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Resolution 2009-42 RESOLUTION NO. 2009-42 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GILROY ORDERING THE CITY ATTORNEY TO TAKE ALL NECESSARY ACTIONS TO ENJOIN MEDICAL MARIJUANA DISPENSARY ACTIVITIES BY MEDILEAF AND ITS AFFILIATES AT 1321-B FIRST STREET, APN: 790-43-017, OR AT ANY OTHER LOCATION WITIDN THE CITY OF GILROY WHEREAS, the sale of marijuana and the operation of a marijuana dispensary within the City constitute the "carrying on of any business, trade, calling, profession, or occupation" and are thus required to have a business license issued by the City pursuant to Sections 13.1, 13.2, 13.43 and 13.44(a) of the Gilroy Municipal Code; and WHEREAS, the sale of marijuana and the operation of a marijuana dispensary are not permitted uses under any City zoning district contained in the Gilroy Zoning Ordinance; and WHEREAS, on or about May 8, 2009, Goyko G. Kuburovich, President of MediLeaf (which is also doing business as "MediLeaf Medical Cannabis Collective Dispensary" and/or "UR Health & Wellness Center", collectively referred to hereafter as "MediLeaf'), submitted an application to the City for a business license to operate a medical cannabis collective dispensary for the retail sales of medical cannibas at 1207 1 st Street in the City of Gilroy; and WHEREAS, on June 8, 2009, Goyko G. Kuburovich, President of MediLeaf, submitted an application to the City for a business license to operate a medical cannabis collective dispensary for the retail sales of medical cannibas at a different location in the City, 7581 Monterey Street; and WHEREAS, the City denied MediLeafs May 8, 2009 and June 8,2009 business license applications, as further explained in letters from the Gilroy City Attorney to MediLeaf s attorneys, dated July 16, 2009 and August 24, 2009, pursuant to Section 13.44(a) of the Gilroy Municipal Code, because the uses being proposed did not comply with federal law; and WHEREAS, on or about September 14,2009, representatives for MediLeafsubmitted an application to the City for a conditional use permit ("CUP") to operate a medical marijuana dispensary at 7101 Monterey Road in the City of Gilroy; and WHEREAS, on or about September 24, 2009, the City declined to process said application because the City Zoning Ordinance does not have a use category that recognizes and regulates a medical marijuana dispensary, and because the proposed use does not comply with federal law and returned MediLeaf s CUP application and application fee to their representative; and WHEREAS, Section 13.30 of the Gilroy Municipal Code exempts organizations that are "conducted, managed, or carried on wholly for the benefit of charitable purposes or from which profit is not derived, either directly or indirectly, by any individual, firm, or corporation," from the City's business license fee requirement, but does not exempt such organizations from the 1 Resolution No. 2009-42 requirement that a business license be obtained in compliance with Sections 13.2 and 13.44(a) of the Gilroy Municipal Code; and WHEREAS, no exemptions from the City's business license requirements, as set forth in Sections 13.1, 13.2, 13.43 and 13.44(a) of the Gilroy Municipal Code, have been granted or apply to MediLeafs sale of marijuana and/or its operation of a marijuana dispensary in the City; and WHEREAS, the City Council discussed and considered a proposed medical marijuana ordinance, which would have permitted the operation of medical marijuana dispensaries, at public meetings held on August 3, 2009, September 14, 2009, and October 12,2009; and WHEREAS, representatives of MediLeaf were advised of their right to attend and participate in, the August 3, 2009, September 14,2009, and October 12,2009 meetings, and did actually attend and participate in them by giving testimony in favor of the adoption of a medical marijuana ordinance; and WHEREAS, at its October 12, 2009 meeting, the City Council ultimately voted not to adopt a medical marijuana ordinance; and WHEREAS, the City discovered, on November 9,2009, that MediLeafwas operating a medical marijuana dispensary at 1321-B First Street, in the City of Gilroy, APN: 790-43-017 ("the Premises"); and WHEREAS, MediLeaf is holding itself out to the public as operating a medical marijuana dispensary at the Premises, which includes selling medical marijuana, as evidenced by its webpage. Attached hereto as Exhibit "A" are pages printed out on November 11, 2009 from MediLeafs webpage, www.medileaf.org; and WHEREAS, on November 11, 2009, the City Administrator served MediLeaf and the owner of the Premises with a letter ordering them to immediately cease and desist operating a marijuana dispensary and/or