Pot rules remain murky for dispensaries, law enforcement

LANCE BENZEL and MEGAN SCHRADER Updated: March 15, 2013 at 12:00 am • Published: March 15, 2013

Surrender your pot, or prepare to defend your business license.

That was the pitch the Colorado Springs City Attorney’s Office made last week to a medical marijuana grower seeking the return of up to $3 million worth of pot after her January acquittal on felony drug charges.

It’s the latest turn-of-the-screw in the case of Rocky Mountain Miracles dispensary-owner Ali Hillery, who has become a central figure in the potentially costly liability battles after unsuccessful marijuana prosecutions throughout the state.

The case illustrates the uncertainty among law enforcement and attorneys in the wake of voter-approved amendments legalizing medical and recreational marijuana.

Now that it’s legal, marijuana has become a multi-million dollar liability for police and an uninsurable investment for pot capitalists, and Hillery is among the Colorado Springs pot merchants caught in the middle.

The conundrum of seized pot is a unique and difficult one, said Jack Finlaw, chief legal counsel for Gov. John Hickenlooper. Any other drug confiscated by law enforcement is illegal whether the defendant is found guilty or not.

“If law enforcement takes possession of marijuana that is ultimately determined to be legal, it is private property of the defendant,” Finlaw said. “It is important to recognize that at least under Colorado law that’s private property that government needs to respect and not destroy.”

The governor’s Amendment 64 Implementation Task Force considered the issue, but was unable to reach consensus on a solution, leaving it to lawmakers to solve.

Hillery, 61, says the city threatened to pursue a revocation complaint that would shutter her business unless she agreed to allow police to destroy 604 pot plants and 36 pounds of refined marijuana confiscated in March 2012 from her Knob Hill neighborhood dispensary — among the largest pot-seizures on record involving local dispensaries.

“Their basic position was: If you don’t enter into this agreement, we’re going to go ahead with the license revocation,” said her attorney, Sean McAllister of Denver, who said Hillery signed off on the deal Thursday to avoid a potentially lengthy battle in the city’s administrative hearings court that deals with dispensary violations. “She’s already spent too much money and too much time fighting the criminal case.”

Upon agreeing to the deal, Hillery was granted local approval to operate in Colorado Springs, McAllister said.

Notification of the approval was sent to the Colorado Department of Health and Environment earlier this month, and Hillery’s state license application is being reviewed by the state, said Lee McRae, a license enforcement officer with the Colorado Springs city clerk’s office.

If the move was the city’s way of trying to dodge civil liability, however, McAllister said it may not hold up in court.

He argues that nothing in the agreement prevents Hillery from suing — meaning taxpayers could be on the hook for the tab. He said the decision over whether to sue hasn’t been made. In a court filing, McAllister said the marijuana seized from Hillery is worth $3.3 million under the same calculations used by the Drug Enforcement Administration.

In a written statement, the City Attorney’s Office said Hillery agreed to the destruction of the marijuana to address a violation of the state’s medical marijuana code — a separate matter from criminal charges that ended in acquittal.

The complaint alleges that Hillery failed to maintain “all books and records necessary” under inspection procedures.

Before the raid, Hillery signed a consent-to-search form that allowed for the destruction of any evidence that was seized — though Hillery said she didn’t fully review the document, and wouldn’t have agreed to the provision had she known about it.

McAllister said she is required to allow searches of her dispensary upon request, and believed she was complying with that requirement alone.

The City Attorney’s office also made reference to the consent form in its statement, saying Hillery twice agreed to the destruction of her pot. McAllister acknowledged that the question of consent would mark a hurdle for a lawsuit.

DEAD ON SEIZURE

Hillery’s 604 pot plants had died long before the agreement with the City Attorney’s Office, which raises the question: Does government need to keep plants alive while awaiting a verdict?

“That’s really the question and it’s a tough one,” said Finlaw, who considered the issue on the governor’s Amendment 64 task force. “It’s a resource issue really.”

The conflict between marijuana growers and law enforcement has only increased since the passage of Amendment 64.

Police are in limbo, Greenwood Village Police Chief John Jackson said. Law enforcement has received no guidance from Colorado or federal authorities on how to handle conflicting state and federal law, or how to enforce the six-plant per person grow limit or the 1 ounce possession of cultivated pot.

