokesman Abraham Simmons said he can’t comment on the case because “it’s still pending litigation” and said his office
    has made “no such announcement” about dropping its suit.”

  • Finally we are seeing some limits on the actions of the DOJ when it comes to their abuses masqueraded as “following the law”.

    But unless there is clear action taken by a president and Congress changing legislation, many more cases involving less visible individuals will keep piling up in courts around the country.