Auburn, medical marijuana dispensary settle costly lawsuit

Now, they ‘wait and see’ how Supreme Court rules
By: Jon Schultz, Journal Staff Writer
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The Auburn City Council approved Monday a settlement agreement with a banned medical marijuana dispensary – putting an end to future legal fees in a case that has cost the city $75,000.

On Feb. 7, the 3rd District Appellate Court ruling upheld the trial court’s decision that granted the city a preliminary injunction to shut down Blooms & Blossoms, saying it violated the city’s business license ordinance.

The city agreed to waive its right to have its legal costs paid by owner Richard Miller and Sierra Patient and Caregiver Exchange, the corporation behind the dispensary, in return for their agreement to follow the city’s ordinances and not pursue further litigation.

Miller, of Auburn, had described the business at 250 Lincoln Way as a “florist; variety shop” on its permit application in 2011, and when the city found it to be operating as a medical marijuana dispensary, it would take legal action to shut it down.

The city banned medical marijuana dispensaries more than six years ago. The appeals court didn’t address the issue of whether local governments can ban dispensaries, which is the subject of a current case before the State Supreme Court involving the City of Riverside.

“City Council felt that we wanted to defend our ordinance. It is the right law,” Mayor Kevin Hanley said. “The California Supreme Court will be taking the general issue of medical marijuana dispensaries and the power of cities and counties to regulate them or not have them at all, so that case will be decided in another venue. But we felt that we didn’t want to spend additional city attorney fees … to go forward with this case.”

If the California Supreme Court rules that it is illegal for local municipalities to ban medical marijuana dispensaries, rendering Auburn’s ordinance unenforceable, then the dispensary could apply to open up shop again.

Miller’s attorney, Ken Brock, said the decision to settle was based on a question of options: appeal to the California Supreme Court, go back to the trial court for more proceedings or bow out and settle.

With the Riverside case already at the Supreme Court and the appellate court’s ruling at hand, the first two options seemed unlikely, and the settlement left the door open based on what happens in the coming months, Brock said.

“The settlement agreement option still leaves the option of reopening on the table, whereas the other two options I don’t think would have,” he said.

Even if the city had sought repayment of legal costs for the case, it would have been unlikely to get them because the corporation has no assets and Miller is coming out of bankruptcy, City Attorney Michael Colantuono said.

Although confident it would succeed, the city would have had to spend $10,000 to $15,000 on filing a lawsuit to recover those costs, he said.

The settlement also protects the city from Miller and Sierra Patient and Caregiver Exchange seeking any damages or liabilities of any nature “known or unknown … which Defendants may now have, now may claim to have, or may hereafter claim to have” related to the lawsuit.

“I think the fact the city’s settlement agreement conditioned everything upon the Supreme Court kind of acknowledges that they think the Supreme Court is going to rule the way we think it is going to rule, too,” Brock said. “Because they’re leaving themselves some pretty significant wiggle room to what they believe the Supreme Court’s ruling will be.”

The deadline for a decision on that case strikes in early May, though it may come sooner, and despite Brock’s assessment, Colantuono said “most observers of the argument in the Riverside case” believe the court will rule in favor of local control.

“The decision might come out any day now,” he said, “so we’re all watching and waiting.”


Jon Schultz can be reached at Follow him on Twitter @Jon_AJNews