AG Schuette: Federal law forbids police from returning seized medical marijuana

Bill Schuette

Attorney General Bill Schuette

Michigan Attorney General Bill Schuette says a portion of the Michigan Medical Marihuana Act that requires police to return medical marijuana to a registered patient or primary caregiver upon release from custody is pre-empted by federal law.

According to Schuette, if the police return the seized marijuana, they could be prosecuted under federal law for distributing or aiding the distribution of marijuana.

From Attorney General Opinion No. 7262:

[T]he MMMA specifically prohibits the forfeiture of marihuana possessed in connection with the medical use of marihuana. Section 4(h) of the Act provides:

“Any marihuana, marihuana paraphernalia, or licit property that is possessed, owned, or used in connection with the medical use of marihuana, as allowed under this act, or acts incidental to such use, shall not be seized or forfeited.” [MCL 333.26424(h); emphasis added.] …

But this does not conclude the analysis because, as stated above, federal law prohibits the manufacture, distribution, or possession of marihuana. The CSA [Controlled Substances Act] provides that “[e]xcept as authorized by this title, it shall be unlawful for any person knowingly or intentionally — (1) to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance . ….” 21 USC 841(a)(1). The CSA categorizes marihuana as a Schedule I controlled substance. 21 USC 812(c) (Schedule I) (c)(10). And its use remains a federal crime. See 21 USC 812(c)(10).7 Simple possession of marihuana is also a crime, 21 USC 844(a), and possession for “personal use” renders the offender “liable to the United States for a civil penalty in an amount not to exceed $10,000.” 21 USC 844a(a). …

Thus, a Michigan law enforcement officer cannot simultaneously comply with the federal prohibition against distribution or aiding and abetting the distribution or possession of marihuana and the state prohibition against forfeiture of marihuana. In other words, it is “impossible” for state law enforcement officers to comply with their state-law duty not to forfeit medical marihuana, and their federal-law duty not to distribute or aid in the distribution of marihuana. …

Under these circumstances, the unavoidable conclusion is that section 4(h) of the MMMA is preempted by the CSA to the extent it requires law enforcement officers to return marihuana to registered patients or caregivers. As a result, law enforcement officers are not required to return marihuana to a patient or caregiver.

Kevin Cotter

Rep. Kevin Cotter (R-Mt. Pleasant)


By returning marihuana to a registered patient or caregiver, a law enforcement officer is exposing himself or herself to potential criminal and civil penalties under the CSA for the distribution of marihuana or for aiding or abetting the possession or distribution of marihuana.

Schuette’s opinion was issued in response to a query from Rep. Kevin Cotter (R-Mt. Pleasant)

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Drug-immunity law bans AG’s Vioxx-Medicaid suit, MSC rules

Merck Corp. took Vioxx, a pain-relief drug, off the market in 2004 (not soon enough, many lawsuits claimed) because the drug had the unintended side-effect of increasing the risk of heart attacks.

Under Michigan’s 1996 drug-manufacturer immunity law, MCL 600.2946(5), Michigan residents could not press Vioxx-related product-liability claims against Merck.

A divided Michigan Supreme Court has upheld a Court of Appeals decision, issued earlier this year, which held that the immunity law also barred the state attorney general’s 2008 suit against Merck under Michigan’s Medicaid False Claims Act for the $20 million the state paid for Vioxx prescriptions dispensed to Medicaid patients.

The attorney general alleged “that because Merck misrepresented the safety and efficacy of Vioxx in its marketing and because Michigan reimbursed providers who prescribed or dispensed Vioxx, Michigan would not have incurred such expenses but for Merck’s fraudulent activity.”

The COA majority in Attorney General State of Michigan, et al. v. Merck Sharp & Dohme Corp., characterized the attorney general’s suit as a product liability action and held that MCL 600.2946(5) barred the suit.

Over the weekend, Chief Justice Robert P. Young Jr., and Justices Stephen J. Markman, Mary Beth Kelly and Brian K. Zahra sided with the COA majority and denied the state’s application for leave to appeal.

Justices Michael F. Cavanagh and Diane M. Hathway would have granted leave. So would have Justice Marilyn Kelly, who said that the suit was a fraud claim, pure and simple, and had nothing to do with product liability:

MCL 600.2945(h) defines a “product liability action” as “an action based on a legal or equitable theory of liability brought for the death of a person or for injury to a person or damage to property caused by or resulting from the production of a product.”

The Court of Appeals majority held that plaintiffs’ allegations fall within this statutory definition because they assert legal and equitable theories of liability for damage to property resulting from the production of a product. Essentially, the court held that plaintiffs’ alleged financial damages in the form of payments to Medicare patients amount to “damage to property.”

This defies common sense and a rational understanding of the statutory phrase “damage to property.”

Kelly said the dissenting COA judge had it right:

As dissenting Court of Appeals Judge FITZGERALD noted, “[w]hen examined in the proper context of a product liability statute, it is clear that ‘damage to property’ means physical damage to property caused by a defective or unreasonably dangerous product.”

