Arizona, State of et al v. United States of America et al

Filing 72

NOTICE OF FILING OF OFFICIAL TRANSCRIPT of Motion Hearing Proceedings held on 12/12/2011, before Judge Susan R Bolton. Court Reporter Elizabeth A Lemke. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER.. Redaction Request due 2/21/2012. Redacted Transcript Deadline set for 3/1/2012. Release of Transcript Restriction set for 4/30/2012. (BAS)

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA State of Arizona; Janice K. ) Brewer, Governor of the State of ) Arizona, in her Official Capacity; ) Will Humble, Director of the ) Arizona Department of Health ) Services, in his Official Capacity;) Robert C. Halliday, Director of ) the Arizona Department of Public ) Safety, in his Official Capacity; ) Plaintiffs, ) ) vs. ) ) United States of America; United ) States Department of Justice; ) Eric H. Holder, Jr., Attorney ) General of the United States of ) America, in his Official Capacity; ) Dennis K. Burke, United States ) Attorney for the District of ) Arizona, in his Official Capacity; ) Arizona Association of Dispensary ) Professionals, Inc., an Arizona ) corporation; Joshua Levine; Paula ) Pennypacker; Dr. Nicholas Flores; ) Jane Christensen; Paula Pollock; ) Serenity Arizona, Inc., an Arizona ) nonprofit corporation; Holistic ) Health Management, Inc., an Arizona) nonprofit corporation; Jeff Silva; ) Arizona Medical Marijuana ) Association; Does I-X, Does XI-XX; ) Defendants, ) ___________________________________) CV11-01072-PHX-SRB Phoenix, Arizona December 12, 2011 11:06 a.m. BEFORE: THE HONORABLE SUSAN R. BOLTON, JUDGE REPORTER'S TRANSCRIPT OF PROCEEDINGS MOTION HEARING Official Court Reporter: Elizabeth A. Lemke, RDR, CRR, CPE Sandra Day O'Connor U.S. Courthouse, Suite 312 401 West Washington Street, SPC. 34 Phoenix, Arizona 85003-2150 (602) 322-7247 Proceedings Reported by Stenographic Court Reporter Transcript Prepared by Computer-Aided Transcription UNITED STATES DISTRICT COURT 2 1 2 3 4 5 A P P E A R A N C E S For the Plaintiffs: OFFICE OF THE ATTORNEY GENERAL By: Kevin D. Ray, Esq. Aubrey Joy Corcoran, Esq. Lori S. Davis, Esq. 1275 W. Washington St. Phoenix, AZ 85007-2926 6 For the Defendant United States Department of Justice: 7 8 9 U.S. DEPARTMENT OF JUSTICE Civil Division, Federal Programs Branch By: Scott Risner, Esq. 20 Massachusetts Ave., N.W. Washington, DC 20001 10 11 12 For the Defendant Arizona Association of Dispensary Professionals Incorporated, Holistic Health Management Incorporated, Serenity Arizona Incorporated, Jane Christensen, Jeff Silva, Joshua Levine, Nicholas Flores, Paula Pennypacker, Paula Pollock and Arizona Medical Marijuana Association: 13 14 15 ACLU - NEW YORK, NY By: Ezekiel Reifler Edwards, Esq. Haley Horowitz, Esq. 125 Broad Street, 18th Floor New York, NY 10004 16 17 18 GAMMAGE & BURNHAM, PLLC By: Cameron Charles Artigue, Esq. Lisa Tewksbury Hauser, Esq. Two North Central Avenue, 18th floor Phoenix, Arizona 85004 19 20 21 22 ACLU - PHOENIX, AZ By: Daniel Joseph Pochoda, Esq. 3707 North 7th Street, Suite 235 Phoenix, Arizona 85014 For the Defendant Arizona Association of Dispensary Professionals Incorporated: 23 24 25 THOMAS W. DEAN, ESQ., PLC By: Thomas W. Dean, Esq. 323 N. Leroux Street, Suite 101 Flagstaff, Arizona 86001 UNITED STATES DISTRICT COURT 3 1 2 3 4 5 6 For the Defendants Holistic Health Management Incorporated, Serenity Arizona Incorporated, Jane Christensen, Jeff Silva, Joshua Levine, Nicholas Flores, Paula Pennypacker and Paula Pollock: ROSE LAW GROUP PC By: Kenneth Michael Frakes, Esq. David Weissman, Esq. 6613 N. Scottsdale Road, Suite 200 Scottsdale, Arizona 85032 7 For the Intervenor Plaintiff Maricopa County and Joy Rich: 8 9 10 MARICOPA COUNTY ATTORNEY'S OFFICE CIVIL SERVICES DIVISION By: Thomas P. Liddy, Esq. 222 North Central Avenue, Suite 1100 Phoenix, Arizona 85004 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNITED STATES DISTRICT COURT 4 1 2 P R O C E E D I N G S (Called to the order of court at 11:06 a.m.) 3 THE COURT: Good morning. 4 THE CLERK: Civil case 11-1072. 5 Time set for hearing regarding defendant's motion to dismiss for lack of jurisdiction and failure to state a claim. 8 9 10 State of Arizona and others v. United States of America and others. 6 7 Please sit down. Counsel, please announce your presence for the record. MS. DAVIS: Your Honor, Lori Davis on behalf of the 11 State of Arizona, Governor Brewer, the Director of the Arizona 12 Department of Health Services, Will Humble, and the Director 13 of Arizona Public Safety, Robert Halliday. 14 table is Kevin Ray and Aubrey Joy Corcoran from the Attorney 15 General's Office. 16 MR. LIDDY: With me at counsel And Your Honor, it's Thomas Liddy on 17 behalf of Maricopa County, Prospective Intervenor, and Joy 18 Rich in her capacity as Assistant County Manager, Planning and 19 Development. 20 MR. EDWARDS: Good morning, Your Honor. Ezekiel 21 Edwards from the ACLU on behalf of the Arizona Medical 22 Marijuana Association. I'm joined by Haley Horowitz behind 23 me, also of the ACLU. And we're also here representing the 24 Arizona ACLU. 25 MR. DEAN: Good morning, Your Honor. UNITED STATES DISTRICT COURT Thomas Dean 5 1 here on behalf of the defendant Association of Dispensary 2 Professionals. 3 4 MS. HAUSER: Good morning, Your Honor. Lisa Hauser appearing for the Arizona Medical Marijuana Association. 5 MR. RISNER: Good morning, Your Honor. Scott Risner 6 from the U.S. Department of Justice representing the United 7 States and the other federal defendants. 8 9 MR. WEISSMAN: Good morning, Your Honor. David Weissman from Rose Law Group here on behalf of the defendants 10 Joshua Levine, Paula Pennypacker, Dr. Nicholas Flores, Jane 11 Christensen, Paula Pollock, Serenity Arizona Incorporated, 12 Holistic Health Management Incorporated, and Jeff Silva. 13 THE COURT: Thank you. Just to clarify, before we 14 begin argument, while there are several pending motions in 15 this case, there is only one motion set for argument this 16 morning; and that is, the nongovernment defendant's motion to 17 dismiss for lack of jurisdiction and failure to state a claim. 