Pubdate: Fri, 16 Mar 2018
Source: Philadelphia Daily News (PA)
Copyright: 2018 Philadelphia Newspapers Inc.
Author: Sam Wood


Is a marijuana dispensary an "unlawful" business? A federal judge in 
Philadelphia will decide.

This arcane dispute over language in the deed of a marijuana
dispensary in Northeast Philadelphia could carry outsized
implications: A ruling by U.S. District Judge Gene Pratter could
affirm the superiority of federal law, which considers marijuana
illegal, over state law, where in Pennsylvania and 29 other states, it
is not.

Pratter's decision came Thursday in a strongly-worded memo that
described the case as "a fundamental clash between state and federal

"The need to pursue certainty on the legal status of marijuana
dispensaries looms large," she wrote.

Pharmacann, an Illinois-based medical marijuana retailer, has a permit
to build a dispensary where a Mexican restaurant once stood. It bought
the site on the periphery of the Philadelphia Mills shopping center
for a reported $1.1 million.

But Philadelphia Mills' owner, Simon Property Group, doesn't want the
dispensary there. Simon, which has no claim on the property, hasn't
explained why it's opposed. But it filed a legal challenge against
Pharmacann, claiming the property deed prohibits using the site for "a
drug store" or any "unlawful" purpose.

"It's a case with potentially far-reaching implications," said Bill
Roark, a Lansdale attorney who co-chairs the Pa. Bar Association's
Medical Marijuana and Hemp Law Committee. "It's not a new question.
But you don't want a federal court answering it because you know what
they're going to say. This could create a ripple effect through dozens
of states."

By definition, a drug store is one "used for the sale and display of
drugs," the judge wrote. Medical marijuana dispensaries only sell
marijuana oils. When the deed was drafted, no one imagined marijuana
would be legal to sell in Pennsylvania. The state's dispensaries,
which sell only cannabis oils, bear little in common with a CVS or a

The judge is not focusing on whether a dispensary is a drug store but
only on whether the proposed store would be unlawful.

Because of the conflict between state and federal law, the definition
of "unlawful" is open to interpretation. Pennsylvania, New Jersey,
Delaware and 27 other states have legalized medical or recreational
marijuana. The federal government, under the Controlled Substance Act,
flatly forbids it in any form.

Pharmacann had sought to have the matter resolved in Philadelphia
Court of Common Pleas.

"We viewed the case a local dispute over a 27-year-old property deed
restriction," said Pharmacann's attorney, Jeremy Unruh.

Simon countered. In October, the mall owner had the case bumped up to
federal court. Pharmacann sought to send the case back to the state
level. That effort failed.

On Wednesday, Pratter, calling this case "exceedingly rare" said she
would hold on to it. She didn't say when she would rule.

"The deed to PharmaCann's property prohibits ‘unlawful' uses,"
Pratter wrote. "That single term opens the door for federal question
jurisdiction by teeing up a fundamental clash between state and
federal law in this case."

"If a court were to rule that PharmaCann's dispensary violated federal
law, the Supremacy Clause would cast doubt on the validity of dozens
of state marijuana schemes," Pratter said.

The Supremacy Clause of the Constitution asserts that federal law
overrides state law. Since 1796, Congress has repeatedly upheld that.
But on the issue of medical marijuana, Congress has prohibited the
federal government from spending money to interfere with
state-sanctioned medical marijuana programs.

Roark, the attorney, said it was unlikely a decision by the judge
would deliver a "knock-out punch" to Pennsylvania's marijuana program.
But it could set a national precedent.

"Primarily, this could make it harder for someone to operate a
dispensary if they don't own the property. Every lease out there has
the 'unlawful use' language." Roark said. "Any landlord could take
their tenant to federal court to evict them."

Such a federal ruling could send a chill through the industry,
according to Hoban Law Group's Steve Schain.

"Any legal authority supporting a prohibition on ‘marijuana
growing, processing or selling' could be cataclysmic– ranging
from impeding the flow of capital through derailing dispensary
operations," Schain said.

"Even the most obscure legal opinion could be leveraged to torpedo a
real estate deal or embolden anti-marijuana groups to hinder legal,
compliant and transparent medical marijuana sales in strip malls or
other highly-trafficked commercial areas."

Pharmacann's attorney said the company was still evaluating the

"While we respect the authority of the court, we're disappointed the
court has gone to such lengths to make a local property dispute a
federal case," Unruh said. "But it's early, we're weighing how this
will affect our strategy going forward."

And the case could still go away. If Pharmacann withdraws its plan to
build on the property, Roark said, the question could become moot.
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