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Ousted medical pot dispensary sues Billings, state over business closure in 2018

Ousted medical pot dispensary sues Billings, state over business closure in 2018

Montana Organic Medical Marijuana

Shawn Palmer, who owns Montana Organic Medical Marijuana, or “MOMS,” is pictured in this 2010 file photo.

A medical marijuana business with a history of disputes with the city of Billings is suing, saying a police detective engaged in “judicial deception” amid ongoing efforts to shut down the dispensary.

Montana Organic Medical Supply, or MOMS, sued in U.S. District Court on Tuesday, naming the state, the Department of Health and Human Services, two of its employees, the city of Billings and a police detective.

MOMS is owned by Steven Palmer.

Palmer said that in 2018, the state health department inspected his business’ cultivation facility near Emigrant and its dispensary, previously located at 2918 Grand Ave. in Billings.

Violations were found, and the inspection report gave the business until Sept. 18 to make corrections.

But without any warning, the state shut MOMS down early, Palmer said.

Palmer said he was given a notice the state was revoking his provider license on Aug. 13. He said he only received a copy of the report with the list of required changes on Aug. 7, and that the state bypassed certain findings it would have needed to make in order to revoke the license in an emergency fashion.

So Palmer took the issue to court, asking a Yellowstone County District judge to review the matter.

Judge Donald Harris found the health department’s order revoking the dispensary’s license “lacks any legal or equitable justification” and the expedited process violated the business’ due process rights.

The judge put a stay on the license revocation and the parties agreed to dismiss the case so that MOMS could pursue damages by filing a separate action.

The next week, though, an inspector for the state health department’s Medical Marijuana Program emailed the Billings Police Department and said MOMS was operating illegally because it didn’t have a valid provider license, according to the plaintiffs.

Police sought a warrant to search the dispensary, noting in the warrant application that the district court had upheld the state’s decision to revoke the provider license, and asserting that MOMS was illegally selling marijuana.

Although it was untrue, the court granted the search warrant. There are eight judges in the Yellowstone County District Court.

Plaintiffs called the detective’s presentation of the facts in the search warrant application “judicial deception.”

“These omissions and representations were made deliberately, or at a minimum recklessly,” the lawsuit stated.

It said “even a brief reading of the” court’s order made clear that it didn’t uphold the license revocation, as the state health inspector had asserted.

With search warrant in hand, police went to the Grand Avenue business and seized products, a laptop, documents, a computer hard drive and other personal belongings, Palmer said.

The marijuana and marijuana products taken were never returned, he said.

MOMS had been a medical marijuana provider since 2011, but in 2017, the city rejected an application for a business license renewal. In 2012, the city of Billings enacted a de facto ban on dispensaries, saying all licensed businesses needed to comply with state and federal laws. Marijuana is illegal under federal law. 

MOMS sued the city of Billings, noting a separate section of city code actually did allow for his business to be licensed. 

Palmer’s lawsuit includes claims that his business’ constitutional rights against unlawful search and seizure and guaranteeing due process were violated. He alleges the state and city interfered with his business relationship not just with the 841 cardholders he had to refer elsewhere after being shut down, but also with Lionheart, another medical marijuana business that was in talks with MOMS to merge.

Palmer is seeking compensatory and punitive damages, in addition to attorney fees and court costs.

MOMS had 10 full-time employees and generated sales of more than $300,000 a quarter, Palmer said. 

A spokesman for the Department of Health and Human Services said the department had not yet been served with the complaint but would respond through the normal legal process in court. DPHHS does not comment on ongoing litigation.

Billings City Attorney Gina Dahl said she was not yet aware of the complaint and would need time to review it.

Montana voters legalized medical marijuana in 2004. Another ballot initiative in 2020 legalized recreational marijuana.

The Legislature is now floating various bills to implement recreational marijuana statewide, with Republicans and Democrats largely divided on issues like taxation rates and where to direct revenue. 

Billings City Council members and staff are working to establish clearer regulations for medical marijuana. A plan for recreational marijuana in the city is next. 

Palmer and his business are represented by Robert Farris-Olsen and Scott Peterson of the Helena law firm Morrison Sherwood Wilson & Deola.

Farris-Olsen is a Democratic member of the Montana House of Representatives.


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