18 The other two motions that are pending are the 19 federal defendant's motion to dismiss and Maricopa County and 20 Joy Rich's motion for leave to intervene. 21 motions requested oral argument and so are not noticed for 22 argument. 23 24 25 Neither of those Who will be arguing on behalf of the nonfederal defendants? MR. EDWARDS: I will, Your Honor. UNITED STATES DISTRICT COURT 6 1 THE COURT: You may proceed. 2 MR. EDWARDS: 3 THE COURT: 4 MR. EDWARDS: 5 Good morning, Your Honor. Your Honor, can I approach? Please. I have a slight cold, Your Honor. Your Honor, there are so 6 many jurisdictional defects with this lawsuit that it's 7 difficult to know where to begin, but I would like to focus on 8 three. 9 The first is that Arizona plaintiffs are seeking an 10 advisory opinion in this case. 11 coherent position of their own, and instead, are coming into 12 federal court and asking for your advice on two diametrically 13 opposed declarations that they seek, but refuse to take a 14 position on which they prefer or why. 15 They are refusing to take a Second, they are also coming to court as the State 16 and asking this Court to declare the validity or invalidity of 17 state law, which they cannot do. 18 And third, this is a hypothetical controversy which 19 is not ripe for adjudication. 20 steps it plans to take with regard to the AMMA, whether or not 21 they think the AMMA is lawful in light of federal law, and 22 there is, indeed, no threat of prosecution by the federal 23 government of state officials. 24 25 Arizona has not indicated what For all those reasons, Arizona's Complaint fails to meet Article III's case or controversy requirements. UNITED STATES DISTRICT COURT 7 1 In addition, Your Honor, even were they to survive 2 that jurisdictional minefield, they still have not presented a 3 claim upon which this Court could grant relief. 4 I would like to start with really what is, I think, 5 the most glaring problem with Arizona's Complaint, which is 6 that their position that they take no position. 7 come forward with a coherent argument as to whether or not 8 they think that the DOJ would have the authority to prosecute 9 state officials for implementing the AZMMA, or whether or not They have not 10 they think they wouldn't have that authority. 11 saying either it is preempted or it's not preempted. 12 know which, please tell us. 13 So Arizona is We don't That is the essence of an advisory opinion that core 14 Article III principles prohibit this Court from giving. 15 it matters, Your Honor, what position Arizona takes, because 16 if Arizona were to come to this Court and say that the state 17 law is preempted, that the DOJ could prosecute state 18 officials -- state officials for carrying out their duties 19 under the AMMA, then we wouldn't have a controversy, because 20 then Arizona couldn't under the supremacy clause implement the 21 AMMA. 22 and void. 23 and we can't implement it. 24 that case and we wouldn't be here. 25 They would be saying: It's preempted. And Our position is that it's null It's unlawful under federal law There would be no controversy in If Arizona, on the other hand, were to say come into UNITED STATES DISTRICT COURT 8 1 court, which would seem to be the most logical step they would 2 take if they're really interested in defending the rights of 3 state officials and say, Your Honor, the AMMA is not 4 preempted, nothing in it requires state officials to violate 5 federal law, then at least they would have been taking a 6 concrete position defending state law, and then the problem 7 for Arizona would be ripeness, because there is no concrete 8 threat of prosecution of state officials. 9 The fact that Arizona not only in their Complaint and 10 the advisory opinion relief that they seek, but also in their 11 response both to our reply and to the DOJ's reply, they had a 12 chance to take a concrete position on what they think this law 13 means. 14 think that state law can carve out safe harbor from federal 15 prosecution? 16 Whether or not they think it's preempted. And yet they refuse to do that. Do they That reveals the 17 nature of their request, which is coming to this Court and 18 seeking this Court's counsel as to whether or not state law is 19 legal and what they should do. 20 If Arizona isn't sure about their position, they 21 cannot use federal court as their counsel. They should go to 22 whoever it is who analyzes state law, whether it's the 23 Governor's Counsel or the Attorney General, and figure out 24 what their position is on the legality of the AMMA and come to 25 court and take that position. They're not doing that. UNITED STATES DISTRICT COURT It's 9 1 an advisory opinion, and therefore, it's barred under Article 2 III. 3 Secondly, Arizona is coming to this Court and asking 4 for a declaration on the validity or invalidity of state law. 5 Both the Supreme Court and the Ninth Circuit have clearly 6 stated that states can't do that. 7 original jurisdiction of federal courts. 8 in our motion to dismiss and again in our reply, as did the 9 Department of Justice. That does not fall in the We raised this issue And the cases I'm referring to are 10 Franchise Tax, that's a Supreme Court case, and Guam v. 11 Gutierrez, that's a Ninth Circuit case. 12 Arizona ignored those arguments. They have not 13 explained why those cases don't bar them, a state, from coming 14 into federal court and saying we want to know if our law is 15 valid in light of federal law. 16 And that was really the issue in Guam. Can a state 17 come running to court and ask federal court: 18 or not because there's possibly conflicting federal law? 19 Is our law valid And the Ninth Circuit was clear, citing Franchise 20 Tax, that states can't do that. 21 is doing and they haven't presented any reason why their case 22 is different. 23 And yet that's what Arizona So even if they were to take a concrete position, 24 which they haven't, they would still be barred under Franchise 25 Tax. UNITED STATES DISTRICT COURT 10 1 I would also light to note that both in Franchise Tax 2 and in Guam, the State was taking a concrete position. 