There is a battle going on right now between the Federal Government and the City of Oakland centered upon a commercial property leased to a permitted Marijuana dispensary operating legally under current California laws regarding medical marijuana sales. The Feds filed what is referred to as a Forfeiture Action in July of this year seeking to seize the premises which the dispensary operates out of.
21 U.S.C. § 881 authorizes the Federal Government to initiate forfeiture proceedings for “All real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this subchapter punishable by more than one year’s imprisonment.” i.e., the sale of a controlled substance which in this case is marijuana, an illegal substance under Federal laws.
By way of these forfeiture proceedings, the Feds can effectively seize the real property at issue (including any leasehold interest) and shut the operations down. This is not the first property used by dispensaries targeted in California and it won’t be the last. What we have seen however, are landlords initiating eviction actions in State Court against their marijuana dispensary tenants, in order to avoid a seizure of their property by the Federal Government.
The target dispensary this time is the Harborside Health Center which claims to be the largest dispensary out there with over 100,000 patients. Interestingly enough, according to Harborside’s executive director Steve DeAngelo, as quoted in the Washington Post, Harborside pays about $3 million a year in federal, state and local taxes. Aside from other policy reasons continuously being debated on the subject matter of legalizing marijuana, the sizable tax revenue both at the state and local level could be one of the more prominent reasons why the City of Oakland has stepped in recently on behalf of the dispensary and asserted various defenses.
The Forfeiture proceeding is currently pending before the United States District Court for the Northern District of California, San Francisco Division in front of the Honorable Maria-Elena James, U.S.D.C. Case No.: 3:12-CV-03567-MEJ.
As Real Estate Attorneys in Los Angeles, dealing with property rights, evictions, transactions and fraud, we analyze and interpret state and local level laws. This is an example however of how federal laws dealing with property rights can play a part in determining property rights for California landlords who may be within the legal bounds of state or local laws but violating federal laws. At least it’s something to consider for Los Angeles landlords considering a marijuana dispensary as a tenant.