AS POT CLUB LEGAL BATTLE APPROACHES, MEDILEAF EXPANDS

More than seven months after MediLeaf opened its doors without city
permission amidst a splash of controversy, the Gilroy-based medical
marijuana dispensary hardly receives notice from passersby.

Yet directors of MediLeaf, which has added two dispensaries in San
Jose, claim it has received more than 4,000 members since it opened
Nov. 9. Meanwhile, its legal challenges continue, as the City of
Gilroy will seek a motion against MediLeaf on July 1 that would
shut down the dispensary, and MediLeaf is in the midst of a lawsuit
against its erstwhile landlords - former Morgan Hill Mayor John
Sorci and his wife, Toni.

According to a city lawsuit, the dispensary opened without a
business license at 1321 First St. on Nov. 9 after the City Council
rejected an ordinance to regulate such operations, effectively barring them.

"Just because somebody complains about it doesn't mean can open up
without proper permits," Mayor Al Pinheiro said.

MediLeaf directors have maintained that the dispensary is a
nonprofit model and therefore does not require a business license.
City officials have said that is not the case, claiming that
dispensary directors knowingly defied city zoning laws. As an
example, local churches, the Salvation Army and Goodwill have all
gone through a licensing process, even though they don't have to
pay licensing fees.

Judge Kevin Murphy denied the city a preliminary injunction to shut
down MediLeaf on Dec. 15, allowing it to continue operating while
litigation is pending.

On July 1, the city hopes to obtain a "summary judgment," which
would indicate that no legal facts are in dispute, said Andy Faber,
the attorney who is representing the city against MediLeaf. If that
were the case, the city would be able to shut down the dispensary, Faber said.

Attorneys for MediLeaf maintain that the dispensary has been acting
legally and has caused the city no harm.

"There have not been marijuana addicts sleeping in the streets,"
said James Roberts, a San Jose-based attorney representing the dispensary.

He did not know of a single complaint made to police about the
dispensary since it began operating, he said.

Batzi Kuburovich, one of MediLeaf's co-directors, said the
dispensary actually has improved the west Gilroy shopping center
where it resides by cleaning up the corner of the lot where it stands.

MediLeaf is still undergoing inspections, but it has obtained a
building permit after lowering sinks, placing handrails in the
bathrooms and conducting other miscellaneous tasks, co-director Neil
Forrest said.

It also has scaled down its size to cut costs, taking up only part
of the building it occupies at 1321 First St., with plans to sublet
the remaining space, Forrest said.

Konni Thomas, owner of First Street Coffee, which sits in the same
shopping center as MediLeaf, said she still is not thrilled about
having a pot club behind her business, but initial fears about
negative impacts have been unfounded.

"It's like it's nonexistent or something," she said. "It's just
quiet. It doesn't seem any different."

Meanwhile, MediLeaf has kept busy with two additional dispensaries
in San Jose - one at 1340 Meridian Ave. in Willow Glen and one at
2129 S. 10th St. in central San Jose.

San Jose has decided not to crack down on dispensaries unless they
are creating a nuisance, said Michael Hannon, a San Jose code
enforcement official. However, that may change as the city is about
to consider a dispensary ordinance, he said.

San Jose does require dispensaries to pay a business tax, but
MediLeaf has done so, according to city finance officials.

MediLeaf has been working with the City of San Jose on drafting the
wording of the city's dispensary ordinance, Kuburovich said.

Meanwhile, he described the situation in Gilroy as "an uphill battle."

"It's hard enough to open a not-for-profit without any obstacles or
barriers," he said.

MediLeaf also has filed a small-claims suit against its former
landlord, John and Toni Sorci, after they allegedly failed to pay
back $5,000 in rent for a building that they had leased to another business.

MediLeaf signed an agreement with John Sorci on June 1, 2009, to
begin leasing 7581 Monterey St. on Sept. 1, 2009. However, the city
granted a business license to Dollar Store and More for the same
location in August, Kuburovich said.

MediLeaf never occupied the building, and MediLeaf representatives
only had one meeting there, he said.

The Sorcis' son, Sal Sorci, contended Thursday that his family only
allowed Dollar Store and More to use that building after MediLeaf
backed out of their agreement, opting to use their current building
at First Street instead. At the time, MediLeaf representatives said
they could not use the building because they had failed to receive
approval from the city government, he said.

"It was a big set-up," Sal Sorci said.

Kuburovich disputed those claims, saying that Sal Sorci can be "misleading."

Judge Gregory Saldivar on Thursday postponed making a decision on
the case at the South County Courthouse after receiving a letter
from Sal Sorci that indicated John Sorci was being hospitalized
after receiving knee surgery. The hearing was continued to July 15.

Meanwhile, both the city and MediLeaf are gearing up for the July 1
hearing in San Jose.

"We are battling the summary judgment, and we believe the city is
wasting its money," Kuburovich said.