Pot shop win ignites city ire

A Superior Court judge handed down a divisive ruling Tuesday
that keeps Gilroy’s fledgling medical marijuana dispensary open for
now and prompted a City Councilman to call for a refund from the
city’s legal firm.
A Superior Court judge handed down a divisive ruling Tuesday that keeps Gilroy’s fledgling medical marijuana dispensary open for now and prompted a City Councilman to call for a refund from the city’s legal firm.

MediLeaf directors embraced and breathed sighs of relief in San Jose Tuesday when Judge Kevin Murphy denied the City of Gilroy’s legal request for a preliminary injunction to shut the dispensary down until after a trial ended. The dispensary, featuring various strains of cannabis that are grown by members, could remain open for a year or longer as the issue, if the city pursues it, winds its way through the legal process. Councilman Craig Gartman said this week that he had heard litigation ultimately could cost the city $250,000 to $500,000.

Councilman Perry Woodward, who has maintained that a legal battle against the dispensary would be too costly, said he saw this coming and that the city’s hired legal guns, San Jose-based Berliner-Cohen, should have seen it coming too. He requested Wednesday that the council discuss a refund from Berliner-Cohen during its next meeting.

“How much are we going to squander on Berliner over this?” Woodward asked in a terse and pointed e-mail addressed to the council, City Administrator Tom Haglund, City Attorney Linda Callon and Police Chief Denise Turner. “Enough is enough.”

Berliner-Cohen charges the city $226 per hour with the exception of discounts for “special matters,” which could include issues related to the dispensary, City Finance Director Christina Turner said. Woodward said he would not be surprised if the city had spent $20,000 thus far on Berliner-Cohen’s work on the dispensary.

MediLeaf opened at 1321-B First St. on Nov. 9 between Rock Zone and Antdawg Universal Strength Headquarters without a business license. Four members of the City Council voted to allow litigation to proceed against the dispensary during a controversial closed session one week later that was boycotted by three council members – Gartman, Peter Arellano and Woodward – who believed the proceedings should have been public. Judge Murphy appeared to agree with them in Tuesday’s ruling, saying that the council had committed a Brown Act violation, although he did not specify how or when.

The council could go back and discuss in open session what they discussed in that closed session at an undetermined future council meeting in order to properly initiate litigation against MediLeaf, Woodward said.

Woodward contends Callon’s bad advice on sending the Council into closed session on Nov. 16 is just another example of the poor legal counsel the city is receiving. He indicated she was also wrong to have said the city does not need a medical marijuana dispensary ordinance that would ban such collectives. Gilroy’s Assistant City Attorney Jolie Houston advised the City of Los Altos to have an ordinance in place to prevent dispensaries there.

Callon stated by e-mail Thursday that circumstances in Gilroy and Los Altos are different. Los Altos is a “general law” city under state law and its business licenses are specifically to generate revenue, not to regulate businesses. By contrast, Gilroy is a charter city that uses business licenses for regulatory purposes, Callon said. Its business ordinance requires that applicants show compliance with state and federal laws. Business licenses are required even by nonprofit entities, such as MediLeaf; they merely do not have to pay fees, she said.

MediLeaf attorneys have disputed that nonprofits do not need to obtain a business license.

Murphy cited the open government violation of the Brown Act issue as one of three reasons for denying the city a preliminary injunction. He also said the dispensary would not cause “irreparable harm” by staying open, adding that more harm would be done to MediLeaf’s business and its customers if it had to close. In addition, he determined there were factual and legal issues that would need to be explored and that it was unclear which party ultimately would prevail in a trial.

MediLeaf directors, attorneys and representatives from Americans for Safe Access all exchanged hugs outside of the courtroom after the decision.

“We’re alive,” MediLeaf co-director Neil Forrest said minutes after Tuesday’s hearing.

He stressed that MediLeaf never sought to have an adversarial role with the city, but found itself in that situation. However, co-director Batzi Kuburovich’s comments were more pointed.

“It sounds like the city slighted us, and now they’re going to be called to answer,” he said.

City attorneys Andy Faber and Linda Callon were taken aback by Murphy’s decision after the hearing, particularly his declaration that the city had violated the Brown Act.

“I was very surprised,” Callon said.

Faber, who argued Gilroy’s case before the judge, said after the hearing that the city was in full compliance with the state law during the Nov. 16 closed session that was in question.

Councilman Bob Dillon, who attended Tuesday’s hearing and participated in the closed session, said he was “puzzled” by Murphy’s comments regarding a Brown Act violation.

“I’ve been sitting on the council for seven years, and I know what (a Brown Act violation) looks like,” he said.

Gartman, who also attended the hearing and voted in favor of approving MediLeaf’s application in October, said he personally felt the council had violated the Brown Act, but he said Murphy never clarified why he thought that was the case. On the other hand, he said he understood Murphy’s other arguments.

Mayor Al Pinheiro, who did not attend Tuesday’s hearing, said it would be helpful if the judge had explained how the council had violated the Brown Act.

In addition, neither Pinheiro nor Councilman Dion Bracco said by phone this week that they felt the city deserved a refund for Berliner-Cohen’s counsel. Council members Dillon and Cat Tucker did not return phone calls.

While Pinheiro said the law firm is not perfect, he felt it has served the city well in the past.

“I want the City of Gilroy to be represented as best as possible,” Pinheiro said. “But I also don’t want to start throwing rocks without having all the facts and without being at the dais and having a conversation with fellow members of the council.”

On the other hand, Gartman said he was happy for Woodward’s straightforward comments. He recommended the council reconvene to discuss creating an ordinance rather than continuing a lengthy court battle.

“It’s been said, ‘It’s better to litigate than to mitigate,'” he said.

Bracco had no comment on Woodward’s e-mail to council members. However, he expressed concern that other businesses such as strip clubs might now decide to open up without city permission based on Murphy’s decisions.

“I think it really sets a bad precedent,” Bracco said.

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