Think about this way, Kelly continued:

Product liability cases are generally brought by or on behalf of people who have suffered injury or damage to their physical property because of the use of a product.

Hence, if a customer buys a product and it burns down his or her house, that person may bring a product liability action. However, if that same customer buys a product, such as fireworks, with the expectation that it will blow up, and it does not work as promised, no product liability action lies.

The latter hypothetical situation is analogous to the instant case. Plaintiffs are attempting to recover money spent for a product that allegedly did not live up to defendant’s representations.

This case is not a product liability action because no physical injury is claimed.

Medical marijuana dispensaries close in wake of COA ruling

State of Michigan v. McQueen, the Michigan Court of Appeals ruling that yesterday declared patient-to-patient sales of marijuana at a Mt. Pleasant medical marijuana dispensary were a public nuisance, could have a far-reaching effect.

The Lansing State Journal reports this morning that many of Lansing’s medical marijuana dispensaries were closed yesterday in the wake of the COA’s ruling.

And from The Detroit Free Press:

Rick Thompson, editor-in-chief of Michigan Medical Marijuana Magazine, said the ruling effectively shuts down the state’s 400 to 500 dispensaries, which allow sales in a safe place between people who trust one another, rather than on the streets between strangers.

“Other than a place like this, people would have to go back into neighborhoods,” he said Wednesday at his office in Big Daddy’s Management Group in Oak Park. Big Daddy’s serves about 3,500 certified patients in five locations, including about 100 low-income patients who pay nothing to Big Daddy’s for their marijuana.

Meanwhile, Michigan Attorney General Bill Schuette praised the ruling in a press release and said he’ll coach Michigan’s 83 prosecutors on how to use the ruling to shut down dispensaries:

“This ruling is a huge victory for public safety and Michigan communities struggling with an invasion of pot shops near their schools, homes and churches,” said Schuette.

“Today the Court echoed the concerns of law enforcement, clarifying that this law is narrowly focused to help the seriously ill, not the creation of a marijuana free-for-all.”

Schuette will send a letter to Michigan’s 83 county prosecutors explaining that the ruling clearly empowers them to close dispensaries and provide instructions on how to file similar nuisance actions to close dispensaries in their own counties.

Stand by for an appeal.

COA bars state’s Vioxx-Medicaid suit against Merck

“The law of unintended consequences, often cited but rarely defined, is that actions of people — and especially of government — always have effects that are unanticipated or unintended. Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.”
– Rob Norton, The Concise Encyclopedia of Economics

The state of Michigan got a taste of its own medicine yesterday when the Court of Appeals, in a 2-1 decision, booted the attorney general’s Medicaid False Claims Act suit against Merck, the manufacturer of the anti-inflammatory drug Vioxx.

Writing for the majority in Attorney General State of Michigan, et al. v. Merck Sharp & Dohme Corp., Judge Henry Saad applied Michigan’s drug immunity law to bar the state’s claim against Merck.

Michigan’s immunity statute is the only one of its kind in the United States and the claims made by the parties raise an issue of first impression under Michigan law.

We hold that where, as here, the drug in question was approved by the FDA [Food and Drug Administration], the state’s suit to recover Medicaid money premised on fraud by the drug company in its representations regarding the safety and efficacy of the drug is barred by MCL 600.2946(5), which exempts drug companies from product liability suits regarding FDA-approved drugs.

Saad, joined by Judge David H. Sawyer, ruled that:

[N]othing in the statute limits its application to claims brought by consumers and that the statute in no way precludes a claim pursued under the [Medicaid False Claims Act] or described as an action for unjust enrichment. Again, by its own terms, MCL 600.2946(5) applies to actions “based on a legal or equitable theory of liability,” which includes the claims at issue here.

If the plain language of the statute results in an outcome that the Legislature now deems improper, it is for the Legislature, not this Court, to narrow the application of the statute by amending or redrafting its terms.

In his dissent, Judge E. Thomas Fitzgerald argued that the state’s claim was not a product liability suit:

[P]laintiffs claim is a “product liability action” subject to the absolute defense of
MCL 600.2946(5) if (1) the action is based on a legal or equitable theory of liability, (2) the action is brought for the death of a person or for injury to a person or damage to property, and (3) that loss was caused by or resulted from the construction, design, formulation, development of standards, preparation, processing, assembly, inspection, testing, listing, certifying, warning, instructing, marketing, selling, advertising, packaging, or labeling of a product.

The point of contention is whether plaintiffs’ claim was “brought for the death of a person or for injury to a person or damage to property.” Here, plaintiff is seeking money damages “representing Medicaid overpayments wrongfully received by Defendant” as a result of defendant’s allegedly fraudulent conduct that occurred after the FDA’s approval of Vioxx.

To treat this case as a product liability action would require a finding that plaintiffs’ claim for money wrongfully paid was brought for damage to property. …

[T]he present case is not a product liability action, as defined in MCL 600.2945(h), because a suit brought for
the return of Medicaid overpayments is not “brought for … damage to property.”

