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November 29, 2009

Dispensary CannaMart sues another city

A medical marijuana dispensary that had already filed a lawsuit against Centennial is now suing the City of Littleton for denying it a license to operate.

CannaMart claims a Littleton city employee told the business in November it would be “grandfathered in” because it had already applied for a sales tax license. The suit says the dispensary invested nearly $80,000 in its commercial building, which it leased for about five years on Nov. 2.

Meanwhile, CannaMart’s shop at Broadway and Arapahoe Road has remained open despite being turned down for a license by a panel in May.

The dispensary is seeking a reversal of last month’s decision as well as damages and attorney fees. CannaMart is being represented by the law firm Hoban and Feola and well-known Denver medical marijuana attorney Jessica Corry.

“CannaMart is seeking compensation for the lost value of its business, which is hundreds of thousands of dollars,” Corry wrote in an e-mail.

The lawsuit, which also names the Littleton Licensing Authority as a defendant, was filed in Arapahoe County Court on June 11. Littleton has 30 days to file a response.

The licensing authority granted licenses to four medical marijuana dispensaries May 12 and denied licenses to CannaMart and another shop that had been operational. In January, the city council passed an ordinance limiting the number of dispensaries to four. Council enacted a moratorium on dispensaries Nov. 3.

A Feb. 5 letter from City Clerk Wendy Heffner to CannaMart says the city manager determined the shop was one of the first four dispensaries to become operational. However, that was not what the licensing authority decided.

The licensing authority, primarily using sales tax records, determined that CannaMart became operational on Nov. 12, the last of the six to do so.

This is the second lawsuit to be filed by CannaMart against a municipality. A case against the City of Centennial is set to go to trial in March, Corry said. Centennial forced the dispensary to close on grounds that its business violated federal law.

“This lawsuit is very important to large litigation strategy, where we are looking to protect patients and caregivers from unconstitutional bans across the state,” Corry said.

While CannaMart’s Centennial location remains closed, the Littleton site is open for business as usual, according to owner Stan Zislis.

Neither city officials nor dispensary representatives would comment on how or why CannaMart is still open in Littleton. The city’s ordinance makes it illegal to operate without a license.

“We have filed suit on this issue and have no comment as we are currently working with the city in the hope to come to a suitable resolution,” Corry said.

The other shop denied permission to operate, A Cut Above, closed shortly after the licensing authority’s decision.

City council is expected to discuss legal issues related to the lawsuit in an executive session on June 29, said City Attorney Suzanne Staiert.

No matter the outcome of the lawsuit, Littleton will, at the very least, have to amend its ordinance to comply with the state’s new regulations, which go into effect July 1.

Medical marijuana centers must be licensed by the local government before applying for a license from the state. According to Staiert, that is problematic, because the city does not recognize “centers” under its ordinance. And the city cannot keep licensing dispensaries because the state does not recognize them.

The city could also put the issue to a vote in November and ask residents whether it should ban dispensaries, something that is likely to happen, according to Littleton Mayor Doug Clark.

Corry says the CannaMart lawsuits have national importance as legislatures across the country consider strategies to permit medical marijuana in their states.

“Here in Colorado, this case could prove critical to eliminating an unconstitutional restriction on patient access to the caregiver of their choice,” she said.

Corry said that because the state’s new law harms those without the financial resources required to fight back in court, her firm, Hoban and Feola, will be taking on any challenges at substantial discounts for clients, or even pro bono in some cases.

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