Sometimes even the best-laid plans go up in smoke. And sometimes these plans end up costing a lot of...

1. $500,000 Medical Marijuana Lawsuit Up in Smoke
Sometimes even the best-laid plans go up in smoke. And sometimes these plans end up costing a lot
of money.
That's what happened to Mark Haile and Michele Hammer, two Arizona businesspeople who in
August, 2010, each loaned $250,000 to Today's Health Care II (THC), a Colorado-based medical
marijuana dispensary. The agreements specifically stated that THC was using the loan proceeds for
"a retail medical marijuana sales and grow center," but neither Haile nor Hammer thought that
would marijuana dispensaries California ever be a problem.
Marijuana is legal in Arizona and Colorado (along with 14 other states and the District of Columbia);
patients simply need a physician's prescription and they are legally allowed to obtain pot for
medicinal purposes.
In fact, as far as Haile and Hammer were concerned, it was a smart business move. In California, for
example, medical cannabis is an estimated $1.3 billion industry (Colorado is the nation's second-
largest market). Why not get in on a potentially lucrative enterprise?
Talk about a pot of gold.
But http://www.medicalmarijuanablog.com/state-laws/wisconsin-050.html in March 12, 2011, THC
defaulted on its loan. According to the original terms, THC had five days to re-pay its debt. If it
didn't, Haile and Hammer were entitled to repayment of the principal loan amount at a default
interest rate of 21 percent, plus attorney fees.
By March 17, THC still hadn't paid anything, so Hammer and Haile sued, clearly expecting to win.
But they didn't. Instead, in his April 17 ruling, Judge Michael McVey, of Maricopa County
http://california-marijuana.com Superior Court, dismissed the suit, stating that he couldn't enforce
the loan agreement because the money was for an illegal purpose under the U.S. Controlled
Substances Act, a federal law.
While he recognized his ruling was "harsh," federal law trumps state law, and THC doesn't have to
repay any part of either loan (although it will have to report the $500,000 as taxable income).
Lawyers for Haile and Hammer could not be reached for comment. But in a Phoenix New Times,

2. story Randy Nussbaum, managing partner of the law firm that represented them, expressed
surprise. Haile and Hammer "were provided with what they thought was a legitimate business
opportunity, and they entered into this agreement in good faith," he said.
William Kozub, THC's lawyer, was not surprised with the verdict. "It's a classic supremacy issue-
-federal versus state," he said. "Take the marijuana out of it. Just make it a regular commercial
dispute for something that's illegal under federal law. It's that simple. Drug lords from Colombia
cannot come to court and say 'They sold me bad cocaine.' The Taliban can't sue in US federal court
because they had a kidnapping gone awry. Certain things are just illegal."
Though the case can't set legal precedent, it does raise interesting questions for people involved in
the medical marijuana industry, or those interested in getting involved: banks, individual investors,
landlords, suppliers, medical directors, independent contractors and yes, even patients.
Over the last year, the Drug Enforcement Agency has raided dozens of dispensaries across the
country, most notably in California.
http://abcnews.go.com/Business/500000-medical-marijuana-lawsuit-smoke/story?id=16322793