3 had -- they actually came in defending their rights under 4 state law and put themselves as clear adversaries against the 5 named defendants. 6 They That Arizona hasn't done. And I should mention as part of the advisory opinion 7 nature of this by Arizona not saying what their position is, 8 you need a concrete controversy for this Court to decide what 9 are the issues, what are people's respective positions to be 10 11 able to decide this matter. Arizona has not permitted you to do that because they 12 haven't said what their position is. 13 actually -- they're not antagonistic to any of the named 14 defendants. 15 defending state law, it's not preempted, or we're coming in 16 because we think state law is preempted, there may be other 17 jurisdictional problems, but at least that would crystallize 18 the issues for Your Honor and know where are they antagonistic 19 and where are they adverse to the other parties in this case. 20 Third, Your Honor, this case has a ripeness problem. 21 Under the Ninth Circuit test for ripeness, the Court needs to 22 look at three things. 23 And so there's Until they say, yes, we're coming in and The first is: Does the plaintiff have the intent to 24 carry out the statute or provision or whatever act it is that 25 they fear prosecution? UNITED STATES DISTRICT COURT 11 1 Right now we don't know if Arizona has any intent of 2 carrying out the AZMMA. 3 they suspended implementation of the AMMA -- AZMMA back on 4 May 27th when they stopped the issuance and review of 5 dispensary licenses. 6 stopped implementing it. 7 going to take. 8 9 THE COURT: We don't know what position they're But there is a lawsuit in state court trying to get them to go forward -MR. EDWARDS: 11 THE COURT: 13 So as of now, voluntarily they have Certainly they think it's unlawful -- 10 12 In fact, unilaterally, on their own, Marijuana Act. Yes. -- with implementing the Arizona Medical And so they might be ordered to go forward. MR. EDWARDS: They might be ordered. But in this 14 case they're coming forward and saying that there is a 15 controversy. 16 That they fear prosecution. And yet the fact that they have to be potentially 17 ordered by state court certainly suggests that from Arizona's 18 standpoint, they don't want to implement the AMMA and they 19 certainly aren't implementing it. 20 Arizona to implement the AZMMA, then there's no fear of 21 prosecution. 22 of looking at ripeness, they fail. 23 So if there's no intent by So under the first prong of the three-part test The second one is is there a concrete, specific 24 threat of prosecution by the defendants against these 25 plaintiffs? And the answer is: There is not. UNITED STATES DISTRICT COURT There has been 12 1 absolutely no threat of prosection of state officials in 2 Arizona by the federal government if they are to carry out 3 their ministerial duties under the AZMMA. 4 5 6 THE COURT: But Arizona is worried because the federal government won't promise not to. MR. EDWARDS: But there is actually case law, Your 7 Honor, that that is not the test. There is a dissent in the 8 Ninth Circuit, I believe -- I'm forgetting the case name -- 9 where they raise that issue. And the majority said the test 10 is not -- the burden is not on the prosecutorial authority to 11 swear in every case that they won't go forward and prosecute, 12 because then states could come into court all the time and 13 say -- suing the Department of Justice and say you have to 14 tell us you're not going to prosecute. 15 They have to establish that there is actually an 16 affirmative threat of prosecution. 17 has there been no specific threat against state officials, 18 there's actually been reassurance that state officials in 19 Arizona would not be prosecuted. 20 absence, and I would say the reassurance, that state officials 21 are not at risk. 22 There has been -- not only So you have both the So they failed the second part of the test. The third part of the test is whether there's been 23 history of prosecution. Well, obviously there has been no 24 prosecution yet, because the AZMMA has not been implemented. 25 But there hasn't been a single prosecution of a state official UNITED STATES DISTRICT COURT 13 1 anywhere in the United States, despite the number of states 2 that have regulated medical marijuana schemes. 3 intent to implement the statute, without the direct threat 4 against these plaintiffs, and without a history here or 5 anywhere of prosecution, this case isn't ripe. 6 So without the I would also -- and I'm close to closing, Your Honor. 7 I would also draw the Court's attention to some of the cases 8 that Arizona cites in support of finding jurisdiction. 9 rely on Oregon v. Ashcroft to support the fact that they're 10 11 facing a real threat in coming to court. I think that case is actually instructive in a 12 different direction. 13 State was taking a concrete position. 14 federal court saying: 15 Act is constitutional or not. 16 it might not. 17 They In Oregon v. Ashcroft, first of all, the They weren't coming to We don't know if the Death With Dignity We think it might be. We think Please help us. They were coming to court saying it is 18 constitutional. 19 Act, which, by the way, the court found that it was. 20 came in defending their rights under state law and saying that 21 it would be beyond the authority of the Attorney General to 22 prosecute doctors under that act. 23 It is lawful under the Control Substances And they So the only way that that case would be analogous 24 here is if Arizona came to court, which again would seem to be 25 the logical step, defending state law, arguing that it would UNITED STATES DISTRICT COURT 14 1 be beyond the authority of the DOJ to prosecute state 2 officials for implementing the AMMA. 3 In addition, in Arizona -- in Oregon there was a 4 concrete, specific threat by the Attorney General himself to 5 specific doctors, so you also had ripeness. 