Lansing district judge sends heavyweights to fight AG’s ouster attempt

Over the weekend, The Lansing State Journal reported that former Michigan Supreme Court Justice Thomas Brennan and attorney Lawrence Nolan are going up against Michigan Attorney General Bill Schuette, who is seeking to oust Lansing District Court Judge Hugh Clarke Jr.

Schuette, you’ll recall, says Clarke is illegally occupying his judicial office: “Schuette seeks to unseat Lansing district judge.”

Former Gov. Jennifer Granholm appointed Clarke in December to fill a vacancy created by Lansing District Court Judge Amy Krause’s appointment to the Michigan Court of Appeals.

According to Schuette, Clarke’s appointment could only last until the end of Krause’s term of office, which ended at noon, Jan. 1.

Krause had been re-elected to the district court in November. Schuette’s position is that Clarke can’t serve the term to which Krause had been re-elected but had not begun serving when she was appointed to the COA.

Brennan and Nolan want the Michigan Supreme Court to bypass the COA, which has original jurisdiction of Schuette’s quo warranto motion to unseat Clarke.

From The LSJ:

Schuette, a Republican who took office Jan. 1, says Clarke’s appointment should have ended on Jan. 1. He further argues that Gov. Rick Snyder has the legal authority to fill the seat once held by Krause.

In their response, Clarke’s attorneys say that state law has an appointee to the District Court bench fill the seat until the “next general November election, at which time a successor is elected and qualified.”

Brennan also argues that the Michigan Supreme Court does not have the power to remove a judge without a recommendation from the Judicial Tenure Commission. Further, such removals can occur only in a specific set of circumstances, none of which apply to the dispute over Clarke.

“We stand by our position. It’s a matter of principle and precedent based on a previous case involving a Supreme Court justice,” said John Sellek, a spokesman for Schuette. Sellek added that due to the lateness of the filings Friday, the Attorney General’s Office had not had a chance to look them over.

In the meantime, Clarke continues to preside over his court.

“I have a parking place. I’m going to work every day, working for the people of Michigan,” Clarke told The LSJ.

Waterstone catches break from MSC

The Michigan Supreme Court has put the prosecution of former Wayne County Circuit Judge Mary Waterstone on hold.

She’s facing felony charges for allegedly allowing perjury at a drug trial.

The MSC’s order directs the Michigan Court of Appeals to decide whether Attorney General Mike Cox can continue as prosecutor in the case.

From The Associated Press

The Supreme Court’s decision Thursday postpones a key hearing set for Monday to determine if there’s probable cause to send Waterstone to trial.

Waterstone wants the attorney general’s office off the case because it represented her in a separate but related civil lawsuit. The appeals court must make a ruling by mid-March.

Former prosecutor Karen Plants and two suburban police officers are also charged in the case.

Of note: Justice Michael Cavanagh voted against considering Waterstone’s request to boot Cox from the case. Justice Maura Corrigan did not particiapte in the decision because she has offered to be a character witness for Waterstone if the matter goes to trial.

Legislating against Santa Cox

“Political,” “misguided” and “malevolent” fumed Michigan Attorney General and 2010 Republican gubernatorial hopeful Mike Cox last week at a Michigan House Judiciary hearing.

The object of Cox’s wrath? Legislation sponsored by committee chair Mark Meadows (D-East Lansing) that would prevent the AG from handing out settlement money as he chooses when there is no aggrieved party to receive the funds.

Last March, Cox wanted to shower two Grand Rapids-area parks with $250,000 each. The money was part of a settlement Cox obtained from Countrywide Finance, a large mortgage lender that Cox accused of predatory lending practices.

This did not sit well with some politicos, who were upset that Cox had consulted with Peter Secchia, a Republican Party heavyweight who’s in charge of fundraising for the parks. A report in The Grand Rapids Press indicated that Democratic Kent County Commissioner Brandon Dillon felt that Cox’s proposed donation might have had as much to do with the AG’s political ambitions as it did with philanthropy.

Cox said his critics were the ones dragging politics into the matter but announced a last-minute change of plans and gave the money to Heart of West Michigan United Way.

It didn’t take Meadows long to introduce HB 4799, which, in a nutshell, would require left-over settlement money to be deposited into the state’s general fund to be disbursed through the appropriations process, instead of leaving it up to Cox to decide which charity or deserving institution should be favored.

Cox characterized the legislation as an attack on the power of his office. Meadows, according to a report in The Detroit News, says it’s not about curbing Cox, it’s about ensuring that money is disbursed transparently.

Otherwise, as the Detroit News quoted committee member Lisa Brown (D-West Bloomfield), Cox gets “to play Santa Claus almost. How do you decide who’s naughty and who’s nice?”

No one is questioning whether the money is winding up in deserving hands. It is, plain and simple.

But the proposed legislation prevents Cox from playing Santa Claus and would eliminate any suspicion, founded or unfounded, that there is any electioneering wrapped up with the gifts.