Free Spirit Organics, NAC v. San Joaquin County Board of Supervisors

District Court, E.D. California·Decided July 7, 2020·No. 2:17-cv-02271·Unknown

Opinion

FREE SPIRIT ORGANICS, NAC, et al., No. 2:17-cv-02271-KJM-EFB Plaintiffs, v. ORDER SUPERVISORS, et al., Defendants.

On October 10, 2017, the San Joaquin County Sheriff entered and seized a hemp crop from a 26.19 acre parcel of land on which plaintiffs owned and operated an industrial hemp operation. On October 27, 2017, plaintiffs initiated this action, claiming this seizure, perpetuated by a number of San Joaquin County officials, deprived them of certain constitutional protections. Defendants have now moved to dismiss the second amended complaint. Having considered the relevant briefing and conducted an evidentiary hearing to address a standing challenge against one of the plaintiffs, the court GRANTS defendants’ motion to dismiss on standing grounds. /// /// /// A. Parties Plaintiffs in this action are as follows.1 Free Spirit Organics (“FSO”), NAC, is a tribal owned Native American company organized under the laws of the State of Nevada.2 Second Am. Compl. (“SAC”) ¶ 3, ECF No. 35. FSO served as the manager and operator of a 250-acre plot of land in Stockton, California on which the industrial hemp grow at issue took place. Id. American States University (“ASU”) is an institution of higher education, as defined under section 81000 of the California Food and Agricultural Code; ASU is FSO’s business partner in the Stockton hemp grow. Id. ¶ 4. HRM Farms, Inc., a California corporation with its principal place of business in Holt, California also was a partner in the grow operation. Id. ¶ 5. Cannabis Science, Inc. is a publicly traded company organized under the laws of Nevada, with its principal place of business in Orange County, California. Id. ¶ 6. Finally, plaintiff S.G. Farms is a California agricultural research organization based in Marin County, California that contracted with FSO “to assist with the subject grow and to conduct research in connection with the subject grow.” Id. ¶ 7. Plaintiffs name several San Joaquin County agencies and officials as defendants in this action. First, plaintiffs name the San Joaquin County Board of Supervisors, including its individual members acting in their official capacity (collectively, “Board”). Id. ¶ 10. Those members are Miguel Villapudua, Katherine Miller, Tom Patti, Bob Elliott and Chuck Winn. Id. Plaintiffs also name Erin Hiroko Sakata, an attorney working for the San Joaquin County

1 On January 7 and 8, 2019, the court held an evidentiary hearing to address the issue of standing as to certain plaintiffs. See ECF Nos. 90, 91. During that hearing, the following plaintiffs were voluntarily dismissed from this action: Winnemucca Shoshoni, MBS, Gerard Galvez, Bruce Granados, Scott Rayborn, Justin Granados, Glen Burgin, Doreen Morales, Gil Granados and Gil Granados, Jr. 2 At the January 8, 2019 evidentiary hearing, the parties stipulated that wherever the record refences the entity Free Spirit Organics, LLC, that reference should be construed to identify Free Spirit Organics, NAC. ECF No. 91. counsel’s office. Id. ¶ 11. Finally, plaintiffs name the San Joaquin County Sheriff and Doe defendants.3 Id. ¶¶ 12–13. B. Factual Allegations Plaintiffs leased a 250-acre parcel of land in San Joaquin County for the purpose of operating an industrial hemp operation on 26.19 acres of that parcel. Id. ¶ 27. Plaintiffs applied for all necessary paperwork to conduct the grow. Id. FSO is an industrial hemp cultivator approved by the Nevada Department of Agriculture and HRM is a hemp grower registered with the San Joaquin County Agricultural Commission. Id. ¶¶ 28–29. Hoping to produce a yield of the highest quality, plaintiffs also allege they contacted S.G. Farms to provide consultation services regarding the grow. Id. ¶¶ 30–32. The parties reached a “cooperative consulting agreement” to achieve that end. Id. ¶¶ 31–32. Plaintiffs allege they were authorized to conduct grow operations by way of S.G. Farms’ qualifications under California Food and Agricultural Code section 81000(c)(1). Id. ¶ 33. In June 2017, plaintiffs began to cultivate the hemp grow. Id. ¶ 34. On July 31, 2017, the County Agricultural Commission approved the grow operation. Id. The Commission identified HRM as a “grower of hemp” on the parcel; S.G. Farms regularly visited the parcel to perform testing and maintenance and Williams Bills (“Chief Bills”), a member of the Native American tribe of Winnemucca Shoshoni, oversaw general grow operations. Id. ¶¶ 8, 34. Plaintiffs further allege they tested the hemp to ensure it fell below the 0.3 percent THC [tetrahydrocannabinol] limit permitted for industrial hemp and posted signage on the grow site to ensure it was “unmistakably identified [] as industrial hemp.” Id. ¶¶ 35–36. On August 29, 2017, County Counsel Sakata sent plaintiffs a letter claiming that, based on an August 17, 2017 investigation, their “cannabis grow” was prohibited by County law. Id. ¶ 37. The letter further demanded plaintiffs produce evidence by September 11, 2017, supporting their claim of being an authorized “research cultivator.” Id. On September 11, 2017,

3 Plaintiffs also named the San Joaquin County District Attorney as a defendant in this action; however, at the April 20, 2018 motion hearing, the court dismissed the District Attorney from this action with prejudice. plaintiffs responded to the County’s letter, providing a factual and legal basis for their alleged authorization to conduct the grow. Id. ¶ 38. Plaintiffs’ responsive letter is attached as exhibit B to the second amended complaint. See id., Ex. B at 32–48, ECF No. 36.4 On September 12, 2017, the County responded by letter, taking the position plaintiffs’ letter was non-responsive and did not demonstrate they qualified as an “Established Agricultural Research Institution for the purposes of agricultural or academic research.” Id. ¶ 39. On September 15, 2017, plaintiffs again replied by letter and provided supporting evidence attempting to substantiate “currently approved [educational] programs” offered by ASU. Id. ¶ 40 (alteration in original). On September 26, 2017, the Board of Supervisors passed ordinance no. 4497, an “Interim Urgency Ordinance Declaring a Temporary Moratorium on the Cultivation of Industrial Hemp by ‘Established Agricultural Research Institutions’ within the Unincorporated Areas of San Joaquin County.” Id. ¶¶ 41–47; id., Ex. C at 49–56. Thereafter, on September 28, 2017, Sakata sent plaintiffs a letter attaching the ordinance, warning the ordinance was effective immediately, asserting plaintiffs’ grow was a public nuisance and demanding abatement. Id. ¶ 43; id., Ex. C. On October 3, 2017, in response to Sakata’s latest letter, plaintiffs again had their crop tested for THC levels. Id. ¶ 44. The test once again revealed THC levels at 0.24%, which plaintiffs allege “clearly designat[ed] it as hemp.” Id. On October 5, 2017, ASU’s Administrative Dean, Roger Agajanian, contacted the Board and requested a hearing be scheduled for October 24, 2017. Id. ¶ 45. His request was denied; however, he was informed his matter would be placed on the agenda for the Board’s November 7, 2017 meeting. Id. The next day, October 6, 2017, Agajanian sent the Board a letter confirming the November 7, 2017 agenda item and summarizing plaintiffs’ position regarding the ordinance. Id.; SAC, Ex. D at 57–71.

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