6 There are a host of other cases which I'm not going 7 to go into detail now unless you want, but just to say that 8 where Arizona will often cite cases getting -- where the 9 plaintiffs have gotten past the jurisdictional threshold. 10 other words, they look at cases where the issue is: 11 Court have discretion to grant a declaratory judgment act? 12 In it does, how should it use that discretion? 13 Does this If But in all of those cases they had already 14 established that there was jurisdiction. 15 Arizona doesn't take a position, because of Franchise Tax and 16 Guam, Arizona fails those jurisdictional requirements and in 17 addition, it's not ripe. 18 But because here In closing, Your Honor, I would just note that the 19 Supreme Court has made clear many times -- and I'm referring 20 specifically to Poe v. Ullman fifty years ago, that it is not 21 for the federal court's job to sit kind of in the abstract and 22 give advice on the constitutionality of state law. 23 needs to be real adversaries, antagonistic parties, and 24 concrete positions laid out by all the parties. 25 Arizona fails the Poe test. There They certainly fail the UNITED STATES DISTRICT COURT 15 1 ripeness test. And for those reasons I would ask that you 2 dismiss this for failure to meet subject matter jurisdiction. 3 The other point after you get through the 4 jurisdictional hurdles is that Arizona has come to court and 5 asked for two diametrically opposite forms of relief. 6 have said: 7 They Tell us whether or not state law is preempted; or, in 8 the alternative, tell us that state law can carve out a safe 9 harbor from federal prosecution. 10 As to the second form of relief, Your Honor, I think 11 we could actually answer that question right now. 12 nothing that state law can do that can immunize anyone in the 13 state, state officials or otherwise, who are breaking federal 14 law. 15 So to come to this court and say: 16 Give us safe harbor. There's 17 law. 18 from you or from the AMMA. 19 We might not. We might be violating a federal We're not sure. But we need safe harbor That's impossible. That's well established in both the Supreme Court and 20 Ninth Circuit precedent. 21 form of relief is really frivolous and certainly should not 22 give this court jurisdiction. 23 A state law cannot do that. So that They haven't stated a claim. The other claim, Your Honor, and I won't repeat 24 myself going back to my earlier arguments, is that state law 25 might be preempted by federal law, but first of all, until we UNITED STATES DISTRICT COURT 16 1 know what Arizona's position is, it's difficult to even 2 entertain that claim. 3 Secondly, if they take the position that it's 4 preempted, they don't have to implement the law and we won't 5 be here. 6 7 8 Third, if they take that as not preempted, there's no ripeness. And fourth, if we actually ever got to the merits 9 question here about whether, in fact, the AMMA requires state 10 officials to violate federal law, our position as we laid out 11 in a bit truncated form in our brief is that it doesn't. 12 And so for that reason I would ask not only that you 13 dismiss for failure -- for subject matter jurisdiction under 14 12(b)(1), but also that you dismiss for failure to state a 15 claim under 12(b)(6). 16 17 18 THE COURT: Well, if I dismissed under 12(b)(1), I would never be able to reach the 12(b)(6) issues. MR. EDWARDS: That's right. Only in the event that 19 you weren't to dismiss under 12(b)(1), we would ask for 20 dismissal nonetheless for failure to state a claim. 21 THE COURT: Okay. Thank you. 22 MR. EDWARDS: 23 THE COURT: Ms. Davis. 24 MS. DAVIS: Thank you, Your Honor. 25 THE COURT: Ms. Davis, I'm used to having the Thank you. UNITED STATES DISTRICT COURT 17 1 plaintiff opposed to the defendant. 2 seems -- well, it reminded me of an interpleader where an 3 insurance company says: 4 money. 5 defendants fight it out adverse to one another over this pot 6 of money. 7 And in this case it Here's all the people that want this We take no position. You figure it out. And those There is no analogy for interpleader with respect to 8 the Declaratory Judgment Act. The person seeking declaratory 9 judgment can't join all of the sides they think there could be 10 to the issue and say: 11 wait to find out what the answer is. 12 to do whatever you say. 13 14 You fight it out. We'll sit back and And then we'll be happy Isn't that what the State of Arizona has asked me to do here? 15 MS. DAVIS: No, Your Honor, and I will tell you why. 16 Backing up just a little bit, the State of Arizona 17 finds itself in an impossible position. On the one hand, if 18 we don't enforce the Arizona Medical Marijuana Act with regard 19 to dispensaries, which, by the way, it has been implemented. 20 The Act is in operation. We have patients -- 21 THE COURT: Some of it. Some of it -- 22 MS. DAVIS: Correct. 23 THE COURT: -- has been implemented. 24 MS. DAVIS: Not the dispensary portion. 25 If we do not implement the dispensary portion, we are Correct. UNITED STATES DISTRICT COURT 18 1 sued in mandamus. 2 that was passed by the voters of the State of Arizona to 3 implement -- to have this law. 4 5 We are going against the voter initiative If we do implement this law as drafted by the voters in their initiative -- 6 THE COURT: And you have already been sued. 7 MS. DAVIS: Three times in mandamus, yes, in Special 8 Action, correct. 9 10 11 THE COURT: Saying: Start issuing these dispensary MS. DAVIS: Correct. Two of the defendants are a licenses. 12 part of this federal action, Serenity and Jane Christensen are 13 part of a Special Action trying to make us implement the 14 dispensary portion of the Act, correct. 15 If we do implement that portion as they want us to 16 do, we are exposing our citizenry, and more especially, our 17 state workers, to direct threat of enforcement of federal 18 prosecution. 19 THE COURT: Well, but I realize that the State thinks 20 it's in a tough spot here, but that doesn't mean that you 21 can't take a position and advocate for it. 22 And that's one of a host of problems that the 23 defendants raise and one that I clearly have to acknowledge is 24 you're saying: 25 Do this or do this. We don't care which. But to have a case or controversy, the plaintiff UNITED STATES DISTRICT COURT 19 1 has to be adverse from the defendant. 