A federal decide this week declined to problem a brief restraining order (TRO) in opposition to a California sheriff who used civil forfeiture to rob armored cars carrying cash earned by state-licensed marijuana companies. In his ruling, U.S. District Decide John Holcomb mentioned Empyreal Logistics, a Pennsylvania-based firm that transports money between companies and banks, “could very properly have a wonderful case on the deserves” however had failed to fulfill “the excessive burden” for a TRO.
San Bernardino County sheriff’s deputies stopped Empyreal vans 3 times in November, December, and January. They seized money throughout two of the stops, making off with a complete of greater than $1 million, which was transferred to the FBI so the Justice Division might pursue forfeiture underneath federal legislation. If the federal government prevails in these forfeiture proceedings, the sheriff’s division will get to maintain as much as 80 p.c of the cash underneath the Justice Division’s “equitable sharing” program. The earnings of state-licensed marijuana suppliers usually are not topic to forfeiture underneath California legislation.
Empyreal, which is represented by the Institute for Justice, argues that San Bernardino County Sheriff Shannon Dicus has no authority to grab cash from companies which might be complying with state legislation, that the van searches violated the Fourth Modification, and that the monetary motive for the stops makes them inconsistent with due course of. Along with Dicus, Empyreal sued the Justice Division, Legal professional Basic Merrick Garland, the FBI, FBI Director Christopher Wray, the top of the FBI’s Los Angeles Discipline Workplace, the Drug Enforcement Administration (DEA), and DEA Administrator Anne Milgram. The corporate argues that federal officers, by collaborating with Dicus, are violating a congressional spending rider that bars the Justice Division (which incorporates the FBI and the DEA) from interfering with the implementation of state medical marijuana legal guidelines.
Concerning that final declare, Holcomb mentioned the proof offered to this point was not adequate to ascertain that Empyreal and its purchasers had been working in accordance with California legal guidelines permitting medical use of marijuana. The corporate says three of the 4 companies whose cash was seized on November 16 had medical marijuana licenses. It says all the cash seized on December 9 got here from such companies.
“Empyreal bears the burden to point out by a preponderance of proof that it has strictly complied with state medical marijuana legal guidelines,” Holcomb writes. “Empyreal has not come near assembly that burden. Empyreal’s solely proof with respect to the problem of strict compliance is self-serving declarations from its CEO, Deirdra O’Gorman. The worth of these declarations is proscribed.”
Dan Alban, one of many Institute for Justice attorneys representing Empyreal, notes that “the appropriations rider requires DOJ to not spend any cash interfering with a state’s implementation of its medical hashish legal guidelines.” Whereas “the rider doesn’t shield each enterprise that Empyreal serves,” he says, “it ought to shield these with medical hashish licenses which might be in strict compliance with state legislation, and federal companies shouldn’t be capable of seize their proceeds.”
Holcomb was additionally unpersuaded by the argument that Dicus had exceeded his authority, since that declare hinges on demonstrating that the companies whose cash his deputies seized had been complying with state legislation. “Empyreal and its purchasers function in full compliance with relevant state hashish legal guidelines,” the corporate says in its TRO utility. However in Holcomb’s view, that assurance isn’t sufficient to help a TRO, since “the one proof that Empyreal presents is self-serving declarations from its CEO.”
For related causes, Holcomb says, Empyreal has not proven that its constitutional claims in opposition to Dicus are more likely to succeed. “Put merely, there may be not sufficient proof right now to counsel that Empyreal’s Constitutional rights had been violated,” he writes. He emphasizes that his order “doesn’t now tackle whether or not Empyreal’s rights had been violated, nor whether or not Defendants violated any legal guidelines.”
Empyreal argues that the site visitors stops had been pretextual: ostensibly justified by minor site visitors violations however truly geared toward producing income for the sheriff’s division. Sheriff’s Deputy Jonathan Franco claimed the November 16 cease, which resulted within the seizure of $712,000, was justified as a result of the Empyreal van was following a tractor-trailer too intently. When the identical deputies pulled over the identical automobile, pushed by the identical worker, on December 9, in response to the lawsuit that Empyreal filed on January 14, they claimed the driving force “barely exceeded the velocity restrict and prematurely activated his flip sign.”
In that case, the grievance says, “the driving force’s operation of the Empyreal automobile was utterly lawful.” The corporate says “the deputies had deliberate the cease upfront and would have pulled over the driving force and the Empyreal automobile no matter how fastidiously or lawfully it was pushed.”
