LEGAL BILLS IN CITY'S MARIJUANA FIGHT RELEASED

A San Jose law firm representing the city of Gilroy in its efforts to
keep medical marijuana dispensary MediLeaf out of town has released
more than 60 pages of attorney bills that offer a glimpse into the
city's $200,000-plus legal tab.

Berliner Cohen released copies of the bills - 62 pages worth totaling
$202,500 - following a public records request by the Dispatch. The
copies are heavily redacted, with many details regarding meetings
between city officials and attorneys blacked out.

"I had originally forecast it would be more than $300,000," said
Gilroy City Councilman Perry Woodward, who is also a partner in the
San Jose law firm, Terra Law LLP. "We got pretty lucky to get out of
it spending what we did."

The bills show the city first met with attorneys on Nov. 17, 2009 -
eight days after MediLeaf opened at 1321 First St.. The city spent
$13,695 on legal services during the first four days, according to
invoices, and attorneys had interactions with many city officials,
including City Administrator Tom Haglund, Mayor Al Pinheiro, Gilroy
Police Department Chief Denise Turner, City Clerk Shawna Freels and
Councilman Bob Dillon over the course of the legal battle, which
hasn't officially ended.

The Council voted 4-3 Dec. 30, 2009 to reapprove litigation against
MediLeaf, which had been operating without a business license. The
council had voted in favor of litigation six weeks earlier in closed
session, but were advised by Berliner Cohen to vote on the matter in
public to prevent a potential violation of the Brown Act, a state code
that governs public meetings.

Dillon, Mayor Al Pinheiro, Councilman Dion Bracco and Councilwoman Cat
Tucker approved the lawsuit during the public meeting, while Woodward,
Councilman Peter Arellano and Councilman Craig Gartman voted against.

Dillon said Wednesday he felt the city's money had been appropriately
spent.

"You either control what happens in your city or you don't. If people
don't comply, they have to be brought to heel," Dillon said.

Pinheiro said it wasn't a matter of whether spending more than
$200,000 was worth it. The city's fight was about enforcing its laws,
he said.

"Obviously we would have rather not spent the money, but we have rules
and regulations that need to be followed," Pinheiro said. "You've got
to protect the city's rules and regulations, and that's it. It's a
matter of having city laws and enforcing them, and that's what we did."

Woodward, who opposed the lawsuit, said spending that much money
wasn't necessary.

"I still wish we had that money back to spend on other things. That
was all for one dispensary," he said.

MediLeaf was forced to close Aug. 9, 2010 after Superior Court Judge
Kevin McKenney issued an eight-page order on July 20 upholding the
city's claim that MediLeaf was operating without a business license.

Attorneys for MediLeaf filed a notice to appeal the injunction the day
after McKenney's decision and requested the dispensary be allowed to
operate during the appeal process. McKenney denied MediLeaf's request
on Sept. 13, 2010.

The dispensary maintains it used a not-for-profit model and therefore
did not require a business license.

On Dec. 9, 2010, dozens of undercover law enforcement officers from
across Santa Clara County raided eight homes and MediLeaf offices in
Gilroy, Morgan Hill and San Jose as part of an eight-month
investigation of illegal sales of marijuana and money laundering into
the medicinal pot club.

The operators of MediLeaf are co-directors Neil Forrest and Goyoko
"Batzi" Kuburovich.

David Tompkins, Assistant Santa Clara County District Attorney, said
Wednesday no charges had been filed in the case against MediLeaf.

Woodward called Gilroy's success in the case a "short-term win," and
said it was naive and ridiculous if people thought spending the money
to close MediLeaf had stopped marijuana sales in the city.

On Feb. 1, Justice Patricia Bamattre-Manoukian, of the California
Court of Appeal for the Sixth District, denied MediLeaf's request to
remain open until the court issued its decision in MediLeaf's appeal.

Though MediLeaf lost a push to stay open during the investigation, the
dispensary's appeal of a decision that forced its closure for
operating without a license is still active, Berliner Cohen attorney
Andy Faber said.

He said the city is, for now, just playing the waiting
game.

"We're now just waiting for the appellate court to set a date," Faber
said.

If MediLeaf were to win an appeal and the case continued - which is
unlikely - the city could be on the hook for even more money, Woodward
said.

"This money we spent may be all of it, but it may not be," Woodward
said. "If we lose (the appeal) - we probably won't - but if we lose,
we'll go back to the trial court. There's going to be thousands of
more dollars spent, at the minimum. There's a very good chance we
could still spend considerably more considering the shifting landscape."

City's battle with MediLeaf

- - Nov. 9, 2009: MediLeaf opens at 1321 First St. in
Gilroy

- - Nov. 16, 2009: City Council approves litigation against MediLeaf in
closed session

- - Dec. 30, 2009: Council votes 4-3 to publicly approve
litigation

- - July 20, 2010: Judge upholds city's claim that MediLeaf was
operating without a business license

- - Aug. 9, 2010: MediLeaf forced to shut down

- - Sept. 13, 2010: MediLeaf's petition to stay open during appeal
denied

- - Dec. 9, 2010: MediLeaf offices and homes of its founders are raided
by law enforcement officers in Gilroy, Morgan Hill and San Jose

- - Feb. 1, 2011: Judge denies MediLeaf's appeal to stay open during
investigation

Mark Powell