2 3 MS. DAVIS: How are you adverse? Your Honor, I will refer specifically to paragraph 166 of our Complaint wherein we state: 4 By virtue of the foregoing, the federal government's 5 position places the AMMA in conflict with the CSA as well as 6 with the policies of the DOJ that have been implemented to 7 enforce the CSA. 8 9 What we're saying is very clearly there is a conflict. Whether that conflict rises to the level of 10 preemption is a matter which this Court would determine on the 11 merits. 12 THE COURT: But do you think it's preempted or do you 13 think it's a safe harbor? 14 the other and you're not advocating for either. 15 You've got to advocate for one or You're saying the federal government says: Read the 16 Controlled Substance Act. 17 legitimate use whatsoever. 18 state law is not in violation of the Controlled Substance Act. 19 That's a given. It says marijuana has absolutely no So we can't say that Arizona's It's acknowledged by everyone that 20 these medical marijuana acts that have been passed in more 21 than a dozen states conflict with the Controlled Substances 22 Act that makes marijuana a controlled substance in Level I 23 rather than II which says there's no legitimate use 24 whatsoever. 25 And many people obviously in different states think UNITED STATES DISTRICT COURT 20 1 that the federal government has scheduled marijuana in the 2 wrong place and that it should be scheduled as a Schedule II 3 rather than a Schedule I. 4 These are not earthshaking decisions. And you 5 acknowledge it in your papers that the state law legalizing 6 some limited use of marijuana conflicts with the Controlled 7 Substances Act. 8 know it. 9 I don't have to tell you that. You already What can I do for the State of Arizona? I can't tell 10 the Department of Justice to never change a policy. 11 tell the Department of Justice to change a policy. 12 tell them to prosecute someone. 13 prosecute someone. 14 That's an Executive Branch function. 15 I can't I can't I can't tell them not to That's what the prosecutor decides. And with respect to advice, your own department, the 16 Department of Law, the Attorney General's Office, and the 17 State of Arizona, one of your primary functions is to give 18 advice to state agencies about what they should do when 19 they're in a tough spot. 20 that advice. 21 agencies. 22 advice. 23 It's not the courts that give you You give advice all the time to your state They take the advice. They act pursuant to the And then if lawsuits ensue, you defend or you 24 prosecute, but you don't come to court and say: 25 our best advice. Well, this is Why don't you give it a shot too? UNITED STATES DISTRICT COURT 21 1 What can I do? 2 MS. DAVIS: Your Honor -- and I understand the 3 Court's comments and I understand the position. 4 that we are facing, however, is if we move forward without a 5 determination from this Court as to whether or not certain 6 portions of the AMMA are preempted, whether or not employees 7 enjoy immunity under, for example, 21 United States Code 8 885 -- 9 10 THE COURT: Wait. The problem It has to be one or the other, doesn't it? 11 MS. DAVIS: Yes. 12 THE COURT: Which one? 13 MS. DAVIS: That's what we're asking the Court to 14 It does. determine. 15 THE COURT: But you can't ask me -- you're 16 basically -- as I said before -- you're like throwing all of 17 the defendants in a pot and saying: 18 We'll sit back. 19 we'll act accordingly. Make them fight it out. And when you've figured it out, tell us and 20 That's not how lawsuits work. 21 The plaintiff takes a position and doesn't take two 22 diametrically opposed positions. You have to advocate your 23 position. 24 and therefore, Arizona can't implement the -- some portions of 25 the Arizona -- or maybe none of them -- you have to take a So you either have to litigate that it's preempted, UNITED STATES DISTRICT COURT 22 1 position. 2 Or you can take a position that somehow when the 3 State of Arizona amends their drug laws pursuant to voter 4 initiative or pursuant to Arizona legislative enactment to 5 conflict with the Controlled Substances Act, that that somehow 6 creates a safe harbor for certain people who are now violating 7 federal law but in compliance with state law. 8 9 I mean, I don't know how you make that argument, but you have to pick and make the argument. 10 makes the other argument. 11 And the other side potentially I can decide. 12 And then I have a case that But I can't decide a case when the State of Arizona 13 comes in and says: 14 because we're in a tough spot? 15 Could you please figure this out for us That's what the Attorney General is there for. 16 Figure it out. 17 Give its advice. And the State acts accordingly. 18 MS. DAVIS: 19 what you're saying. 20 has tried to do everything proper to not go against the will 21 of the people with regard to the voter initiative; while at 22 the same time not exposing its state employees to criminal 23 liability. 24 Arizona finds itself in. 25 And, Your Honor, I understand exactly What I'm saying is the State of Arizona It's an impossible position that the State of THE COURT: That you think a federal court can UNITED STATES DISTRICT COURT 23 1 2 resolve? MS. DAVIS: Your Honor, I think the federal court 3 absolutely can resolve whether or not there is a conflict 4 between the CSA and the Arizona Medical Marijuana Act. 5 6 7 THE COURT: But you already know there is. You've acknowledged it in all of your papers. MS. DAVIS: There's a conflict, but whether it rises 8 to the level of preemption and to what extent it is preempted, 9 that is the question that we're asking the Court. 10 THE COURT: If you want to take that position, take 11 that position and we'll see if we have a case or controversy. 12 But don't take the position: 13 tell us that there's a safe harbor. 