otherwise cease and desist from selling marijuana at the Premises (a copy of which is attached hereto as Exhibit "B"); and WHEREAS, as of November 16, 2009, MediLeaf has not ceased and desisted from operating a marijuana dispensary at the Premises; and WHEREAS, Section 53.30 of the Gilroy Zoning Ordinance provides, in pertinent part, that, "any use of any land, building or premises conducted, operated or maintained contrary to the provisions of this Ordinance shall be and the same is hereby declared to be unlawful and a public nuisance and the City Attorney of the City shall, upon order of the City Council, immediately commence action or proceedings for the abatement and removal and enjoinment thereof in the matter provided by law and shall take such other steps and shall apply to such court or courts as may have jurisdiction to grant such relief...;" and 2 Resolution No. 2009-42 WHEREAS, Section 53.30 of the Gilroy Zoning Ordinance further provides that the remedies for abating and enjoining nuisances provided therein are cumulative and not exclusive; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Gilroy, pursuant to Section 53.30 of the Gilroy Zoning Ordinance, hereby orders the City Attorney to immediately commence action or proceedings for the enjoinment of MediLeafs operation of a marijuana dispensary and/or the enjoinment of marijuana sales at the Premises or at any other locations in the City, and to take such other actions and proceedings to prevent further violations of the Gilroy Municipal Code and Zoning Ordinance as are otherwise authorized by law. PASSED AND ADOPTED this 16th day of November, 2009, by the following vote: AYES: COUNCILMEMBERS: BRACCO, DILLON, TUCKER and PINHEIRO NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: NONE ARELLANO, GARTMAN, WOODWARD APPROVED: - / ).;;:.::;-::::7 L. A~;~;=- --"."_...,,-".,. ATTEST: Attachments: Exhibits A and B 3 Resolution No. 2009-42 EXHIBIT A ,. ...,"_! ,t.!> '.I! MediLeaflH Home About MediLeaf News Newsletter Member Sign-up Calendar FAQ Information Links Press Employment Contact MediLeaf Medical Cannabis Collective Dispensary 1321-8 First Street, Gilroy, CA 95020 Office: 408-847-2400 Fax: 408-842-5800 About MediLeaf MediLeaf 1M MediLeaf is an upscale Medical Cannabis Collective-Dispensary being established to provide Medical Cannabis to Approved Patients who hold a currentand valid Doctor's Recommendation and/or Patient Identification Card. MediLeaf iSda Mutual Benefit Nonprofit California Corporation. California State Law - Proposition 215 has backed the use of Cannabis for Medical purposes. The Citizens of Santa Clara County need a local source for Compassionate Relief. That stated, a new approach should be taken to insure that the retail sale of Medical Cannabis is done in a manner similar to other retail providers of controlled substances, such as Tobacco Products, Liquor and over the counter Cold Remedies that are dispensed from pharmacies. The Operators of MediLeaf have extensive business experience and are well qualified to plan, open and maintain a business of this type that can meet the needs of collective members while addressing the concerns of the local community. As civic minded citizens and long standing members of the community, the operators and managers are committed to working with local and county offices in meeting all legal requirements for operating this business. In addition, a close working relationship will be developed with local police to insure security through the use of effective security systems. This business endeavor is Health Related, Green for the Environment, Organic and Natural and good for the Economy in as such that Jobs are created and Taxes are generated. This is a Win-Win situation for the Community, Customers, Economy and Environment. http://www.medileaf.net/about%20Medileaf/about.htm 11/1112009 Mission Statement To assist Patients who require a local source for filling their needs for Medical Cannabis in a compassionate and humane manner. To Pay Taxes that help support the Community. To help Patients who are suffering and Patients who are in Pain. To maintain a Collective-Dispensary that is located in a safe and convenient location. The Medical Cannabis Collective-Dispensary will be clean, attractive, well lighted and staffed by professionals that will treat the Patients in a respectable and professional manner. As a resource to the community and Medical professionals, the Medical Cannabis Collective-Dispensary will provide information on the use of Cannabis for Medical purposes. To be supportive of the needs of the communities served by being active in the local Chamber of Commerce and to donate time and resources to our comm~h'ity:'To create jobs within our Community such as Retail, Educatgrs, P9~t9r~,L9wyers, Accountants, Buyers, Contractors, Chiropradbr.sahd Acupuncturists to name a few. <": ::.:i'; '\-.;" ,.