This time the deputies took about $350,000, which was one thing of a letdown. Based mostly on an audio recording by the van’s safety system, Empyreal’s lawsuit describes this alternate: “One of many deputies mentioned, ‘That is it?’ and chuckled. He then mentioned: ‘You set the bar too excessive.’ When one other deputy remarked that he thought they’d get ‘1,000,000 or two,’ the [first] deputy responded, ‘At the least we obtained over 1,000,000′”—apparently referring to the mixed take from the 2 seizures.
The sheriff’s deputies who pulled over an Empyreal van on January 6 had been much more disenchanted. They found that it was carrying rolled cash that had nothing to do with the marijuana trade, so they didn’t get to grab something. As within the different stops, they didn’t write a ticket both.
“As a result of the sale of hashish and the transport of hashish proceeds (together with
in localities the place dispensaries are prohibited) are lawful underneath California legislation,” Empyreal says in its TRO utility, “the Fourth Modification prohibits the Sheriff from stopping, looking out, or seizing Empyreal’s personnel or property (specifically, automobiles, safes, and money) with out affordable suspicion or possible trigger to imagine that the property is related to or is the proceeds of hashish gross sales that violate state legislation….The Sheriff is utilizing pretextual site visitors stops to look and seize Empyreal’s property with out possible trigger. Certainly, the Sheriff isn’t even issuing site visitors citations throughout these stops—simply taking Empyreal’s money.”
Even when the stops had been justified by site visitors violations, Empyreal says, the following searches had been unconstitutional. A “traffic-violation cease doesn’t give officers the precise to look the automobile,” it notes. “Any warrantless search pursuant to the auto exception requires possible trigger to imagine that the place searched comprises contraband. Contra the Sheriff’s needs, a traffic-violation cease isn’t carte blanche to look a automobile, not to mention a locked secure inside it.”
Through the December 9 cease, the deputies claimed a drug-sniffing canine alerted to the van, which Empyreal says isn’t true: “Video footage from the automobile doesn’t present the canine alert on the automobile. As a substitute, it reveals the canine is barely within the automobile.”
The deputies obtained a search warrant previous to the November 16 seizure, however Empyreal says the appliance included a number of false or deceptive statements. It says the deputy who utilized for the warrant mistakenly claimed that Empyreal converts cash from marijuana companies into cryptocurrency and falsely asserted that among the firm’s purchasers weren’t licensed by the state. The deputy additionally mentioned Empyreal didn’t have a marijuana enterprise license, which isn’t required to move cash from dispensaries to banks. Moreover, a 2020 law says an organization that gives such providers to state-licensed marijuana companies “doesn’t commit a criminal offense underneath any California legislation.”
When he weighed the TRO utility, Holcomb declined to contemplate the details about the search warrant, which he mentioned had been launched too late, with out giving the defendants an opportunity to reply. Alban says that info, which Empyreal included in its reply briefs, was based mostly on “new proof that we had solely simply obtained and didn’t possess after we filed our TRO utility.”
The brand new proof included an unredacted copy of the November 16 search warrant. “We had tried to get these paperwork from the defendants for months,” Alban says, “however solely acquired them final week.” Though Holcomb declined to contemplate the brand new proof at this stage, Alban says, “we are able to now use these paperwork to help a movement for a preliminary injunction.”
Litigation of those claims will proceed, however within the meantime Empyreal, which reimbursed its purchasers for the seized cash, is out the $1 million or in order that Dicus’ deputies stole, plus one other $165,000 that Kansas sheriff’s deputies took throughout a site visitors cease in Dickinson County final Might. Empyreal says all the cash seized in Kansas got here from state-licensed medical marijuana dispensaries in Missouri. As in California, the cops had been working with the DEA and the Justice Division, which is pursuing forfeiture underneath federal legislation.
Empyreal says it’s attempting to keep away from additional bother by routing cash from marijuana companies round Kansas and San Bernardino County, which ends up in pointless additional journey. Empyreal has suspended plans for a “vault and foreign money processing facility” in Dicus’ jurisdiction. It says it had already invested $100,000 in that undertaking and continues to pay $21,000 a month in hire and utilities for the constructing. Empyreal says the specter of continued harassment and seizures has value it purchasers and endangered the enlargement of its enterprise, particularly in California.