14 MS. DAVIS: Well, if that doesn't work, then I understand, Your Honor. I believe 15 under the well-pled complaint rule that we have sufficiently 16 alleged facts getting beyond the semantics of the Complaint to 17 support a case or controversy. 18 19 20 THE COURT: What about your fictitious defendants? It's my intention to dismiss them all without prejudice. MS. DAVIS: Those were added simply as a means of -- 21 if there were additional folks that wanted a seat at the table 22 for the determination that we discovered at a later date, we 23 could add them in, similar to not knowing a John Doe in any 24 other lawsuit. 25 place marker, more or less. John Doe defendants were added to -- as a UNITED STATES DISTRICT COURT 24 1 THE COURT: Well, we don't keep them in place after 2 the -- if you haven't figured out that any of them have real 3 names yet, so -- 4 MS. DAVIS: I understand. 5 THE COURT: So I'm going to order that all of the 6 fictitious defendants be dismissed without prejudice. 7 later discover someone that needs to be joined in the case, 8 you can move to amend to join an additional party-defendant, 9 but we do not persist in having any fictitious defendants in 10 federal court. 11 If you It's a different practice in state court. But I haven't let you launch into your argument, so 12 why don't you take five minutes and say what -- the highlights 13 of what you wanted to address with me in opposition. 14 MS. DAVIS: Well, first, I would like to address the 15 three points of ripeness raised by the defendant ACLU in its 16 argument. 17 18 19 The first being: Does the plaintiff intend to carry out the law in question? Absolutely, the State of Arizona is carrying out the 20 law in question. 21 on hold at this point awaiting a determination regarding the 22 liability of the government employees that will necessarily 23 have to do acts that arguably are in conflict with the CSA. 24 25 The dispensary portion of that law is simply Second, whether or not there's a concrete threat of prosecution by the federal defendants. Certainly, I think UNITED STATES DISTRICT COURT 25 1 it's clear from anybody -- anyone's perspective that the 2 federal government has boots on the ground coming at medical 3 marijuana from all angles from raiding dispensaries to sending 4 letters to the City of Eureka, the City Of Chico warning them 5 that if they implement their laws, that they will proceed with 6 prosecution and forfeiture. 7 THE COURT: 8 But you haven't gotten any such letter from the United States Attorney in Arizona. 9 MS. DAVIS: The United States Attorney in Arizona -- 10 former United States Attorney Dennis Burke stated in his 11 letter -- it was completely silent with regard to state 12 employees, despite the specific request of Director Humble to 13 address it. 14 Later in news reports he's reported as saying that 15 the state workers cannot be under the mistaken impression that 16 they are immune from criminal liability or have any kind of 17 safe harbor, which we believe spoke volumes in favor of 18 they're in a real threatening situation, squarely within the 19 crosshairs of the federal government's prosecution. 20 21 THE COURT: Have you asked the current U.S. Attorney if she has any different view? 22 MS. DAVIS: We are a part of the lawsuit -- at the 23 time of the lawsuit already had commenced we have not had 24 contact directly with them. 25 same. Our position has always been the If they would come forward and give immunity to the UNITED STATES DISTRICT COURT 26 1 state workers that are acting in compliance with the federal 2 laws -- which they have chosen not to do so -- 3 THE COURT: Well, I can't do that. I don't have the 4 power to grant immunity without a request from the government 5 to do so. 6 7 8 9 MS. DAVIS: to do that. No. I'm saying that they have the power I'm not asking -- THE COURT: I know, but aren't you, in essence, asking as one of your two diametrically-opposed alternatives, 10 to grant immunity from federal prosecution to state workers 11 implementing the AZAMMA? 12 MS. DAVIS: I think a question that could come before 13 Your Honor is similar to that faced in U.S. v. Rosenthal in 14 which an agent of the City of Oakland was prosecuted for his 15 acts as an official cultivator. 16 Mr. Rosenthal claimed immunity under 21 United States 17 Code 885(d) as a person acting in furtherance as a law 18 enforcement person having immunity from the Controlled 19 Substances Act. 20 granted immunity. 21 22 23 And that -- in that case And in that particular case he was not Now, what the State of Arizona would ask the Court to look at -THE COURT: Well, that's not the kind of immunity 24 we're talking about. That's a statutory grant of immunity to 25 law enforcement officers that permit them in the course of UNITED STATES DISTRICT COURT 27 1 their law enforcement duties to possess controlled substances 2 or to negotiate the purchase of controlled substance or to 3 engage in what, for nonlaw enforcement individuals would be 4 conspiracies, in their undercover work. 5 But that's a statutory grant of immunity and that 6 case basically said: 7 statute. 8 9 This person doesn't come within that What you're asking me to do is to essentially say to the federal government: You wouldn't promise not to 10 prosecute, so I'm going to say they're immune from 11 prosecution. 12 MS. DAVIS: No, Your Honor. We are asking -- for 13 example, using that case and that statute as an example, does 14 that statute as a matter of law apply to a state worker 15 working in furtherance of processing applications? 16 It didn't apply in that jurisdiction to a cultivator, 17 an official city cultivator of marijuana. Would it apply here 18 for a state worker who was issuing dispensary registration 19 certificates as an immunity? 20 case that we would ask Your Honor to consider on the merits 21 with regard to immunity of state employees. 