< -- ,'- ,": To cooperate wit~ 'Law Enforcement (Police, Sherriff,...), Legislation (City Council,..,) 8r;1d th.eCommunity in order to reduce Crime, Generate Political~uI?P9rt~ Create' Jobs. To Help Organize, Regulate, Tax and Control Cannabis sales in Santa Clara County as required by law. Home I About MediLeaf I News I Newsletter I Member Sign-up I Calendar I FAQ I Information Links I Press I Contact Employment I Employees I Rules and Regulations I Privacy Statement I Site Map I 810g Copyright @ 2009 MediLeaf Medical Cannabis Collective Dispensary. All Rights Reserved. http://www .rnedileafnetJ about%20Medileaf/ about.htrn 11/11/2009 MemLeaf'" Home About MediLeaf News Newsletter Member Sign-up Calendar FAQ Information Links Pn~ss , , .. Employment '. . Contact ,. . http://www.medileaf.netl MediLeaf Medical Cannabis Collective Dispensary 1321-8 First Street, Gilroy, CA 95020 Office: 408-847-2400 Fax: 408-842-5800 Welcome Open Seven Days a Wee t:iiiMJ sonD MediLeaf and dba UR Health & WellnessCenter is open 11am - 7pm seven days per week @132-BtstStreet inGilroy, CA next door to The Rock Zone. MediLeaf and UR Health& Wellne~sCe:nterspecializes,inaffordable and High Quality Medicine: Cannabis $55 ma)(imum for1/8ths & $400 maximum for ounces. We hav~ Clones for those who would like to grow their own Medicine. . . . We look forward to providing a comfortable, safe, informative and pleasant environment while offering a wide variety of Cannabis strains for our Members. We look forward to welcoming all New Members and please be sure to bring your Doctor Recommendation on your first visit. MediLeaf Directors & Management MediLeaf is registered as a Mutual Benefit Nonprofit California Corporation and will be known as "MediLeaf and dba UR Health & Wellness Center." In keeping with our Health and Wellness philosophy, we are offering additional health and wellness products and services to our members through MediLeaf and dba UR Health & Wellness Center. The MediLeaf Medical Cannabis Collective Dispensary is committed to meeting the needs of those seeking relief from pain and suffering through the legal use of Medical Cannabis. Batzi Kuburovich and Neil J Forrest, directors of the collective, are 11/11/2009 committed to meeting the needs of the collective membership in balance with the needs of the community. For additional information we suggest you review the sections AbolJt MecHLeaf and the Rules and Regulations of the collective. Attention Patients and Care Givers All Patients and Care Givers are welcome to egister under the Membership Sign-uQ menu option. New members will need to bring their Doctor's recommendation with a California State Issued Driver's License or I D. You may wish to review our Privacy Policy. MediLears Medical Cannabis 810g We have started a Medical Cannabis Blog to collect personal experiences as to how Medical Cannabis has been helpful to you or someone you love. See what others a~e saying and tell us of your experience. . . . . ;Notice:This websjte is still under construction. PIe,C!sebepatientas 'lffJ add90ntent and. function~lity to thi*}:vebsite.,. . . Home I About MediLeaf I News I Newslett~[ I Member Siqn-uQ I Calendqr. I FAQ I InfOrmation L"inks I pres~ I ConJ~<j ErnpJQyment I EmQ).Qyees I Bules_and Regulations I Privacy Statl3ment I Site MaR I 810g Copyright @ 2009 MediLeaf Medical Cannabis Collective Dispensary. All Rights Reserved. http://www .medileaf.netJ 11/11/2009 MediLeaflM Home About MediLeaf News Newsletter Member Sign-up Calendar FAQ Information Links Press EmpJoym~nr, > . Contact MediLeaf Medical Cannabis Collective Dispensary 1321-6 First Street, Gilroy, CA 95020 Office: 408-847-2400 Fax: 408-842-5800 News ~ ", ..~"... I-,J I. MediLeaf Business News M~diLeaf. anq dba UR Health & .Wellness Center isopem 11am-7prnseven days per week We are located at: 1321 B First Street Gilroy, California We are located next door to The Rock Zone. (Current hours are by appointment only) MediLeaf and UR Health & Wellness Center specializes in affordable and High Quality Medicine: Cannabis $55 maximum for 1/8ths & $400 maximum for ounces. We have Clones for those who would like to grow their own Medicine. We look forward to providing a comfortable, safe, informative and pleasant environment while offering a wide variety of Cannabis strains for our Members. We look forward to welcoming all New Members and please be sure to bring your Doctor Recommendation on your first visit. MediLeaf Directors & Management Home I About MediLeaf I News I Newsletter I Member Sign-up I Calendar I FAQ I Information