Though Beach Cities Collective is considered an illegal operation both by the city of Dana Point and an Orange County Superior Court judge, the California Department of Transportation considers the medical-marijuana dispensary a viable business and does not plan to kick it out of the state’s Adopt-A-Highway program, said Tracey Lavelle, a Caltrans spokeswoman.

That could change if the agency determines that violations cited by the city disqualify the dispensary, Lavelle said.

Beach Cities Collective isn’t the first marijuana dispensary to adopt a highway, Lavelle said. The collective is paying a Caltrans-approved contractor $250 a month to clean a section of southbound I-5 between San Juan Capistrano and Dana Point.

Beach Cities owner David Lambert applied to have an Adopt-A-Highway sign erected with Beach Cities’ name as a way to tell the community that the dispensary plans to stay in business, even though Dana Point code-enforcement officials shut it down in January and a judge has ordered it not to reopen in the city. Caltrans put up the I-5 sign April 5, about a mile north of the Pacific Coast Highway exit to Dana Point.

Caltrans approved Beach Cities’ Adopt-A-Highway application Jan. 27, four days after the dispensary was red-tagged. Lavelle said Caltrans was not aware of Beach Cities’ problems with the city.

“The red-tagging was for building code violations – for the building, not the business. At the time of application, they are a viable business,” Lavelle said Thursday.

Caltrans hasn’t “found anything to substantiate the city’s claims” regarding code violations, she added.

Beach Cities and Dana Point have been mired in legal and code-enforcement fights for nearly two years. The latest round came Wednesday, when Beach Cities filed a $20 million Superior Court lawsuit against the city and staff and council members, alleging defamation, conspiracy, interfering with contracts and other issues.

The filing followed Superior Court Judge William Monroe’s order last month for Beach Cities to pay Dana Point more than $2.4 million in civil damages in a lawsuit in which the city accused Beach Cities of operating illegally. The city says the dispensary was selling marijuana for profit for nonmedical purposes, which would violate state law. Beach Cities says it was providing medicine to patients, and it is appealing the court judgment.

City code-enforcement officials shut down the collective and two others in January, citing violations including building modifications, missing certificates of occupancy and security issues.

Beach Cities appealed its closure, saying code-enforcement officials shut it down without inspecting the building. A retired Orange County judge denied the appeal in February after a hearing.

Contact the writer: blevine@ocregsiter.com, twitter.com/danapointnews or 949-492-5135