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)

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
[phone]
Proceedings Reported by Stenographic Court Reporter
Transcript Prepared by Computer-Aided Transcription
UNITED STATES DISTRICT COURT

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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

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For the Defendant United States Department of Justice:
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U.S. DEPARTMENT OF JUSTICE
Civil Division, Federal Programs Branch
By: Scott Risner, Esq.
20 Massachusetts Ave., N.W.
Washington, DC 20001

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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:

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ACLU - NEW YORK, NY
By: Ezekiel Reifler Edwards, Esq.
Haley Horowitz, Esq.
125 Broad Street, 18th Floor
New York, NY 10004

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GAMMAGE & BURNHAM, PLLC
By: Cameron Charles Artigue, Esq.
Lisa Tewksbury Hauser, Esq.
Two North Central Avenue, 18th floor
Phoenix, Arizona 85004

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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:

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THOMAS W. DEAN, ESQ., PLC
By: Thomas W. Dean, Esq.
323 N. Leroux Street, Suite 101
Flagstaff, Arizona 86001
UNITED STATES DISTRICT COURT

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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

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For the Intervenor Plaintiff Maricopa County and Joy Rich:
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MARICOPA COUNTY ATTORNEY'S OFFICE
CIVIL SERVICES DIVISION
By: Thomas P. Liddy, Esq.
222 North Central Avenue, Suite 1100
Phoenix, Arizona 85004

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UNITED STATES DISTRICT COURT

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P R O C E E D I N G S
(Called to the order of court at 11:06 a.m.)

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THE COURT:

Good morning.

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THE CLERK:

Civil case 11-1072.

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Time set for hearing regarding defendant's motion to
dismiss for lack of jurisdiction and failure to state a claim.

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State of Arizona and

others v. United States of America and others.

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Please sit down.

Counsel, please announce your presence for the
record.
MS. DAVIS:

Your Honor, Lori Davis on behalf of the

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State of Arizona, Governor Brewer, the Director of the Arizona

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Department of Health Services, Will Humble, and the Director

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of Arizona Public Safety, Robert Halliday.

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table is Kevin Ray and Aubrey Joy Corcoran from the Attorney

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General's Office.

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MR. LIDDY:

With me at counsel

And Your Honor, it's Thomas Liddy on

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behalf of Maricopa County, Prospective Intervenor, and Joy

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Rich in her capacity as Assistant County Manager, Planning and

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Development.

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MR. EDWARDS:

Good morning, Your Honor.

Ezekiel

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Edwards from the ACLU on behalf of the Arizona Medical

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Marijuana Association.

I'm joined by Haley Horowitz behind

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me, also of the ACLU.

And we're also here representing the

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Arizona ACLU.

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MR. DEAN:

Good morning, Your Honor.

UNITED STATES DISTRICT COURT

Thomas Dean

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here on behalf of the defendant Association of Dispensary

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Professionals.

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MS. HAUSER:

Good morning, Your Honor.

Lisa Hauser

appearing for the Arizona Medical Marijuana Association.

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MR. RISNER:

Good morning, Your Honor.

Scott Risner

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from the U.S. Department of Justice representing the United

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States and the other federal defendants.

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MR. WEISSMAN:

Good morning, Your Honor.

David

Weissman from Rose Law Group here on behalf of the defendants

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Joshua Levine, Paula Pennypacker, Dr. Nicholas Flores, Jane

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Christensen, Paula Pollock, Serenity Arizona Incorporated,

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Holistic Health Management Incorporated, and Jeff Silva.

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THE COURT:

Thank you.

Just to clarify, before we

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begin argument, while there are several pending motions in

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this case, there is only one motion set for argument this

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morning; and that is, the nongovernment defendant's motion to

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dismiss for lack of jurisdiction and failure to state a claim.

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The other two motions that are pending are the

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federal defendant's motion to dismiss and Maricopa County and

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Joy Rich's motion for leave to intervene.

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motions requested oral argument and so are not noticed for

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argument.

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Neither of those

Who will be arguing on behalf of the nonfederal
defendants?
MR. EDWARDS:

I will, Your Honor.

UNITED STATES DISTRICT COURT

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THE COURT:

You may proceed.

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MR. EDWARDS:

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THE COURT:

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MR. EDWARDS:

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Good morning, Your Honor.

Your Honor, can I approach?
Please.
I have a slight cold, Your Honor.
Your Honor, there are so

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many jurisdictional defects with this lawsuit that it's

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difficult to know where to begin, but I would like to focus on

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three.

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The first is that Arizona plaintiffs are seeking an

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advisory opinion in this case.

