PIEDMONT -- When federal agents taped a forfeiture notice on the door of Oakland's biggest medical marijuana dispensary, Oakland City Attorney Barbara Parker turned to high-profile litigation partner and former federal prosecutor Cedric Chao to help sue the government.
Chao, of Morrison & Foerster in San Francisco, got the call from Parker after U.S. Attorney Melinda Haag filed the civil forfeiture action to seize the property at 1840 Embarcadero, where Harborside Health Center is located. The center, which is licensed and strictly regulated by the City of Oakland, distributes medical cannabis to patients "suffering from acute and chronic pain, life-threatening and severe illnesses, diseases and injuries," according to the complaint filed Oct. 10 in federal court.
"Barbara Parker contacted me and asked me if I would be interested in taking (the case) pro bono," said Chao, a Piedmont resident who met Parker as a co-worker at the U.S. Attorney's Office in San Francisco shortly after he graduated from Harvard Law School. "I thought about it, but I hadn't followed medical marijuana issues that closely. So we had long discussions about it, and at the end of the day, I decided that it was an important issue." Since then, Harborside landlord Ana Chretien has attempted to prevent the federal government from seizing her property by filing an eviction notice in Alameda County Superior Court, claiming the dispensary breached its lease agreement by violating federal law.
Alameda County Superior Court Judge Evelio Grillo ruled against Chretien, however, explaining in his 20-page opinion that California law "does not allow a landlord to evict a tenant based solely on the tenants' use of the property for a purpose that is unlawful under federal controlled substance law but immunized from criminal and quasi-criminal penalty under state law."
The U.S. attorney's office "also pressured the landlords to file a motion to prohibit the dispensary from violating federal law," Chao said. "It's similar to a preliminary injunction that would have them stop their operations. That was filed in federal court."
Chao responded by filing a motion to stay any action on that motion.
"I said the landlord's motion should not go forward until after the federal court has considered the City of Oakland's lawsuit," Chao said. The motion will be heard Dec. 20 in the U.S. District Court in San Francisco. Oakland's lawsuit, which demands a jury trial, alleges that Haag's federal forfeiture action violates both the five-year statute of limitations (Harborside opened in 2006) and the principles of "equitable estoppel." The estoppel claim alleges that the federal government, through both policy statements and patterns of nonenforcement, led the city to believe that it would not shut down medical cannabis dispensaries that comply with state law.
"The federal government continues to contradict itself," Chao said. "The U.S. Attorney is attempting to shut down operations of a dispensary that is in compliance with state law, but the U.S. Attorney General said the federal government will not use its resources to go after these patients, caregivers, and dispensaries. It really is a mystery."
Chao noted that the U.S. Department of Health and Human Services developed and patented synthetic cannabis or cannabinoid. The patent, cited in Chao's legal documentation, lauds the drug's efficacy "in the treatment and prophylaxis of wide variety of oxidation associated diseases, such as ischemic, age-related, inflammatory and autoimmune diseases ... (and) in limiting neurological damage following ischemic insults, such as stroke and trauma, or in the treatment of neurodegenerative diseases, such as Alzheimer's disease, Parkinson's disease and HIV dementia." Medical marijuana is legal in California, as it is in 17 other states and Washington, D.C. Marijuana is now legal for both medical and recreational use in Washington state and Colorado.
"I have very great respect for Melinda Haag," Chao said, "but there is a very important public policy interest at stake here. There clearly are medical uses for cannabis; you don't hear the Department of Justice denying that. And there clearly is a demand among the patient population for medical cannabis. If you shut down the dispensaries, the demand is not going to go away. So you are telling the patients, 'Either you suffer in pain or through your disease without the use of medicine, or go into the shadows, if you dare, and buy it from criminals on the street.' It's a serious public safety issue."
Chao, a top trial lawyer and international arbitrator who focuses on business litigation, business crimes and internal investigations, said he thoroughly researched how Oakland regulates dispensaries and concluded that it is a very carefully constructed program designed to protect both patient and public safety on a variety of levels.
"To get a permit (to operate a dispensary), you have to agree to all kinds of requirements, one of which is that you send your product to an independent lab for testing to make sure there are no other drugs in there, no impurities, and no pesticides," he said. "Your employees have to go through background checks, and you have to open your books to audits by the city. You have to have a security plan with cameras inside to make sure all the transactions are lawful, there have to be security cameras in the parking lot, the lot has to be well-lit, and you have to have security guards on site in the dispensary."
This case is bound to be highly controversial and precedent-setting, but that doesn't scare Chao. He has handled many high-risk cases, where millions of dollars and core legal issues were at stake. At Morrison & Foerster, he serves as lead counsel in high-stakes cases -- civil and criminal -- and has argued 11 times before the Ninth Circuit Court of Appeals, three times before the California State Court of Appeal, and once before the U.S. Supreme Court.
"When you go up against the federal government, it's like going up against Goliath," Chao said. "The first impulse (in Oakland's medical marijuana case) is, 'It's a controlled substance and they're shutting it down, so what?' But there's an important issue here. In this case, cannabis is a medical substance. What is supposed to happen to the patients? This case will highlight impeding the public interest. Hopefully, our presentation will make it clear to the federal judiciary that there's a whole other side to this than what the Justice Department is saying today."