Dozens of well-armed agents swept into the Med-West Distribution medical cannabis business in Kearny Mesa early this year. Before the raid was over, they seized $324,000 in cash and thousands of dollars worth of inventory.

Within days agents also froze owner James Slatic’s bank accounts and those of his wife and two teenaged daughters.

Nine months later, Slatic has yet to be charged with a crime. Two Med-West employees arrested on the morning of the raid were released and have not been charged.

The company folded and its 35 employees lost their jobs, along with their health benefits and retirement accounts. The District Attorney’s Office is declining to return any of the cash.


“It’s the dirty little secret of the American justice system,” Slatic said in an interview. “They can come in and take all your money and property just on the say-so of a police officer. Once they do that, you have to go to court and prove why your money is not guilty.”

Slatic has lawyers fighting what’s known as civil asset-forfeiture, the tool police and sheriff’s departments across the country rely on to seize cash and property they suspect are derived from criminal activity. A San Diego Superior Court hearing is scheduled Nov. 14 before Judge Jay M. Bloom.

The District Attorney’s Office opposes the release of any of the cash or property seized by drug agents, saying the case remains under evaluation. The office declined to comment on the Med-West case but said the confiscations are an important way to prevent crime.

“The primary mission of the asset forfeiture program is to enhance public safety by removing the proceeds of crime and other assets relied on by criminals to perpetuate their criminal activity,” said Steve Walker, spokesman for District Attorney Bonnie Dumanis.


Slatic said his business paid state and federal taxes, was licensed by San Diego and was visited by police and city lawyers multiple times.

“I’m a 57-year-old entrepreneur and businessman,” he said. “You always think the laws are designed to protect middle-class gray-haired guys supplying jobs, then one day you wake up with 28 helmeted SWAT guys with automatic weapons breaking down your front door with a sledge hammer.”

‘Hardly suspicious’

Med-West Distribution supplied a collective of medical pot shops that sell cannabis oils used in vaping to patients across California. It also produced cannabis-infused edibles, topical creams and other products permitted under state medical marijuana laws.

“I have a drawer full of business tax certificates,” Slatic said. “We weren’t some clandestine operation. We were across the street from a Mercedes-Benz dealership.”


The company was one of numerous entities and partnerships Slatic was involved in.

When San Diego police Detective Mark Carlson, then assigned to the federal drug task force, filed affidavits seeking court permission to seize the accounts, he cited state law that doesn’t allow manufacture of a controlled substance using a process of chemical extraction. Slatic’s contention is that his business only refined oils, it didn’t extract them.

Carlson cited Slatic’s wide-ranging business dealings as one reason the funds should be confiscated.

“Based upon my review of Wells Fargo documents and documents provided by Schools First and North Island Credit Union, James Slatic has transferred significant funds from his concentrated cannabis extraction business to his wife Annette Slatic, who in turn has deposited some of these funds, at least $210,200 into her Wells Fargo accounts,” Carlson wrote.


According to a court filing submitted by Slatic’s lawyers Friday, Carlson failed to establish in his affidavit that there was probable cause to believe that James Slatic had broken any laws.

“Writing a check to one’s wife is hardly suspicious and the government has made no effort to show why it is suspicious in this case,” it stated.

Slatic’s lawyers also allege that Carlson omitted key facts from the affidavits he filed with the court.

Specifically, Carlson never told the judge that Med-West was a legal medical marijuana operation, permitted under state law to distribute marijuana or that the company never extracted cannabis oil from raw marijuana.


“Critically, the equipment that Carlson describes — a rotary evaporator — can only be used for refinement,” the motion said. “Indeed it is impossible to use a rotary evaporator to extract cannabis oil from raw marijuana, as expert testimony at the hearing will show.”

Prosecutors have yet to respond to the motion filed last week. But in a brief submitted to the court earlier this year, Deputy District Attorney Jorge Del Portillo defended the judge’s decision to grant the affidavits.

“A court reviewing issuance of the warrant does not determine probable cause de novo,” Del Portillo wrote. “Its task is simply to insure the magistrate had a substantial basis for concluding that probable cause existed.”

Slatic is not yet fighting to have his Med-West cash and property returned. The court hearing this month only concerns the $100,000 seized from his and his family’s personal accounts.


Pro bono counsel

Medical marijuana has been legal in California for 20 years, although it remains banned under federal law. Next Tuesday, when voters render a decision on Proposition 64, recreational use of the drug may be legalized across the state.

The rules over civil asset forfeiture also are changing.

Gov. Jerry Brown signed a bill in September that requires law enforcement agencies to win a criminal conviction before they can keep assets worth up to $40,000. The new legislation will go into effect in January but will not affect people like James Slatic, whose seized property exceeds $40,000 in value.

Wesley Hottot is an attorney for the Institute for Justice, a nonprofit law firm based in Arlington, Va. that litigates cases aimed at limiting the size and scope of government and protecting rights of American citizens.


He said he is representing the Slatic family to protect them from government abuse.

“One of the insidious things about civil forfeiture is it costs a lot of money to fight for your money back,” Hottot said. “The Slatics can’t afford to continue paying for attorneys. The only reason they are able to challenge this now is that they found pro bono counsel.”

The District Attorney’s Office, San Diego police and the sheriff’s department collect the most money under the federal government’s seized-assets program of all the local law enforcement agencies — more than $11 million among them in the past three years.

Dumanis has spent her office’s share of forfeited cash and property on awards and memorials, grants to nonprofit groups and on training and awareness programs. According to her recent report to the U.S. Government, she had $2.4 million on hand.


“When it comes to spending the funds, we’re obligated to follow nationwide policies, procedures and guidelines set up by the Department of Justice,” Dumanis spokesman Walker said.

jeff.mcdonald@sduniontribune.com (619) 293-1708 @sdutMcDonald