Civil Asset Forfeiture

A California Sheriff Remains Free To Rob Armored Cars Carrying Money From State-Licensed Marijuana Businesses

A federal judge declined to issue a temporary restraining order, saying the evidence of legal violations is insufficient at this point.


A federal judge this week declined to issue a temporary restraining order (TRO) against a California sheriff who used civil forfeiture to rob armored cars carrying money earned by state-licensed marijuana businesses. In his ruling, U.S. District Judge John Holcomb said Empyreal Logistics, a Pennsylvania-based company that transports cash between businesses and banks, "may very well have an excellent case on the merits" but had failed to meet "the high burden" for a TRO.

San Bernardino County sheriff's deputies stopped Empyreal vans three times in November, December, and January. They seized cash during two of the stops, making off with a total of more than $1 million, which was transferred to the FBI so the Justice Department could pursue forfeiture under federal law. If the government prevails in those forfeiture proceedings, the sheriff's department will get to keep up to 80 percent of the money under the Justice Department's "equitable sharing" program. The earnings of state-licensed marijuana suppliers are not subject to forfeiture under California law.

Empyreal, which is represented by the Institute for Justice, argues that San Bernardino County Sheriff Shannon Dicus has no authority to seize money from businesses that are complying with state law, that the van searches violated the Fourth Amendment, and that the financial motive for the stops makes them inconsistent with due process. In addition to Dicus, Empyreal sued the Justice Department, Attorney General Merrick Garland, the FBI, FBI Director Christopher Wray, the head of the FBI's Los Angeles Field Office, the Drug Enforcement Administration (DEA), and DEA Administrator Anne Milgram. The company argues that federal officials, by collaborating with Dicus, are violating a congressional spending rider that bars the Justice Department (which includes the FBI and the DEA) from interfering with the implementation of state medical marijuana laws.

Regarding that last claim, Holcomb said the evidence presented so far was not sufficient to establish that Empyreal and its clients were operating in accordance with California laws allowing medical use of marijuana. The company says three of the four businesses whose money was seized on November 16 had medical marijuana licenses. It says all of the money seized on December 9 came from such businesses.

"Empyreal bears the burden to show by a preponderance of evidence that it has strictly complied with state medical marijuana laws," Holcomb writes. "Empyreal has not come close to meeting that burden. Empyreal's only evidence with respect to the issue of strict compliance is self-serving declarations from its CEO, Deirdra O'Gorman. The value of those declarations is limited."

Dan Alban, one of the Institute for Justice attorneys representing Empyreal, notes that "the appropriations rider requires DOJ to not spend any money interfering with a state's implementation of its medical cannabis laws." While "the rider does not protect every business that Empyreal serves," he says, "it should protect those with medical cannabis licenses that are in strict compliance with state law, and federal agencies should not be able to seize their proceeds."

Holcomb was also unpersuaded by the argument that Dicus had exceeded his authority, since that claim hinges on demonstrating that the businesses whose money his deputies seized were complying with state law. "Empyreal and its clients operate in full compliance with applicable state cannabis laws," the company says in its TRO application. But in Holcomb's view, that assurance is not enough to support a TRO, since "the only evidence that Empyreal presents is self-serving declarations from its CEO."

For similar reasons, Holcomb says, Empyreal has not shown that its constitutional claims against Dicus are likely to succeed. "Put simply, there is not enough evidence at this time to suggest that Empyreal's Constitutional rights were violated," he writes. He emphasizes that his order "does not now address whether Empyreal's rights were violated, nor whether Defendants violated any laws."

Empyreal argues that the traffic stops were pretextual: ostensibly justified by minor traffic violations but actually aimed at generating revenue for the sheriff's department. Sheriff's Deputy Jonathan Franco claimed the November 16 stop, which resulted in the seizure of $712,000, was justified because the Empyreal van was following a tractor-trailer too closely. When the same deputies pulled over the same vehicle, driven by the same employee, on December 9, according to the lawsuit that Empyreal filed on January 14, they claimed the driver "slightly exceeded the speed limit and prematurely activated his turn signal."

