Feds, Calif. Sheriff Illegally Seizing Cannabis Cash

(January 18, 2022, 6:02 PM EST) -- Armored transportation company Empyreal Logistics has filed a civil rights suit against the federal government and a California sheriff, claiming officers are unlawfully searching the vehicles and seizing money from cannabis clients so law enforcement can reap gains through civil forfeiture.

Pennsylvania-based Empyreal Enterprises LLC, which does business as Empyreal Logistics, said in a suit filed Friday in California federal court that there is no reason San Bernardino County's sheriff should be targeting a state-sanctioned business lawfully operating under California law.

The company added that federal agencies also shouldn't be targeting a business that provides financial infrastructure support for the state-legal medical cannabis industry "particularly when [the U.S. Department of Justice] is forbidden from spending federal funds to do so under the appropriations rider known as the Rohrabacher-Farr amendment."

"The real reason Empyreal is being targeted is because it is very profitable for these law-enforcement agencies to seize the cash proceeds that Empyreal is transporting and keep that money using civil forfeiture," it said.

The suit names as defendants San Bernardino County Sheriff Shannon D. Dicus; the DOJ and Attorney General Merrick Garland; the FBI, its director and an assistant director overseeing the FBI's Los Angeles field office; and the Drug Enforcement Administration and its administrator.

Empyreal said the DOJ is coordinating a federal effort across multiple states — in cooperation with "multiple state and/or local law-enforcement agencies via joint task forces or joint investigations" — to target Empyreal vehicles for stops and searches and to seize cash proceeds from state-legal cannabis businesses that Empyreal transports to financial institutions. The company noted it never transports any actual cannabis.

Since May 2021, Empyreal said its vehicles have been stopped and searched by sheriff's deputies five times, three of which resulted in cash seizures. The company said three of the stops have occurred in the past eight weeks in San Bernardino County alone.

Empyreal argued the traffic stops that led to the searches and seizures were pretextual, adding that not a single traffic citation was issued to an Empyreal driver during any of the stops discussed in its complaint. The company also noted that no criminal charges have been brought against Empyreal, any of its employees or any of its clients relating to the stops and seizures at issue.

On Nov. 16, sheriff's deputies seized about $700,000 from a vehicle, seized the vehicle itself and took the driver's business and personal cellphones, according to the complaint. And in doing so, the government damaged the vehicle.

Empyreal said the cash proceeds it was transporting at the time were entirely from state-licensed cannabis businesses in good standing and operating lawfully in California.

Empyreal also pointed to another traffic stop in San Bernardino County on Jan. 6. At the time, the company had suspended its cash logistics operations in the county, but the driver was "simply picking up an order of rolled coin boxes from Empyreal's vendor," per the complaint.

After confirming the coins weren't related to cannabis, the deputies didn't seize them, the complaint said. The driver asked a deputy why Empyreal vehicles were being stopped so frequently, and the officer told him it was "political" without elaborating, according to the complaint.

"Targeting Empyreal vehicles for stops, searches, and seizures for 'political' reasons is an improper government motive for enforcement that exceeds the sheriff's statutory authority and violates Empyreal's constitutional rights," the company argued, adding that it's also not a valid reason for conducting a traffic stop.

Empyreal said the stops and seizures are costly to the company, noting that it has reimbursed clients for the cash that was taken. The company said it has been forced to suspend business operations in San Bernardino County and has stopped driving through Kansas, adding that it has lost customers because of the stops and seizures and hasn't been able to roll out new services in multiple states because of seizure concerns.

"If these incidents continue to occur — and there is every indication they will — it will threaten Empyreal's business model and its ability to continue providing financial infrastructure for the state-legal medical cannabis industry by safely moving cash from business premises into the legal banking system for greater transparency," the company argued.

Empyreal had sought a temporary restraining order and preliminary injunction to allow it to resume business operations in San Bernardino County and maintain its operations elsewhere during the lawsuit.

But on Tuesday, the court denied Empyreal's temporary restraining order request without prejudice, finding the company failed to comply with a notice requirement.

Empyreal's suit includes counts of ultra vires, violations of the Fourth Amendment and violations of due process. Among other things, the company is seeking to block the defendants from unreasonably stopping, searching or seizing the vehicles or their contents "based solely on the actual or suspected presence of cash earned by state-legal cannabis dispensaries without reasonable suspicion or probable cause."

Counsel for Empyreal and a representative of the U.S. Attorney's Office for the Central District of California didn't immediately respond to requests for comment Tuesday.

Empyreal is represented by David C. Bass and Jerome Satran of Koeller Nebeker Carlson & Haluck LLP, and Dan Alban and Kirby Thomas West of the Institute for Justice.

The federal defendants are represented by Joanne Osinoff of the U.S Attorney's Office for the Central District of California.

Counsel information for the San Bernardino County Sheriff's Department wasn't available Tuesday.

The case is Empyreal Enterprises LLC v. U.S. et al., case number 5:22-cv-00094, in the U.S. District Court for the Central District of California.