December 23, 2012

Harborside Health Center Legal Update

December 23, 2012

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An Update On The Harborside Health Center Legal Battle

By Steve DeAngelo, Executive Director, Harborside Health Center

Harborside Health Center (HHC) was one of the first of hundreds of dispensaries targeted in the federal crackdown on medical cannabis. Unlike many others, we had the determination and the resources to fight back, and we have been doing that–hitting back hard. If our luck holds, and our legal team prevails, we could well become the last dispensary they decide to tangle with.

Our federal troubles started in early 2010, when our banks were pressured to close our accounts and credit card processing service. After that, the IRS audited us, demanding the kind of detailed financial records that are impossible to keep without a bank account. Despite that obstacle, we submitted complete records to the IRS–which they certified as being 100% accurate. But it didn’t matter; IRS handed us a $2.5 million tax bill, denying all our deductions on the grounds we’re a DTO–Drug Trafficking Organization. Then, as if that were not enough, federal agents sneaked up to our front door on a day before we opened this past July, and taped a notice of property seizure, scurrying away before anybody could confront them.

The notice informed our landlords that their property was going to be seized, because it was being used to commit a federal crime. The feds also threatened our landlords with criminal prosecution, unless they worked in “good faith” with the feds to get rid of us. Our terrified landlords, with whom we have had a long and cordial relationship, were forced almost at gunpoint to file eviction proceedings against us. When the City of Oakland heard what was going on, they came to our defense, and filed their own lawsuit to block the federal government’s attack on Harborside.

For the past six months, all these different pieces of litigation have been moving through state and federal courts. A few weeks ago, California Superior Court gave us our first victory when it quashed the Oakland eviction suit, ruling that California state courts cannot evict a tenant for selling medical cannabis, provided the tenant is otherwise in compliance with their lease. This groundbreaking precedent puts a spike in the federal campaign of forced evictions, which closed over 600 California dispensaries before Harborside stood up and fought back. It won’t do the U.S. attorneys much good to threaten landlords anymore, since the landlords can’t evict us anyhow.

On December 20 we had our first historic hearing in federal court, with our supporters overflowing into the hallway, and 13 lawyers representing seven different parties: our two landlords, the landlord’s bank, the City of Oakland, ASA, Harborside, and of course the feds themselves. Major legal and constitutional issues of first impression were debated, and the stakes could not have been higher. Unfortunately, but understandably given the amount of material she has to consider, Judge James decided to wait before issuing her ruling, so we don’t yet know the outcome of the hearing.

While the legal and procedural posture of the case is complex, the basic dynamic of the hearing was simple; the government did all it could to close HHC without a jury trial, while our (brilliant!) team did all it could to make sure we get our day in court. If Judge James rules in our favor–and I am optimistic that she will–then Harborside will stay open and continue to serve patients until the trial can take place in about a year. I am sure we will win that trial and that victory will be the final end of this litigation, and hopefully the whole long federal nightmare. Of course, they could always attack us again–but at some point you would expect they’ll get tired of losing.

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