Links I Press I Contact Employment I Employees I Rules and Requlations I Privacy Statement I Site Map I Blog Copyright @ 2009 MediLeaf Medical Cannabis Collective Dispensary. All Rights Reserved. http://www.medileaf.net/news/news.htm 11/11/2009 MediLeaf1>l Home About MediLeaf News Newsletter Member Sign-up Calendar FAQ Information Links Press Employment Contact MediLeaf Medical Cannabis Collective Dispensary 1321-8 First Street, Gilroy, CA 95020 Office: 408-847-2400 Fax: 408-842-5800 The managers of MediLeaf Medical Cannabis Collective Dispensary are dedicated to both Collective Members and the commul1ity we serve. Plea'se contactus if you have questions, concerns or'suggestions. .Your.. feedback is appreciated. Location MediLeaf Medical Cannabis Collective Dispensary 1321-8 First Street Gilroy, CA 95020 Mailing Address MediLeaf Business Office 16430 Monterey Suite 5 Morgan Hill, CA 95037 Hours of Operation Open 7 days a week from 11 :00 am to 7:00 pm Starting Monday, November 9,2009 Email Contacts Click the name below to send an email message to: Batzi Kuburovich or Neil J Forrest http://www.medileafnet/contact/contact.htm 11/11/2009 To submit comments, suggestions or report problems with the website, please send an email to our Webmaster. MediLears Medical Cannabis Blog We have started a Medical Cannabis Slog to collect personal experiences as to how Medical Cannabis has been helpful to you or someone you love. See what others are saying and tell us of your experience. MediLeaf Privacy Statement Home I About MediLeaf I News ll'Jewsletter I Member Sign-uQI Calendar I FAQ I Information Links I Press I Contact Employment I Employees I Rules and Reoulations I Privacy Statement I Site Map I 810g Copyright @ 2009 MediLeaf Medical Cannabis Collective Dispensary. All Rights Reserved. 10 http://www.medileaf.netJcontact!contact.htm 11/1112009 EXHIBIT B QCitp of (fgilrop 7351 Rosanna Street Gilroy, California 95020-6197 Telephone (408) 846-0202 Facsimile (408) 846-0500 http://www.ci.qilrov.ca.us Thomas J. Haglund CITY ADMINISTRATOR November 11,2009 Neil J. Forrest, Director Batzi Kuburovich, Director MediLeaf Dba MediLeaf Medical Cannabis Collective Dispensary Dba DR Health & Wellness Center 1321-B First Street Gilroy, CA 95020 Goyko G. Kuburovich MediLeaf 16430 Monterey Road, Ste. 5 Morgan Hill, CA 95037 Mike and Kulwinder Kaur Atkar 2467 Murillo A venue San Jose, CA 95148 Re: Cease and Desist Order 1321-B First Street, APN: 790-43-017 To Whom It May Concern: The City of Gilroy ("City") is informed that one or more of the persons or entities addressed above, and/or persons or entities under their control and/or acting in concert with them, is operating a medical marijuana dispensary and/or otherwise selling marijuana at l321-B First Street in the City of Gilroy ("Premises"), in violation of federal law, the Gilroy Municipal Code, and the Gilroy Zoning Ordinance. The sale of marijuana and the operation of a marijuana dispensary in the City constitute violations of Sections 13.2 and 13.44(a) of the Gilroy Municipal Code because such activities are being conducted without a business license. A properly issued, lawful business license is required of for-profit and non-profit businesses and entities in the City of Gilroy. In addition, such activities violate Sections 53.20 and 53.30 of the Gilroy Zoning Ordinance because they are not permitted uses under any City zoning district. As such, these uses constitute a public nuisance (Zoning Ordinance section 53.30), and no exceptions have been granted or apply. Thus, the persons or entities addressed above, including the owners of the property upon which the unlawful use is conducted, and/or persons or entities under their control and/or acting in concert with them, are hereby ordered to IMMEDIA TEL Y CEASE AND DESIST from selling marijuana or otherwise operating a medical marijuana dispensary at the Premises or at any other location in the City, and will be held liable if such use is not ceased. As MediLeaf's representatives are well aware, the operation of a medical marijuana dispensary and the sale of marijuana are not permitted under the City's Zoning Ordinance. The City rejected MediLeaf s application for a business license because the proposed use is not a lawful use according to federal law as required by the business license ordinance nor does it meet the zoning requirements of the City (see letters from the City attached hereto), and the City returned MediLeafs September 14, 2009 application for a conditional use permit and refused to process it for the same reason. (See City letter attached hereto.) In addition, the City Council gave serious consideration to a proposed medical marijuana ordinance that would have permitted