“Law enforcement needs pragmatic solutions to these complicated problems,” Jackson said. “If we don’t get it what we will end up with is multiple lawsuits and multiple people feeling like their constitutional rights got trampled.”

Jackson said his officers must be able to seize pot if quantities exceed state limits or it is evidence in another criminal case.

“Are we supposed to turn our property rooms into grow houses?” Jackson asked. “Pragmatically, we didn’t get a solution to that, and that’s a huge problem for law enforcement. What it will do is foster grow centers across the state because we can’t take the plant.”

Because a plant is functionally dead the moment it is seized, Jackson said it’s a huge liability.

While Hillery’s case involves the biggest quantities seen thus far, she is not the only one threatening to sue over damage to marijuana collected as evidence.

In December, Robert Crouse filed a threat to sue the city after discovering that $300,000 worth of marijuana spoiled while in police custody. The 63-year-old former restaurateur was acquitted of drug charges in June. Crouse, who is battling cancer, said he uses marijuana concentrates to treat his leukemia.

Colorado Springs dispensary owner Michael Lee said he is considering filing suit at the conclusion of his criminal drug case, involving 504 plants and marijuana baked into edibles. Prosecutors have dismissed felony counts against him in favor of less-serious misdemeanors.

The conflict in Colorado Springs appears to revolve around concerns cited by law enforcement groups over marijuana’s murky legal status.

Although the recent passage of Amendment 64 largely decriminalized marijuana possession in Colorado, it remains a Schedule 1 drug under federal law, and police fear they could be hit with federal charges for returning pot in such large quantities, according to arguments heard in court in the Crouse matter.

Finlaw said he doesn’t give much credence to worries from law enforcement that if they return marijuana to citizens they are violating federal law.

“This is now the law of the land in Colorado, get over it,” he said.

POLICE SEEK GUIDANCE

Jackson expressed the need to address this issue as one of 24 members on the governor’s task force.

He said he was on the losing end in that committee with most of his public safety recommendations, including two dealing with the handling of pot by law enforcement.

Jackson’s recommendation — which ultimately was not supported — said if pot plants are seized in “good faith” that they are in excess of the six plant per person limit the “law enforcement agency is under no obligation to keep them alive and they may be destroyed subject to a court order.”

Two defense attorneys on the panel were vehemently opposed to that recommendation.

“There will be situations where one or both parties to the dispute will ask experts to examine the plants,” wrote Colorado defense attorney Brian Connors. “Destruction of the live plants eliminates this evidence and makes it impossible to resolve the dispute.”

Then there’s the question of cultivated marijuana that is in the possession of someone who has been arrested.

“We’re treating it like it’s legal, like it’s a pack of cigarettes and we’re going to give it back to them,” Jackson said. “That’s different than a lot of other departments and different than what I recommended to the task force. We’re trying really hard.”

Jackson said there is a patchwork of policies right now in Colorado on the issue because every force has an attorney with a different legal opinion.

In Colorado Springs, police used to photograph marijuana and take clippings from individual plants if they felt dispensary owners were violating the law.

Police changed the practice a couple years ago and began cutting down and collecting plants during raids, setting up the potential for liability claims should growers be acquitted, said Cliff Black, a Colorado Springs defense attorney.

The Police Department declined a request for an interview, but said in a statement to The Gazette that the department’s policy is to return marijuana should charges result in a jury’s acquittal.

“As with all evidence collected at a crime, CSPD will be placing marijuana into evidence so it can be used at trial if necessary,” said Deputy Chief Vince Niski in an email. “We will then release items to the proper owner when they come to take custody of it.”

That wasn’t what happened after recent acquittals of Crouse and Hillery, however.

In Crouse’s case, the City Attorney’s office fought a judge’s order to return his marijuana to the Colorado Supreme Court, which ended up siding with Crouse.

Hillery, who opened up shop before the state had devised its medical marijuana licensing program, is among the dispensary owners in Colorado who were allowed to operate with a pending license application.

After her March arrest, the City Attorney’s Office moved to bring her before a local administrative hearings officer for revocation proceedings.

According to McAllister, the city said it would proceed with those plans unless she agreed to allow police to destroy the marijuana.

“We just didn’t have any confidence at all in those proceedings,” he said.

Contact Lance Benzel: 636-0366 Twitter @lancebenzel

Contact Megan Schrader: 719-286-0644 Twitter @CapitolSchrader

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