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coherent position of their own, and instead, are coming into

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federal court and asking for your advice on two diametrically

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opposed declarations that they seek, but refuse to take a

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position on which they prefer or why.

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They are refusing to take a

Second, they are also coming to court as the State

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and asking this Court to declare the validity or invalidity of

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state law, which they cannot do.

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And third, this is a hypothetical controversy which

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is not ripe for adjudication.

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steps it plans to take with regard to the AMMA, whether or not

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they think the AMMA is lawful in light of federal law, and

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there is, indeed, no threat of prosecution by the federal

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government of state officials.

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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

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In addition, Your Honor, even were they to survive

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that jurisdictional minefield, they still have not presented a

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claim upon which this Court could grant relief.

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I would like to start with really what is, I think,

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the most glaring problem with Arizona's Complaint, which is

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that their position that they take no position.

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come forward with a coherent argument as to whether or not

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they think that the DOJ would have the authority to prosecute

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state officials for implementing the AZMMA, or whether or not

They have not

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they think they wouldn't have that authority.

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saying either it is preempted or it's not preempted.

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know which, please tell us.

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So Arizona is
We don't

That is the essence of an advisory opinion that core

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Article III principles prohibit this Court from giving.

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it matters, Your Honor, what position Arizona takes, because

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if Arizona were to come to this Court and say that the state

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law is preempted, that the DOJ could prosecute state

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officials -- state officials for carrying out their duties

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under the AMMA, then we wouldn't have a controversy, because

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then Arizona couldn't under the supremacy clause implement the

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AMMA.

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and void.

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and we can't implement it.

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that case and we wouldn't be here.

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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

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court, which would seem to be the most logical step they would

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take if they're really interested in defending the rights of

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state officials and say, Your Honor, the AMMA is not

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preempted, nothing in it requires state officials to violate

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federal law, then at least they would have been taking a

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concrete position defending state law, and then the problem

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for Arizona would be ripeness, because there is no concrete

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threat of prosecution of state officials.

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The fact that Arizona not only in their Complaint and

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the advisory opinion relief that they seek, but also in their

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response both to our reply and to the DOJ's reply, they had a

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chance to take a concrete position on what they think this law

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means.

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think that state law can carve out safe harbor from federal

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prosecution?

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Whether or not they think it's preempted.

And yet they refuse to do that.

Do they

That reveals the

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nature of their request, which is coming to this Court and

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seeking this Court's counsel as to whether or not state law is

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legal and what they should do.

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If Arizona isn't sure about their position, they

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cannot use federal court as their counsel.

They should go to

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whoever it is who analyzes state law, whether it's the

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Governor's Counsel or the Attorney General, and figure out

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what their position is on the legality of the AMMA and come to

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court and take that position.

They're not doing that.

UNITED STATES DISTRICT COURT

It's

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an advisory opinion, and therefore, it's barred under Article

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III.

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Secondly, Arizona is coming to this Court and asking

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for a declaration on the validity or invalidity of state law.

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Both the Supreme Court and the Ninth Circuit have clearly

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stated that states can't do that.

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original jurisdiction of federal courts.

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in our motion to dismiss and again in our reply, as did the

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Department of Justice.

That does not fall in the
We raised this issue

And the cases I'm referring to are

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Franchise Tax, that's a Supreme Court case, and Guam v.

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Gutierrez, that's a Ninth Circuit case.

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Arizona ignored those arguments.

They have not

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explained why those cases don't bar them, a state, from coming

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into federal court and saying we want to know if our law is

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valid in light of federal law.

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And that was really the issue in Guam.

Can a state

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come running to court and ask federal court:

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or not because there's possibly conflicting federal law?

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Is our law valid

And the Ninth Circuit was clear, citing Franchise

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Tax, that states can't do that.

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is doing and they haven't presented any reason why their case

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is different.

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And yet that's what Arizona

So even if they were to take a concrete position,

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which they haven't, they would still be barred under Franchise

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Tax.
UNITED STATES DISTRICT COURT

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I would also light to note that both in Franchise Tax

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and in Guam, the State was taking a concrete position.

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had -- they actually came in defending their rights under

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state law and put themselves as clear adversaries against the

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named defendants.

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They

That Arizona hasn't done.

And I should mention as part of the advisory opinion

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nature of this by Arizona not saying what their position is,

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you need a concrete controversy for this Court to decide what

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are the issues, what are people's respective positions to be

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able to decide this matter.
Arizona has not permitted you to do that because they

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haven't said what their position is.

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actually -- they're not antagonistic to any of the named

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defendants.

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defending state law, it's not preempted, or we're coming in

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because we think state law is preempted, there may be other

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jurisdictional problems, but at least that would crystallize

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the issues for Your Honor and know where are they antagonistic

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and where are they adverse to the other parties in this case.