22 that has applicability. And that would be part of the Whether or not 23 THE COURT: Okay. 24 MS. DAVIS: And third, under the ripeness component, 25 Please continue. on the history of prosecution, Mr. Edwards had mentioned that UNITED STATES DISTRICT COURT 28 1 there were no history of prosecutions in the past. 2 And, of course, as he recognized the Arizona Medical 3 Marijuana Act is in its infancy and the dispensary process has 4 been halted before the point at which we believe there would 5 be exposure for our employees. 6 have been a prosecution up to this date here. So certainly there wouldn't 7 Now, the U.S. v. Rosenthal case, I think, is a prime 8 example of the federal government going against a state actor 9 where this individual was cultivating with the authority and 10 permission for the City of Oakland. 11 prosecuted under the Controlled Substances Act. 12 And he was -- and he was So we believe that that coupled with the boots on the 13 ground that's happening with the federal government 14 enforcement of the Controlled Substances Act, starting with 15 the Cole memo which ramped up a little bit of the -- ratcheted 16 up the activity on the part of the federal government to go 17 after those acting in compliance with state law, followed by 18 U.S. Attorney letters specifically in the state of Washington 19 talking about state employees are not immune, talking about 20 the City of Eureka, the City of Chico, the fact that we see it 21 coming towards Arizona, the fact that it's not here yet is of 22 no consequence. 23 At present there is a genuine threat that there is 24 exposure. There is a potential that we should as the 25 MedImmune case, the United States Supreme Court case said we UNITED STATES DISTRICT COURT 29 1 should not be required to go to the point of risking federal 2 prosecution of betting the farm, as they said, in order to get 3 a declaratory judgment under Article III. 4 THE COURT: Okay. Anything else? 5 MS. DAVIS: Your Honor, I would just state again that 6 I believe that we have under -- presuming true all allegations 7 with all reasonable inferences in favor of the State, I 8 believe that we have adequately pled a conflict allowing a 9 case or controversy in this matter and we would ask that this 10 Court deny the motion to dismiss and allow the case to be 11 heard on the merits. 12 THE COURT: At a minimum though, don't I have to 13 force you to amend to decide which side of this you're on, 14 because you have to take a side? 15 MS. DAVIS: Well, Your Honor, that certainly could be 16 part of the Court's order and we would consider whatever the 17 Court has -- if the Court -- 18 THE COURT: You don't agree you have to take a side? 19 MS. DAVIS: I believe we have taken a side, Your 20 Honor, and I'm going to point out -- 21 THE COURT: Which side? 22 MS. DAVIS: We've taken it specifically on paragraph 23 166 of our Complaint. 24 are in conflict. 25 We've stated that the CSA and the AMMA And I believe that -- THE COURT: Well, but that's just stating the UNITED STATES DISTRICT COURT 30 1 obviously. 2 Marijuana Act legalizes people possessing and using marijuana 3 under certain circumstances and the federal Controlled 4 Substances Act says there are no circumstances except this 5 limited laboratory exception. 6 They're in conflict because the Arizona Medical There are no circumstances where people can possess 7 and use marijuana. 8 law no matter what the states have tried to do. 9 paragraph doesn't say anything that isn't a given that 10 It's always been a violation of federal So that everyone knows. 11 The question is: With the state and its concern 12 about its -- about the activities of its employees which do 13 not involve the possession or use of marijuana, what is your 14 position? 15 take? 16 What position does the State of Arizona wish to That they're not liable under the Controlled 17 Substances Act? 18 precludes them from doing what they're doing? 19 Or that the Controlled Substances Act It's one or the other. You have to take that 20 position. 21 without one side taking one position and the other side taking 22 a different one. 23 You can't just ask me to figure it out on my own And once you decide which position to take, we're 24 probably going to have to realign the defendants, because some 25 will be with you and some will be against you. UNITED STATES DISTRICT COURT I don't know 31 1 which ones. 2 State of Arizona, which would be refreshing, or we could get 3 all of the medical marijuana people with the State of Arizona 4 against the federal government, which would be more 5 traditional, and go from there possibly. 6 We could get the federal government with the But you have to decide which of these adverse 7 defendants really should be plaintiffs by deciding which side 8 you're on. 9 Good law consistent with federal law and you get the 10 marijuana people with you. 11 Or it's: We can't do this. We're preempted because 12 the Controlled Substances Act is the supreme law of the land 13 and we'll get the federal government helping you out on that. 14 One or the other. 15 MS. DAVIS: Well, Your Honor, we will -- 16 THE COURT: You're not prepared today to say whether 17 you want to join the federal government and be aligned with 18 them or whether you want to align yourself with the marijuana 19 folks? 20 make you do it today in front of this whole audience. You're going to have to pick at some point. I won't 21 MS. DAVIS: Thank you, Your Honor. 22 THE COURT: Mr. Edwards. 23 So now that we know the State has to pick one side or 24 the other and we'll realign the defendants, is that going to 25 solve the problem? Will we then have a case or controversy UNITED STATES DISTRICT COURT 32 1 one way or the other? 2 MR. EDWARDS: Your Honor, I think it depends, 3 obviously, which is why we were also urging them to take a 4 position on what that position is. 5 If their position is that the DOJ would be within 6 their authority under the CSA to prosecute state officials, 7 then under the supremacy clause it would be our understanding 8 that they couldn't implement the AMMA and there wouldn't be a 9 case or controversy here. 10 There may be, as you indicated, a state court issue 11 where there would be state defendants suing them to implement 12 it and they could raise preemption as a defense and that would 13 be appropriate for a state court to figure out, but it 14 wouldn't be appropriate for a federal court. 