In that case, the complaint says, "the driver's operation of the Empyreal vehicle was completely lawful." The company says "the deputies had planned the stop in advance and would have pulled over the driver and the Empyreal vehicle regardless of how carefully or lawfully it was driven."

This time the deputies took about $350,000, which was something of a letdown. Based on an audio recording by the van's security system, Empyreal's lawsuit describes this exchange: "One of the deputies said, 'That's it?' and chuckled. He then said: 'You set the bar too high.' When another deputy remarked that he thought they'd get 'a million or two,' the [first] deputy responded, 'At least we got over a million'"—apparently referring to the combined take from the two seizures.

The sheriff's deputies who pulled over an Empyreal van on January 6 were even more disappointed. They discovered that it was carrying rolled coins that had nothing to do with the marijuana industry, so they did not get to seize anything. As in the other stops, they did not write a ticket either.

"Because the sale of cannabis and the transport of cannabis proceeds (including
in localities where dispensaries are prohibited) are lawful under California law," Empyreal says in its TRO application, "the Fourth Amendment prohibits the Sheriff from stopping, searching, or seizing Empyreal's personnel or property (namely, vehicles, safes, and cash) without reasonable suspicion or probable cause to believe that the property is associated with or is the proceeds of cannabis sales that violate state law….The Sheriff is using pretextual traffic stops to search and seize Empyreal's property without probable cause. Indeed, the Sheriff is not even issuing traffic citations during these stops—just taking Empyreal's cash."

Even if the stops were justified by traffic violations, Empyreal says, the ensuing searches were unconstitutional. A "traffic-violation stop does not give officers the right to search the vehicle," it notes. "Any warrantless search pursuant to the automobile exception requires probable cause to believe that the place searched contains contraband. Contra the Sheriff's wishes, a traffic-violation stop is not carte blanche to search a vehicle, let alone a locked safe inside it."

During the December 9 stop, the deputies claimed a drug-sniffing dog alerted to the van, which Empyreal says is not true: "Video footage from the vehicle does not show the dog alert on the vehicle. Instead, it shows the dog is barely interested in the vehicle."

The deputies obtained a search warrant prior to the November 16 seizure, but Empyreal says the application included several false or misleading statements. It says the deputy who applied for the warrant mistakenly claimed that Empyreal converts money from marijuana businesses into cryptocurrency and falsely asserted that some of the company's clients were not licensed by the state. The deputy also said Empyreal did not have a marijuana business license, which is not required to transport money from dispensaries to banks. Furthermore, a 2020 law says a company that provides such services to state-licensed marijuana businesses "does not commit a crime under any California law."

When he weighed the TRO application, Holcomb declined to consider the information about the search warrant, which he said had been introduced too late, without giving the defendants a chance to respond. Alban says that information, which Empyreal included in its reply briefs, was based on "new evidence that we had only just obtained and did not possess when we filed our TRO application."

The new evidence included an unredacted copy of the November 16 search warrant. "We had tried to get those documents from the defendants for months," Alban says, "but only received them last week." Although Holcomb declined to consider the new evidence at this stage, Alban says, "we can now use these documents to support a motion for a preliminary injunction."

Litigation of these claims will continue, but in the meantime Empyreal, which reimbursed its clients for the seized money, is out the $1 million or so that Dicus' deputies stole, plus another $165,000 that Kansas sheriff's deputies took during a traffic stop in Dickinson County last May. Empyreal says all of the money seized in Kansas came from state-licensed medical marijuana dispensaries in Missouri. As in California, the cops were working with the DEA and the Justice Department, which is pursuing forfeiture under federal law.

Empyreal says it is trying to avoid further trouble by routing money from marijuana businesses around Kansas and San Bernardino County, which leads to needless extra travel. Empyreal has suspended plans for a "vault and currency processing facility" in Dicus' jurisdiction. It says it had already invested $100,000 in that project and continues to pay $21,000 a month in rent and utilities for the building. Empyreal says the threat of continued harassment and seizures has cost it clients and endangered the expansion of its business, especially in California.