Court questions federal action against Oakland pot dispensary

A federal appeals court questioned the government’s move to seize and shut down the huge Harborside medical marijuana dispensary, but showed no support Tuesday for Oakland’s attempt to preserve the pot supplier and its bounty of tax revenue.

Despite the Obama administration’s repeated assertions that it would not target medical marijuana operations that comply with state laws, U.S. Attorney Melinda Haag filed suit in July 2012 to close down the city-licensed Harborside Health Center, which supplies marijuana to 108,000 patients along the Oakland Estuary at 1840 Embarcadero. City officials sued to block the forfeiture, but a federal magistrate ruled in 2013 that Oakland had no rights of its own at stake in the case.

Harborside, which is challenging the forfeiture in a separate case, remains open while Oakland appeals the dismissal of its suit. The appeal drew a plague-on-both-your-houses reaction Tuesday from a conservative panel of the Ninth U.S. Circuit Court of Appeals in San Francisco, which seemed scornful of both the federal government’s actions and the city’s effort to block them.

“Why have you picked this fight?” Stephen Murphy, a federal judge from Detroit temporarily assigned to the panel, asked the Justice Department’s attorney, Adam Jed. Murphy said the forfeiture action appears to conflict with President Obama’s and Attorney General Eric Holder’s declared policy of “legally looking the other way with respect to medical marijuana facilities.”

Jed said he didn’t know why Haag had gone to court, and stressed that the administration’s policy statements weren’t legally enforceable. Judge Richard Tallman said he’d be surprised if Haag hadn’t consulted with Holder’s Justice Department in advance, and observed that if Obama had objected to her forfeiture case, he could have asked for her resignation.

But the judges showed no inclination to reinstate Oakland’s lawsuit.

“You’re challenging the discretionary decision by the attorney general and his U.S. attorney to bring a forfeiture action. Isn’t that the end of our inquiry?” asked Tallman, noting that courts lack authority to overrule prosecutors’ discretionary acts.

Murphy, a former U.S. attorney, said the city would have no right to intervene if Haag had filed criminal charges against Harborside for violating federal narcotics laws, and suggested the same barriers exist in a civil forfeiture suit.

Oakland’s attorney, Cedric Chao, said the city has multiple interests at stake: its system of regulating pot dispensaries, the taxes from more than $20 million in annual sales, and the health and safety of patients who obtain marijuana from a licensed business rather than street dealers.

Under federal law, Chao argued, the city can sue the federal government for disregarding its own stated policies and a five-year statute of limitations by filing the forfeiture claim six years after Harborside began dispensing marijuana, giving Oakland “a basis to believe that its program would be allowed.” He also said the forfeiture action conflicts with a new federal spending law that prohibits the government from interfering with states’ medical marijuana laws.

But Tallman questioned whether the city had any tangible interests at stake. If the federal government seizes Harborside, he said, it will also control the dispensary’s property and funds, and Oakland’s taxing authorities will have “no claim to the money.”

Bob Egelko is a San Francisco Chronicle staff writer. E-mail: begelko@sfchronicle.com Twitter: @egelko