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Third, Your Honor, this case has a ripeness problem.

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Under the Ninth Circuit test for ripeness, the Court needs to

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look at three things.

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And so there's

Until they say, yes, we're coming in and

The first is:

Does the plaintiff have the intent to

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carry out the statute or provision or whatever act it is that

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they fear prosecution?
UNITED STATES DISTRICT COURT

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Right now we don't know if Arizona has any intent of

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carrying out the AZMMA.

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they suspended implementation of the AMMA -- AZMMA back on

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May 27th when they stopped the issuance and review of

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dispensary licenses.

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stopped implementing it.

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going to take.

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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:

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THE COURT:

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So as of now, voluntarily they have

Certainly they think it's unlawful --

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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

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case they're coming forward and saying that there is a

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controversy.

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That they fear prosecution.

And yet the fact that they have to be potentially

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ordered by state court certainly suggests that from Arizona's

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standpoint, they don't want to implement the AMMA and they

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certainly aren't implementing it.

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Arizona to implement the AZMMA, then there's no fear of

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prosecution.

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of looking at ripeness, they fail.

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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

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threat of prosecution by the defendants against these

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plaintiffs?

And the answer is:

There is not.

UNITED STATES DISTRICT COURT

There has been

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absolutely no threat of prosection of state officials in

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Arizona by the federal government if they are to carry out

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their ministerial duties under the AZMMA.

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THE COURT:

But Arizona is worried because the

federal government won't promise not to.
MR. EDWARDS:

But there is actually case law, Your

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Honor, that that is not the test.

There is a dissent in the

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Ninth Circuit, I believe -- I'm forgetting the case name --

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where they raise that issue.

And the majority said the test

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is not -- the burden is not on the prosecutorial authority to

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swear in every case that they won't go forward and prosecute,

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because then states could come into court all the time and

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say -- suing the Department of Justice and say you have to

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tell us you're not going to prosecute.

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They have to establish that there is actually an

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affirmative threat of prosecution.

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has there been no specific threat against state officials,

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there's actually been reassurance that state officials in

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Arizona would not be prosecuted.

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absence, and I would say the reassurance, that state officials

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are not at risk.

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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

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history of prosecution.

Well, obviously there has been no

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prosecution yet, because the AZMMA has not been implemented.

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But there hasn't been a single prosecution of a state official
UNITED STATES DISTRICT COURT

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anywhere in the United States, despite the number of states

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that have regulated medical marijuana schemes.

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intent to implement the statute, without the direct threat

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against these plaintiffs, and without a history here or

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anywhere of prosecution, this case isn't ripe.

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So without the

I would also -- and I'm close to closing, Your Honor.

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I would also draw the Court's attention to some of the cases

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that Arizona cites in support of finding jurisdiction.

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rely on Oregon v. Ashcroft to support the fact that they're

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facing a real threat in coming to court.
I think that case is actually instructive in a

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different direction.

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State was taking a concrete position.

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federal court saying:

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Act is constitutional or not.

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it might not.

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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

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constitutional.

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Act, which, by the way, the court found that it was.

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came in defending their rights under state law and saying that

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it would be beyond the authority of the Attorney General to

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prosecute doctors under that act.

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It is lawful under the Control Substances
And they

So the only way that that case would be analogous

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here is if Arizona came to court, which again would seem to be

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the logical step, defending state law, arguing that it would
UNITED STATES DISTRICT COURT

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be beyond the authority of the DOJ to prosecute state

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officials for implementing the AMMA.

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In addition, in Arizona -- in Oregon there was a

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concrete, specific threat by the Attorney General himself to

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specific doctors, so you also had ripeness.

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There are a host of other cases which I'm not going

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to go into detail now unless you want, but just to say that

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where Arizona will often cite cases getting -- where the

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plaintiffs have gotten past the jurisdictional threshold.

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other words, they look at cases where the issue is:

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Court have discretion to grant a declaratory judgment act?

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In

it does, how should it use that discretion?

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Does this
If

But in all of those cases they had already

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established that there was jurisdiction.

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Arizona doesn't take a position, because of Franchise Tax and

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Guam, Arizona fails those jurisdictional requirements and in

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addition, it's not ripe.

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But because here

In closing, Your Honor, I would just note that the

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Supreme Court has made clear many times -- and I'm referring

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specifically to Poe v. Ullman fifty years ago, that it is not

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for the federal court's job to sit kind of in the abstract and

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give advice on the constitutionality of state law.

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needs to be real adversaries, antagonistic parties, and

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concrete positions laid out by all the parties.