15 If they come in and say: We're siding with the 16 marijuana folks. We think that this is lawful under federal 17 law and we're defending -- which is what most states usually 18 do when they come into federal court on state law issues -- 19 and then we would be faced with the question predominantly of 20 ripeness. 21 And it would still be our position that there is no 22 concrete threat of prosecution of state officials in Arizona 23 either because, as you indicated, there's been no specific 24 threat, no letters, no indication, no state officials 25 prosecuted elsewhere who are implementing medical marijuana. UNITED STATES DISTRICT COURT 33 1 I just had a few very minor comments. 2 THE COURT: 3 Does this make a difference? Could I just raise a question? I was saying that it's 4 a given that the state law with respect to the possession and 5 use of marijuana is in direct conflict with the Controlled 6 Substances Act and it's pretty apparent that there are a lot 7 of people that are going to take the risk -- 8 MR. EDWARDS: 9 THE COURT: Right. -- of federal prosecution. They have 10 decided that the risk-benefit ratio is such that whatever 11 benefit they believe they might have from using medical 12 marijuana is worth the risk of violating federal law and so 13 they make that decision on their own. 14 And the State is coming in and saying -- they didn't 15 say it this way. 16 well, this isn't a question of our employees getting to decide 17 the risk benefit. 18 have to do it and won't be able to just say: 19 I thought of it this way -- they're saying, They're State employees. I'm sorry. They're going to I just think the risk that this might be 20 considered facilitation or aiding and abetting to be so high 21 that you're making me a potential federal felon. 22 going to do it. 23 24 25 I'm not You may have to discipline me. Does that make it different when they're not voluntarily making the decision to violate federal law? MR. EDWARDS: Well -- UNITED STATES DISTRICT COURT 34 1 THE COURT: -- or potentially violate federal law? 2 MR. EDWARDS: Well, just to back up, I mean, our 3 position is that nothing in the AMMA requires state officials 4 to violate federal law, so our position is they are not being 5 required to do that. 6 So our position is that they are in no different 7 position than a citizen in Arizona who is making the choice: 8 Do I take the risk or do I not? 9 Because a dispensary, for instance, is definitely -- 10 if they're going to engage in production and distribution -- 11 violating federal law, as you said, there's no mystery about 12 that but they don't have to do that. 13 is there's nothing that's required of state officials. 14 Likewise, our position Now, if your question is, you know, if they were 15 required to violate federal law and there was -- there would 16 still have to be an actual imminent threat of prosecution, not 17 just the violation, the DOJ would have to have made clear or 18 however we do the Ninth Circuit ripeness analysis that they 19 would be prosecuted, then, yes, you may have jurisdiction 20 assuming that Arizona were to come into court -- 21 Well, Arizona still couldn't come into court in that 22 instance and say: Our law is invalid. But State officials 23 would have a viable claim if they did have to violate the AMMA 24 and that was there position, and in fact, they did and there 25 was an actual threat of prosecution. UNITED STATES DISTRICT COURT 35 1 But I notice that Arizona got up, as I would have if 2 I were them, and talked as much as I could about ripeness, 3 even though I think -- we think -- that their ripeness claim 4 fails for all the reasons I listed. 5 before Your Honor made painfully clear and take a position, 6 which was one of the key problems with this complaint. 7 They are seeking an advisory opinion. They did not come up They don't 8 talk about Franchise Tax and Guam and why Arizona gets to come 9 into court and ask for a declaration on the validity or 10 invalidity of state law. 11 And what they said was there was a conflict between 12 state and federal law. 13 pointing out that there is nothing unusual about that and that 14 alone does not give federal court jurisdiction. 15 And as I understood Your Honor to be States don't have to walk in lock-step with federal 16 law when it comes to what people criminalize and what they 17 don't. 18 And that's, of course, the Printz case. If any kind of conflict meant that state law was 19 invalid, then you would have exactly what the Supreme Court 20 said you shouldn't have, which is states needing to mirror 21 federal law. 22 And the only other thing I would add, and I know Your 23 Honor understands this, but even though we are the moving 24 party here with the motion to dismiss, the burden is on 25 Arizona to establish that this Court has jurisdiction under UNITED STATES DISTRICT COURT 36 1 Article III. And I don't think in their Complaint, in their 2 response, or in their argument today that they have done that. 3 THE COURT: 4 It's ordered taking this matter under advisement. 5 6 7 Okay. Thank you. Court is in recess until one o'clock. (Proceedings adjourned at 11:52 a.m.) * * * 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNITED STATES DISTRICT COURT 37 1 2 C E R T I F I C A T E 3 4 I, ELIZABETH A. LEMKE, do hereby certify that I am 5 duly appointed and qualified to act as Official Court Reporter 6 for the United States District Court for the District of 7 Arizona. 8 9 I FURTHER CERTIFY that the foregoing pages constitute a full, true, and accurate transcript of all of that portion 10 of the proceedings contained herein, had in the above-entitled 11 cause on the date specified therein, and that said transcript 12 was prepared under my direction and control. 13 14 DATED at Phoenix, Arizona, this 5th day of January, 2012. 15 16 17 18 s/Elizabeth A. Lemke ELIZABETH A. LEMKE, RDR, CRR, CPE 19 20 21 22 23 24 25 UNITED STATES DISTRICT COURT

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