A Jackson County Circuit Court judge on Tuesday upheld the city of Medford's right to revoke the business license of MaryJane's Attic and Basement for unlawfully selling marijuana.
In what could prove to be more far-reaching, Judge Timothy Gerking also found that the landmark Oregon Medical Marijuana Act governing medical marijuana is in conflict with federal law.
Relying on a previous Oregon Supreme Court employment case involving medical marijuana use, Gerking wrote that the state law is "unenforceable" because it conflicts with federal law.
In his ruling on the Medford business, Gerking said substantial evidence also showed that MaryJane's wasn't operating lawfully under the OMMA.
Leland Berger, attorney for Richard and Marlene Nuckols, owners of MaryJane's, said he wouldn't comment on the judge's ruling until he had a chance to discuss it with his clients.
The city issued a business license to MaryJane's on April 9, 2012, but the City Council revoked it in March.
The Nuckolses appealed the city of Medford's revocation of their business license to Jackson County Circuit Court.
At the time, Gerking said owners of MaryJane's could operate the business until he made a ruling, as long as medical marijuana or other controlled substances were not exchanged on the premises.
The Nuckolses have two separate businesses under one roof. MaryJane's Attic sells clothing, candles and other products. MaryJane's Basement dispenses medical marijuana to patients who display a valid Oregon Medical Marijuana Act patient card.
Gerking's ruling upholds the city's decision to revoke the business license for both businesses at MaryJane's.
"Suffice it to say, the city was authorized to issue a single business license to the Nuckols for their multiple business operations on the same premises, and the city was also authorized to revoke that license if there was unlawful activity occurring on any part of that premises," Gerking wrote.
Councilor Daniel Bunn said, "Obviously, the city is pretty happy with the results."
The biggest issue resolved by Gerking's ruling is that federal law preempts state law in this case, he said.
"I think it spells trouble for the OMMA," Bunn said.
Under his reading of the city code, Bunn said, the Nuckolses' business license would be revoked for a one-year period, after which they could reapply, though not as a marijuana dispensary.
While pleased with the outcome, Bunn said he anticipates an appeal and expects the debate on medical marijuana to continue.
He said the city sought clarity about whether it should be considering federal or state law because it hadn't received enough direction from lawmakers.
"We're happy the court sided with us but frustrated we're in this position," he said.
Gerking said he relied heavily on an Oregon Supreme Court case known as Emerald Steel Fabricators Inc. versus the Bureau of Labor and Industry.
The Supreme Court ruled in that case that federal drug laws preempt the OMMA.
The court ruled Emerald Steel had the right to fire a marijuana-smoking employee who operated a forklift even though the employee had a medical marijuana card and limited his marijuana use to when he wasn't working.
Gerking found the Nuckolses obtained compensation from the sale of marijuana in excess of that allowed by state law.
The couple claimed the additional compensation was a donation, but Gerking stated, "This argument is disingenuous at best."
Last September, the Medford City Council enacted an ordinance essentially banning marijuana dispensaries. On March 20, the council enacted a permanent moratorium on marijuana dispensaries in response to House Bill 3460, which provides state licenses to sell medical marijuana.
MaryJane's recently obtained a state license to operate a marijuana dispensary.
Gerking didn't specifically rule on whether Medford's ordinance and moratorium violates state law.
"It is unnecessary for me to examine whether the city's ordinance is preempted by state law because I have already found that the applicable state law is unenforceable under the Supremacy Clause of the United States Constitution," Gerking wrote.
Reach reporter Damian Mann at 541-776-4476, or email email@example.com. Follow on Twitter at @reporterdm.