such uses, but ultimately decided not to adopt the ordinance at its October 12,2009 City Council meeting, which MediLeaf representatives participated in. Therefore, such a business remains unlawful both under the City's business license ordinance and under the City's zoning ordinance. If you fail to cease and desist these operations immediately, then the City will be free to take any and all legal actions necessary to enforce your compliance with the law, including but not limited to issuing administrative citations against you, seeking administrative penalties for each day you continue to operate without a license, issuing criminal citations, and seeking a court order for injunctive relief to prevent further violations. Thorn s J. Haglund City Administrator EncIs. cc: Denise Turner, Chief of Police Linda A. Callon, City Attorney Kristi Abrams, Development Center Manager 2 BERLINER. COHEN SANFORD ^- BElU./NER ANDREW L. FABER RALl'Il J. SWANSON PEGGY L. SPRlNGGA Y JOSEPH E. DWOItAJ( SAMUEL L. F ARB ALAN J. PlNNllR FRANK !l UBHAUS LINDA ^- CALtoN JAMES P. CASHMAN STEVEN J. CASAD NANCY J. JOHNSON JEROLD A. RElTON ROBERT L. CHORTEK JONATIlAN D. WOLF KA THUlEN X. SIPLE KEVIN f. KEllEY MARK MAXlEWlCZ ROBERTA S. HAYASHl JIlFFREy S. KAUFMAN JOLIE HOUSTON BRIAN L. SlIEllD. JOHN F. DOMJNGUE IlARIl. Y ^- LOPEZ CliAJlU;S W. VOLPE M1CIIAI!L V10LANrl ATTORNEYS AT LAW TEN ALMADEN BOULEY ARD ELEVENTH FWOR SAN JOSE, CALIFORNIA 95113-2233 TELEPHONE: (408) 286-5800 FACSIMILE: (408) 99&-5388 www.berliner.com THOMAS P. MURPHY V1CroR A PAPPAlARDO MILES J. DOLINGER CHRlSTlAN E. PICONE mOMAS D. MORELL SETH J. COHEN CHRISTINIl It LONG LAURA PALAZZOLO SHANNON N. COGAN AARON M. V AI..ENTI KAllA L ARGUELLO ANDRllW J. GJORGlANNJ MATTHl!W ^- TAYLOR IffiA TIlEll/i MUNOZ FORREST W. HANSEN ALAN D. NlEBEL SANDAA G. SElL'!. VEn.4 MARCOM.CJJ,lJ'AGNA ERIC J. EE.'lQ1Il5T DEBBIE Y. ME MARY ICATIlAllINE WILSON NICHOLAS RABY STEP!IANlll B. WERSEL USA L. GORECKI RETIRED SAMUEL J. COHEN ROBERT W. HUMPHR.I!YS Branch Offic. - Merced, CA OF COUNSEl. HUG!! L. ISOLA STEVEN L. IlALLGRlMSON EllIC WONQ PIIILlP GOLDEN NANCY L BR.UIDT September 24, 2009 James Suner 2950 Soma Way Gilroy, CA 95020 Re: Conditional Use Permit Application ("CUP") Location: 7101 Monterey Road, Gilroy APN #799-10-060 Applicant: Medi Leaf Corp. - Batzi Kuburovich and Neil Fon.est Dear Mr. Suner: The City is returning to you the original above-referenced CUP application that you turned into the City on September 14,2009, a copy of which has been kept by the City, and is returning to you the original check for City fees in the amount of $4,185.00. The City cannot process this application at this time because the City Zoning Ordinance does not have a use category that recognizes and regulates a medical marijuana dispensary. In addition, the Gilroy City Code does not allow operation of any business that does not show compliance with all federal, state and local laws and ordinances. (See the business license ordinance at Gilroy City Code section 13.33(a)] The proposed use does not comply with federal law or with the City's zoning ordinance. As to the zoning issue, the City Council understands that this is a newly proposed use that must be considered within the zoning and land use context for Ioeational criteria and other standards and limits on development to apply to such a use to protect the health, safety and welfare of the users and the surrounding areas. On August 3, 2009, the City Council directed staff to propose a new zoning ordinance that would permit and regulate the use of a medical marijuana dispensary within the City, and that work is underway. (See City Council agenda packet for September 14, 2009.) The City Council at that meeting, which you attended and ItAC\B01265.2 092409-01706089 James Suner September 24, 2009 appeared on behalf of the CUP applicants, directed staff to bring back regulatory proposals for its review, and a special meeting is now scheduled for October 12,2009 at 6 p.m. In addition, if such an ordinance is adopted, the City will also amend its business license ordinance to be consistent with the regulatory scheme for such a use. As we discussed at the September 14,2009 Council meeting, the City at this time does not have a process under which to proceed with an application for a use or a requested permit that is not consistent with the zoning ordinance. This letter is to inform you that this application is therefore incomplete, and cannot be made complete by any action of the applicants. A change in both the zoning ordinance to include such a use with its accompanying regulations and a change in the Gilroy City Code allowing such a use to be licensed must be approved by the City Council and take effect prior to processing