The cost of keeping a medical marijuana shop out of Gilroy is
pushing $150,000, and taxpayers can expect to pay double that
before the court battle is over, one councilman predicts.
The cost of keeping a medical marijuana shop out of Gilroy is pushing $150,000, and taxpayers can expect to pay double that before the court battle is over, one councilman predicts.
“By the time this goes up on appeal, it’s going to be $300,000 to $600,000,” said Councilman Perry Woodward, a San Jose attorney who specializes in litigation involving complex real estate, commercial and high technology disputes. “I hate to be right about this but I think that’s where we’re headed.”
Earlier this month, a Santa Clara County Superior Court Judge, Kevin McKenney, denied MediLeaf’s request to remain open while it appeals a prohibitory injunction he issued in July. The injunction upholds the City of Gilroy’s claim that MediLeaf – which opened without a business license Nov. 9 in the shopping center at the corner of First Street and Westwood Drive – was operating illegally. The dispensary closed Aug. 9 after McKenney issued the injunction.
Woodward said he expected the appeals process to take about two years.
As of July 2010, Berliner Cohen, the legal firm with which the city contracts, had billed the city a total of $147,504.40 for the MediLeaf litigation, Finance Director Christina Turner wrote in an e-mail.
However, “bills have yet to be prepared for the most recent work,” she wrote.
Even if the city wins the case, it will not be eligible to recover those fees, she said.
Woodward guessed the level of legal activity in the past two months likely pushed the current number well past $150,000.
“I bet the number’s actually quite a bit higher than $147,000,” he said. “My whole opposition to filing this lawsuit was that I thought it was going to be very expensive. I wanted a full airing of how much money we were going to spend on running a medical marijuana dispensary out of town.”
And if Proposition 19 – a California ballot initiative that would legalize marijuana statewide – passes, “all this money is wasted,” Woodward said.
Several candidates running for city council this November agreed with the current council’s move to fight MediLeaf, calling the issue a Pandora’s box, but said they would have gone about it a different way.
“At some point, they’ll just have to come back to the table and work it out without all the attorneys making all the money,” said Art Barron, a former planning commissioner who is running for council. “We need to cut out the lawyers and come to an understanding. I don’t know if that’s happened but it should have happened a long time ago.”
The location MediLeaf chose to open its dispensary was not an appropriate place, Barron said.
A dance studio, coffee shop and an eatery occupy the same plaza as MediLeaf.
“As a former planning commissioner, I know it’s important where we put businesses in terms of zoning,” Barron said. “Where (the dispensary) is now is not a good place. You wouldn’t put a liquor store next to a school. We have zoning laws for a reason.”
Barron said the city should plan ahead in case Proposition 19 does pass, but simply allowing MediLeaf to stay open in Gilroy without a business license would set a poor precedent.
The issue isn’t as simple as MediLeaf opening without a business license, explained Woodward, who was one of three council members who voted in October to create a specific ordinance that would have allowed the dispensary. The city was working with MediLeaf to establish the ordinance then “the council changed course and did a 180,” he said. The motion to create an ordinance failed in a 4-3 vote.
Pasquale Greco, a Gilroy native who retired after 37 years of service to the City of Santa Clara, said he was against legalizing marijuana in general and agreed with the council’s decision to keep MediLeaf out of Gilroy.
“How can we legalize (marijuana) if the federal government opposes it?” he said. “Whose rules are we really following? That’s a big issue for me.”
Greco didn’t like the sound of mounting legal bills but proposed a solution: hiring an in-house city attorney.
“I’m against contracting out,” he said. “We have to have a full-time attorney. That’s one way to resolve it.
“I don’t know where the money is going to come from. It can’t come from the general fund – it’s negative.”
But Russ Valiquette, a former Gilroy city councilman who is running again, said swapping the city’s contract with Berliner Cohen for an in-house attorney wasn’t that easy. Like a general practice doctor, an in-house attorney would still need to turn to outside resources for specialized cases, which costs money, he said.
The issue with MediLeaf is twofold, he said.
“One issue is the actual business of MediLeaf and the other one is what to do with a business that snubs its nose at you and opens without a business license,” he said.
In theory, Valiquette said he didn’t have a problem with marijuana being used for medical purposes but that the law legalizing medical marijuana has failed in its regulation.
“They’re passing it out like it’s candy,” he said.
Fighting the dispensary has nothing to do with the business of medical marijuana, but the fact that MediLeaf opened without a business license, he said.
“I don’t think it’s a large chunk of money if you look at the outcome,” Valiquette said. “We need the courts to play referee and unfortunately that costs money.”
But for Woodward, the price the city will pay to keep MediLeaf out of Gilroy is too high.
“The goal is not worth the cost,” he said. “Any victory is a hollow victory if we’ve spent that much.”