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Arizona fails the Poe test.

There

They certainly fail the

UNITED STATES DISTRICT COURT

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ripeness test.

And for those reasons I would ask that you

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dismiss this for failure to meet subject matter jurisdiction.

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The other point after you get through the

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jurisdictional hurdles is that Arizona has come to court and

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asked for two diametrically opposite forms of relief.

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have said:

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They

Tell us whether or not state law is preempted; or, in

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the alternative, tell us that state law can carve out a safe

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harbor from federal prosecution.

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As to the second form of relief, Your Honor, I think

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we could actually answer that question right now.

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nothing that state law can do that can immunize anyone in the

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state, state officials or otherwise, who are breaking federal

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law.

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So to come to this court and say:

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Give us safe harbor.

There's

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law.

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from you or from the AMMA.

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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

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Ninth Circuit precedent.

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form of relief is really frivolous and certainly should not

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give this court jurisdiction.

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A state law cannot do that.

So that

They haven't stated a claim.

The other claim, Your Honor, and I won't repeat

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myself going back to my earlier arguments, is that state law

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might be preempted by federal law, but first of all, until we
UNITED STATES DISTRICT COURT

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know what Arizona's position is, it's difficult to even

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entertain that claim.

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Secondly, if they take the position that it's

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preempted, they don't have to implement the law and we won't

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be here.

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Third, if they take that as not preempted, there's no
ripeness.
And fourth, if we actually ever got to the merits

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question here about whether, in fact, the AMMA requires state

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officials to violate federal law, our position as we laid out

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in a bit truncated form in our brief is that it doesn't.

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And so for that reason I would ask not only that you

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dismiss for failure -- for subject matter jurisdiction under

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12(b)(1), but also that you dismiss for failure to state a

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claim under 12(b)(6).

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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

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you weren't to dismiss under 12(b)(1), we would ask for

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dismissal nonetheless for failure to state a claim.

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THE COURT:

Okay.

Thank you.

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MR. EDWARDS:

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THE COURT:

Ms. Davis.

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MS. DAVIS:

Thank you, Your Honor.

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THE COURT:

Ms. Davis, I'm used to having the

Thank you.

UNITED STATES DISTRICT COURT

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plaintiff opposed to the defendant.

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seems -- well, it reminded me of an interpleader where an

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insurance company says:

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money.

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defendants fight it out adverse to one another over this pot

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of money.

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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

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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:

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wait to find out what the answer is.

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to do whatever you say.

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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?

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MS. DAVIS:

No, Your Honor, and I will tell you why.

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Backing up just a little bit, the State of Arizona

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finds itself in an impossible position.

On the one hand, if

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we don't enforce the Arizona Medical Marijuana Act with regard

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to dispensaries, which, by the way, it has been implemented.

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The Act is in operation.

We have patients --

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THE COURT:

Some of it.

Some of it --

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MS. DAVIS:

Correct.

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THE COURT:

-- has been implemented.

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MS. DAVIS:

Not the dispensary portion.

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If we do not implement the dispensary portion, we are

Correct.

UNITED STATES DISTRICT COURT

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sued in mandamus.

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that was passed by the voters of the State of Arizona to

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implement -- to have this law.

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We are going against the voter initiative

If we do implement this law as drafted by the voters
in their initiative --

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THE COURT:

And you have already been sued.

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MS. DAVIS:

Three times in mandamus, yes, in Special

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Action, correct.

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THE COURT:

Saying:

Start issuing these dispensary

MS. DAVIS:

Correct.

Two of the defendants are a

licenses.

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part of this federal action, Serenity and Jane Christensen are

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part of a Special Action trying to make us implement the

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dispensary portion of the Act, correct.

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If we do implement that portion as they want us to

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do, we are exposing our citizenry, and more especially, our

17

state workers, to direct threat of enforcement of federal

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prosecution.

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THE COURT:

Well, but I realize that the State thinks

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it's in a tough spot here, but that doesn't mean that you

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can't take a position and advocate for it.

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And that's one of a host of problems that the

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defendants raise and one that I clearly have to acknowledge is

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you're saying:

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Do this or do this.

We don't care which.

But to have a case or controversy, the plaintiff
UNITED STATES DISTRICT COURT

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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

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enforce the CSA.

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9

What we're saying is very clearly there is a
conflict.

Whether that conflict rises to the level of

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preemption is a matter which this Court would determine on the

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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.)
* * *

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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
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DATED at Phoenix, Arizona, this 5th day of January,
2012.

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s/Elizabeth A. Lemke
ELIZABETH A. LEMKE, RDR, CRR, CPE

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UNITED STATES DISTRICT COURT