any application for a medical marijuana dispensary in Gilroy. This processing denial is without prejudice, and your clients are free to file for the appropriate land use application and a business license when and if the City Council adopts the relevant ordinances to allow this use. Please call with any questions. Verytrl.Jly yours, BERLINER COHEN LINDA A. CALLON City Attorney, City of Gilroy E-Mail: linda.callonCa1berliner.com LAC:cem cc: Tom Haglund, City Administrator Kristi Abrams, Development Center ManagerlBuilding Official lLACIB01265.2 092409-04706089 -2- BERLINER. COHEN SANFORD A. BERLINIU\ ANDREW L FABIU\ RAI.1H J. SWANSON l'EGGY L SPRlNGGA Y JOSEPH E. DWORAK SAMlJEL1.. FARIl A!.AN I. PINNER fRANK R. UBllAUS LINDA A. CALLON lAMES P. CASHMAN STEVEN I. CAS,W NANCY I. JOHNSON JEROLO A. RElTON ROBERT L CllORTEl< JONATHAN D. WOLF KATHLEEN It SIPLE KEVIN F. KELLEY MAAJ< MAKlEWlCl ROBERTA S. llA Y ASH! JEFFREY S. KAUFMAN JOUE HOUSTON BRlAN L SI!lITU!R. JOHN F. DOMINGUE !lAAAY A. LOPEZ CIIAll.LES W. VOI.1E MICHAEL VlOLANTI ATTORNEYS AT LAW TEN ALMADEN BOULEVARD ELEVENTII FLOOR SAN JOSE, CALIFORNIA 95113-223) TELEPHONE: (408) 286-5800 FACSIMILE: (408) 998-5)88 www.beTliner.com THOMAS P. MURl'1fY VICTOR A. PAPPALAlWO M1LSS I. DOLltIGIU\ ClIIUSTWl E. PICONE mOMAS D. MOIU!ll SETH I. COHEN CllIUSTlNE H. LONG LAURA PALAZZOLO SHANNON N. COGAN AARONM. VALENTI KARA 1.. ARGUELLO ANDREW J. GIOR-GIANNI MAlTHEW A. TAYLOR HEA TIlER H. MUNOZ FOR.REST W. HANSEN A!.AN D. NIEBEl SANDRA G. SEPULVEDA MAIleo M. CAMP AON ^ ElUe I. BERQUIST DEll8IE Y. 8AE MARY ICAlllARINE WILSON NlCHOUS RAllY STEPHANIE B. WEJl5EL USA L GORECKI RETIRED SAMUEL J. COHEN ROBEllT W. HUMPHlU!YS OF COUNSEL IlUGH I. L~O!.A STEVEN L HAllGRlMSON ERle WONG PHlUP GOLDEN NANCY L. BRANDT Branch om,. - Mctud. CA August 24, 2009 James K. Roberts, Esq. Roberts & Elliot Ten Almaden Boulevard, Suite 500 San Jose, CA 95113 VIA EMAIL &U.S.MAIL Re: Medileaf - Medical Mariiuana DiS{>ensarv Dear Mr. Roberts: Weare in receipt of your letter of August 10, 2009 regarding the business license application of Medileaf. In your letter you asked that we clarify the status of your client's application based on a stateiIJ.ent made by the Police Chief in the August 3, 2009 City Council study session that the business license application had been denied, and statements in the City's previous letters to you. In. my July 16, 2009 letter, I stated that the application was not approved, and I cited Section 13.44(a) of the Gilroy City Code, which requires that an applicant for a proposed business "shall show compliance with all federal, state and local laws and ordinances which apply to each," noting that the Section appeared to prevent issuance of a business license to your client due to federal law's prohibition of such a use. I invited your analysis as to the federal law issue. Though you commented on the issue, we did not receive any input from you that would convince us that your client's proposed activities will comply with federal law. Moreover, we have found nothing in the law, including the Compassionate Use Act, the Medical Marijuana Program and in the cases you cite, that requires a City to permit a medical marijuana dispensary within its city limits. We have no doubt that Section 13.44(a) constitutes a legitimate use of the City's police powers under current, applicable state law and remains a valid requirement of the City of Gilroy until amended or repealed by the City CoUncil. WPAPPI799505.1 08180941706083 James K. Roberts, Esq. August 24, 2009 Therefore, in order to once again clarify the situation at your request, the City under its own code has denied your client's application since there was no showing of compliance with federal law. Please note that the denial of your client's application is without prejudice to your client's right to refile its application for a business license ifthere is a change in the law. As you are aware from the City Council's direction to City staff at the August 3, 2009 study session, we are expecting that the City will in the near future consider a new ordinance pencitting and regulating the use of a medical marijuana dispensary within the City limits, and if so adopted, will also amend the business license ordinance to be consistent with the regulatory ordinance. I hope this clarifies the City's position on this matter. Please let me know if you have any further questions or comments. Sincerely, BERLINER COHEN y{~d; GcQ0w LINDA A. CALLaN E-Mail: linda.callon@berliner.com . LAC:cds cc: Police Chief Denise Turner Sergeant Kurt Ashley Kristi Abrams, Conununity Development Department Tom Haglund, City Administrator \VPAPP\799505.1 081809-04 706083 -2- BERLINER. COHEN SANFORD A. BERLINER ANDREW L