SUING POT STORES CAN BURN THROUGH CITIES' LEGAL FUNDS

Costly Lawsuits Do Not Always Succeed, Many Municipalities Have
Discovered. Laws Are Confusing, Officials Say

Three years ago, Garden Grove enacted a ban on medical marijuana dispensaries.

But the city's crackdown didn't go the way officials planned. Dealing
with one marijuana case cost $200,000 in attorney's fees, leaving
city leaders with sticker shock. Then they began to wonder whether
their ban would even withstand legal challenge, given the
contradictory case law.

So Garden Grove stopped enforcing its ban and this summer required
dispensaries to register with the city.

Now there are about 60 pot shops in Garden Grove, selling products
with names like Porn Star and Super Lemon Haze. City Manager Matt
Fertal said he believes it's more shops per capita than any other
city in California.

"Everybody is just so frustrated with this," Fertal said. The state,
he noted, allows medical marijuana but doesn't give clear direction
on how cities and counties should regulate it. Federal law says it is
illegal in all circumstances.

And as for the dispensaries, Fertal said, some do not hesitate to sue
cities that try to regulate them: "They've got more money than
everybody to throw at this, and they are just determined to sue on
every matter.... We feel like we are caught in the middle."

As the medical marijuana business booms, cities are finding that
regulating it is expensive. That's especially true of small and
medium-sized California cities like Garden Grove, which don't have
the in-house legal departments of Los Angeles and San Francisco and
instead pay outside attorneys by the hour.

"Cities are either wringing their hands about the fact that they are
going broke trying to deal with marijuana or they are just stuck,"
said Thomas Brown, an attorney at Burke Williams & Sorensen who has
advised numerous cities on the issue. "It's paralyzing a lot of cities."

There are no hard figures on how many cities and counties have been
involved in litigation over medical marijuana. But The Times
identified at least 40, and many experts say the number is probably
much higher.

As cities struggle with the dire financial problems, many
dispensaries are feeling anything but a budget crunch. Although the
dispensaries are prohibited by law from operating for profit, some
generate enough revenue to defend themselves in court.

Medical marijuana activists say they are fighting on behalf of
patients who need the drug to cope with pain and other ailments.

"People who want to suppress it are going to be victims of
litigation," said Kris Hermes, spokesman for Americans for Safe
Access. "There are patients in these communities that fight back."

Backers point out that California voters permitted medical marijuana
and that polls show they support it.

But opposition remains in some communities, where residents may view
the dispensaries as blights.

Down the road from Garden Grove in Lake Forest, officials saw an
influx of dispensaries, including several within 600 feet of a
Montessori school.

Officials spent nearly $1 million on lawyers trying to shut down more
than a dozen dispensaries. But they got nowhere: Even when an Orange
County Superior Court judge issued injunctions shutting dispensaries
down, owners filed appeals, and the state's 4th District Court of
Appeals allowed them to stay open while the cases moved through the courts.

In desperation, officials this spring appealed to the federal
government, writing U.S. Atty. Andre Birotte Jr. to ask for aid in
combatting store-front marijuana dispensaries in Lake Forest.

This fall, Birotte answered them, writing a letter pledging help on
the same day he and three other U.S. attorneys in California
announced they would go after large-scale growers and dispensary
owners in the state. The strategy worked for Lake Forest. Three weeks
after the crackdown was announced, officials said, all but one
dispensary has left the city.

Gilroy City Councilman Perry Woodward calls what happened in his
city, which enacted a ban in 2009, a cautionary tale.

He said a group of local business people had been working with the
city to open a dispensary, only to have the project go off the rails
after community opposition. The dispensary opened anyway. The town
sued and won, but not before City Hall racked up $200,000 in legal costs.

"We spent a lot of money," Woodward said, at the same time it was
laying off police officers and firefighters. "Anyone who thinks that
as a consequence, marijuana is no longer being sold in Gilroy is
living in a fantasy land."

Hemet spent approximately $100,000 to shut down a single dispensary
this year whose owner refused to leave in a local zoning dispute; it
was more than 10% of the city's projected budget for legal fees for
the year. In Temecula, a suit over a dispensary has cost $140,000 and
counting (the matter is still before the court) in a city that
budgets less than $1 million a year for legal costs.

Much of the legal activity involves cities trying to ban or use
zoning laws to restrict the number of dispensaries. But at least one
town, Isleton in Sacramento County, spent tens of thousands in legal
fees to try to get into the marijuana business.

The little city, so broke that it has relied on volunteer police
officers, entered a deal last fall to let an abandoned housing
development be used as a marijuana growing operation, with the city
getting a cut of the profits as well as other sweeteners like
surveillance cameras and an upgraded computer system. The project
fell apart after the U.S. attorney and the Sacramento County Grand
Jury objected, but not before the city incurred $100,000 in legal costs.

David Larsen, the city's attorney and city manager, said those costs
would ultimately be paid by the grower. But the debacle "has diverted
a lot of resources.... Any time you have to drag the whole council
and everyone else up to the grand jury, that is an interruption of
scarce resources," he said.

California voters approved the use of marijuana for medicinal
purposes in 1996 with the passage of Proposition 215. In 2003, the
state Legislature passed the Medical Marijuana Program Act, the
cheekily named Senate Bill 420, a slang reference to smoking marijuana.

But the legality of medical marijuana operations has long been murky.
The federal government continues to view marijuana use as a crime.
Then in the early days of the Obama administration, U.S. Atty. Gen
Eric Holder announced that prosecutors would not target medical
marijuana users and caregivers as long as they followed state laws.

Last week, an appeals court upheld a dispensary ban in Riverside.
Other cities hope the ruling places their bans on firmer legal
footing. Medical marijuana activists vow to fight on but say the law
needs to be clarified.

"I would have to agree that this is a mess," said Joe Elford, chief
counsel for Americans for Safe Access. "People should be entitled to
know what the law is, and the law is not clear enough for people to
know what it is."