FABER RALnl I. SWANSON PEGGY L SPRlNGGA Y JOSEPH Ii. DWORAK SAMUSL L. f ARB Al.J\N 1. PINNEll F1lANK Il UBHAUS UNDA A. CALLON lAMES P. CASHMAN STEVEN J. CASAD NANCY I. JOHNSON JEROLD A.ltEITON ROBERT L. 0I0RTEK JONATH/IN D. WOLf KA TIil.EEN II SIPLE KEVIN F. KELLEY MARJ( MAXlEWlCZ ROBERTA S. HAYASHI JEFFREY S. KAUFMAN lOLI8 HOUSTON BRlAN L. SHETLER JOlIN F. DOMINGUE HARRY A. LOPEZ CHARLES W. VOLPE MICHAEL VlOLANTI ATTORNEYS AT LAW TEN ALMADEN BOULEY ARD ELEVENTH FLOOR SAN JOSE, CALIFORNIA 95113-2233 TELEPHONE: (408) 286-5800 FACSIMilE: (408) 998-5388 www.berliner.com THOMAS P. MURPHY VICTOR A. PAPPALARDO MILas I. DOlINGER CHlUSTW-l E. PICONE THOMAS D. MOltEU. SETH I. COHEN CHIUSTlNE H. LONG LAURA P AlAZZOLD SHANNON II. COGAN AARON M. V ALENTl KAKA L ARGUELLO IINDlEW I GIORGIAHNJ MATTHEW A. To\YLOR IlEA THER H. MUNOZ FOIlREST W. HANSEN ALAN D. NlEBEL SIINDRA G. SEPULVEDA MARCO M. CAMPAGNA ERIC J. BERQUIST DEBBIE Y. IIAE MARY KA ntARINE WlLSON N!OIOlAS RABY STEPIIANlE B. WERSEL USA L GOR.I!CJ:I Bf'1..I)I;bOfficr -Mcrctd. CA OF COUNSBL HUGH L. lSOU. STEVI!N L IlALLGRlMSON ERIC WONG PHlUP GOLDEN NANCY L BRANDT lUlTlllD SAMUEL I. COHEN ROBERT W. Il1Jtdl>HREYS July 16,2009 James K. Roberts Roberts & Elliot Ten Almaden Boulevard, Suite 500 San Jose, CA 95113 I Re: Medileaf - Medical Cannabis Dispensary Dear Mr. Roberts: Our client, the City of Gilroy, is in receipt of your letters of June 29, 2009 and July 2, 2009 as well as your cli~nt's business license application dated June 8, 2009. To clarify any confusion due to having,:two applications submitted, Sergeant Kurt Ashley ofthe Gilroy Police Department upon receipt of your letter of June 29,2009, called your client Goyko Kuburovich and told him that the June 8, 2009 application was not approved for the same reason that the May 8,2009 application was not approved. Both applications were submitted without any information that would have allowed the City to determine the legality of the proposed operation ofMedileafCannabis Collective Dispensary. However, you provided some information for our review with your June 29, 2009 letter, and we are in the process of reviewing that'information. As you may be aware, the Gilroy Business License Application Form requires approval by numerous City departments. Pursuant to Sec. 13.43 of the Gilroy City Code regarding business licenses, those departments are asked to clear the license applications in part to verify that the proposed uses of property meet City laws and policies, as well as State and federal laws administered by each department. The police department has a vital role in such approvals; they both clear the application and, if necessary, impose conditions and requirements for any such approval related to their role in maintaining the peace and safety of our community. A medical marijuana collective is not a typical business and the City of Gilroy has not been asked to approve one in the past. Obviously, distribution of marijuana to persons other than lLAC\797080.1 071609-04706098 James K. Roberts July 16,2009 qualified patients or caregivers is a criminal act under both state and federal law, and any distribution is against federal law. Section 13.44(a) of the Gilroy City Code states that: All business, trades, professions and callings shall show compliance with all federal, state and local laws and ordinances which apply to each and shall obtain clearances set forth in section 13.43, prior to issuance of a business license. It is difficult for the City to reconcile approval ofMedileafs application with the above- cited provision ofthe Gilroy City Code, and the burden of proof is on the applicant. The City, at a minimum, needs to assure itself that your client's proposed operation will operate under the legal requirements of the Compassionate Use Act, the Medical Marijuana Program set forth in California's Health and Safety Code, and the Attorney General's guidelines. In addition, we have concerns as to whether the City or its officers and employees would have any liability under federal law ifthis license is issued. We request your analysis as to how the City can issue this license in light of federal law on the subject. As you know, consideration of any permission to allow these facilities is a matter that requires careful consideration. The City Council at this time is scheduled to conduct a general study session with the Police Department on medical marijuana distribution in the City on August3, 2009, from 6pm to 7 pm in the City of Gilroy City Council Chambers, and of course the public may attend. Please check the City's website or with the City Clerk's office to confirm that date and time later this month. Meanwhile, we are reviewing the materials you have provided us and are trying to discern if your rules and regulations for the dispensary at least meet State law dictates. If you have further information that would aid in that effort, please do forward it to the City. Thank you for your cooperation. Very truly yours, BERLINER COHEN x:~~ LINDA A. CALLON City Attorney, City of Gilroy E-Mail: linda.callon@berliner.com LAC:cem cc: Police Chief Denise Turner Sergeant Kurt Ashley Kristi Abrams, Development Center Manager Tom Haglund, City Administrator \LAC\797080.1 071609-04706098 -2- ~iIrop Jolier 11gepartttttnt ((itp of @t1rop AdmIn. (408) 846..{)310 Comm. (408) 846-0350 Records (408) 846-0300 Fax (408) 846-0339 7301 Hanna Street Gilroy, California 95020-6129 DENISE J. TURNER Chief of Police June 16,2009 Goyko Kuburovich Neil Forrest 2135 Darnis Circle Morgan Hill, CA 95037 Re: MedUeaf - Medical Cannabis Collective Dispensary Mr. Kuburovich and Mr; Forrest; On May 8, 2009, you submitted a request for approval for a business license for MediIeaf - Medical Cannabis CoUective DispensaJ:Y. Af~r considering your written request and the information you provided to me in our follow-up meeting, we find that you have not submitted enough information to show that your proposed business would meet state 'legal standards. Asa result, we cannot approve your business license. Under CaliforniaHea1th and Safety Code, Section 11362.775, "[q]ualified patients, persons with valid identification cards, and the designated primary caregivers of qualified patients.. . who associate...in order collectively or cooperatively to cultivate marijuana for medical purposes" are not subject to' criminal sanctions for such activity. California's Attorney general has interpreted this statute as allowing only "statutory cooperatives" or "collectives" for purposes 'of providing medical marijuana. According to the Attorney General, a "statutory cooperative" must file articles of incorporation and conduct its, business for the mutual benefit of its members. Cooperatives must be "democratically controlled" and must not be organized "to make a profit for themselves." According to the Attorney General, "cooperatives should not purchase marijuana from or sell to non-members; instead they should only provide a means for facilitating or coordinating transactions between members." . The Attorney General has similarly opined that a collective should be an organization that merely facilitates the collaborative efforts of patient and caregiver members _ including the allocation of costs and revenues. Like a cooperative, the collective should not purchase marijuana from, or sell to, non-members; instead, it should only provide a means for facilitating or coordinating transactions between members. State law allows only patients and primary ,caregivers to grow, cultivate and possess marijuana. The legal definition for a primary caregiver is a person who has consistently PROTECTION OUR DUTY, PREVENTION OUR GOAL 'C)C'^_n...o_o^...~ Medileaf - Medica! Cannabis Collective Dispensary June 16,2009 Page 2 assumed responsibility for a patient's care "independent of any assistance in taking medical marijuana" (People v. Mentch, 45 Ca!. 4lh 274, 283 (2008). Clearly, you could not be a primary caregivc::r for all of the proposed members of the enterprise. Similarly, you indicated that you would receive your marijuana only from "certified growers". I have no information that California provides for any "certification" of marijuana growers, but even with such certification (if it exists), if you cannot show that such proposed growers are legitimate members (either patients or primary caregivers) of the collective or cooperative, then we believe your proposed business would not meet the legal requirements of California's Health and Safety Code. In fact, the very term "Collective Dispensary" indicates that your proposed business may be operated unlawfully; the Attorney General has made clear that "dispensaries...are not recognized under the law!' Based on your application and our follow-up discussion, I have not received any information showing that your "Collective Dispensary" would operate legally under state law. As a result, we cannot approve of yourapplic~tion for a business license for Medileaf - Medica! Cannabis Collective Dispensary. If you have any questions regarding the above, please contact Sgt~Kurt.Ashley at 846-0521. Sincerely j ~'d~. Denise J. Turner Chief of Police DT/nb I, SHA WNA FREELS, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 2009-42 is an original resolution, or true and correct copy of a city resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 16th day of November, 2009, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 17th day of November, 2009. (Seal)