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United States v. Kleinman

United States Court of Appeals, Ninth Circuit

June 16, 2017

United States of America, Plaintiff-Appellee,
v.
Noah Kleinman, AKA Chuckles, Defendant-Appellant.

          Argued and Submitted April 4, 2017 Pasadena, California.

         Appeal from the United States District Court for the Central District of California Otis D. Wright II, District Judge, Presiding D.C. No. 2:11-cr-00893-ODW-2

          Becky S. James (argued) and Jessica W. Rosen, James & Associates, Los Angeles, California, for Defendant-Appellant.

          Julie Shemitz (argued) and David P. Kowal (argued), Assistant United States Attorneys; Lawrence S. Middleton, Chief, Criminal Division; United States Attorney's Office, Los Angeles, California; for Plaintiff-Appellee.

          Paula M. Mitchell, Ninth Circuit Appellate Clinic, Alarcón Advocacy Center, Loyola Law School, Los Angeles, California, for Amici Curiae Members of Congress.

          Roger I. Roots, Livingston, Montana, for Amicus Curiae Fully Informed Jury Association.

          Before: DAVID M. EBEL, [*] MILAN D. SMITH, JR., and N. RANDY SMITH, Circuit Judges.

         SUMMARY [**]

         Criminal Law

         The panel affirmed a conviction and sentence for conspiracy to distribute and possess marijuana, distribution of marijuana, maintaining a drug-involved premises, and conspiracy to commit money laundering, arising out of the operation of purported medical-marijuana collective storefronts in California.

         The defendant argued that a congressional appropriations rider enjoining use of United States Department of Justice funds in certain medical marijuana cases prohibits continued prosecution of his case, and that he is entitled to an evidentiary hearing under United States v. McIntosh, 833 F.3d 1163 (9th Cir. 2016), to determine whether he strictly complied with all relevant conditions imposed by state law.

         The panel held that the rider only prohibits the expenditure of DOJ funds in connection with a specific charge involving conduct that is fully compliant with state laws regarding medical marijuana; that the rider does not require a court to vacate convictions that were obtained before the rider took effect; and that the rider, if it applies to this case at all, might operate to bar the DOJ from continuing to defend the prosecution on appeal insofar as it relates to those counts that may be determined to involve only conduct that wholly complies with California medical marijuana law.

         The panel concluded that the defendant is not entitled to a McIntosh remand in this case because (1) his conviction and sentence were entered before the rider took effect; (2) the rider does not bar the DOJ from spending funds in connection with Counts 1 and 6, which definitively involved conduct that violated state law; (3) even if the rider applied to Counts 2 and 5, an open question, the panel's rulings on Counts 1 and 6 are dispositive of all counts since the defendant's substantive appellate claims concern all counts equally; and (4) the defendant does not win relief on any of his other arguments, so a McIntosh remand on Counts 2 through 5 is unnecessary.

         The panel held that the district court erred by instructing the jury that "[t]here is no such thing as valid jury nullification, " and that it "would violate [its] oath and the law if [it] willfully brought a verdict contrary to the law given to [it] in this case." The panel held that because there is no right to jury nullification, the error was harmless.

         The panel held that the district court did not err by denying the defendant's motion to suppress, because the dispensary's practice, as described in the warrant affidavit, of requiring members to designate the dispensary as their primary caregiver and then allowing members to purchase marijuana immediately after, provided probable cause to believe that the dispensary was operating illegally. The panel held that the district court did not err by denying the defendant a Franks hearing, or by declining to instruct the jury on the defendant's joint-ownership defense.

         The panel held that the district court did not abuse its discretion by considering the government's late-filed objections to the presentence report, and that the sentence is substantively and procedurally reasonable.

          OPINION

          M. SMITH, CIRCUIT JUDGE:

         Noah Kleinman appeals his jury conviction and 211 month sentence for conspiracy to distribute and possess marijuana, distribution of marijuana, maintaining a drug-involved premises, and conspiracy to commit money laundering. His offenses arose out of purported medical marijuana collective storefronts that he operated with his co-defendants in California, which he alleges complied with state law. On appeal, Kleinman argues that (1) a congressional appropriations rider enjoining use of United States Department of Justice (DOJ) funds in certain medical marijuana cases prohibits continued prosecution of his case; (2) the district court gave an anti-nullification jury instruction that effectively coerced a guilty verdict; (3) the district court erroneously denied Kleinman's motion to suppress evidence seized pursuant to a faulty search warrant; (4) the district court erred by not granting an evidentiary hearing on the validity of the affidavit supporting the search warrant; (5) the district court erred by refusing to instruct the jury on Kleinman's defense theory; and (6) the 211 month sentence was substantively and procedurally unreasonable. For the reasons described herein, we AFFIRM Kleinman's conviction and sentence.

         FACTS AND PRIOR PROCEEDINGS

         Kleinman, along with defendant Paul Montoya and others, began operating purported medical marijuana collectives in California around 2006. In 2007 or 2008 they opened their fourth store, NoHo Caregivers (NoHo), which the government alleged was the hub of a large conspiracy to distribute marijuana. At trial, witnesses testified that Kleinman and his associates sold 90% of their marijuana outside of their storefronts, used encrypted phones and burner phones to communicate, drove rented cars to escape detection, hid drugs and money in "stash apartments" rented for that purpose, and shipped marijuana hidden in hollowed-out computer towers to customers in New York and Philadelphia.

         In 2010, pursuant to a Los Angeles Police Department (LAPD) investigation of medical marijuana collectives, two undercover officers entered Kleinman's dispensary Medco Organics (Medco) and purchased marijuana. The LAPD then obtained a search warrant and seized evidence, and California initiated criminal proceedings against Kleinman. He moved to dismiss the case, arguing that he had complete immunity from prosecution pursuant to California medical marijuana laws. The state did not file an objection. During a preliminary hearing on the dismissal motion, the deputy district attorney stated that he did not see a basis on which to deny Kleinman's motion, and the state court dismissed the charges. After the case was dismissed, the United States Drug Enforcement Administration (DEA) seized the evidence in the LAPD's custody.

         In 2011, a federal grand jury indicted Kleinman, Montoya, and five others for conspiracy to distribute and possess marijuana, distribution of marijuana, maintaining a drug-involved premises, and conspiracy to commit money laundering. Kleinman moved to suppress the evidence seized by the DEA on the ground that it was obtained pursuant to a search warrant that lacked probable cause. In the alternative, Kleinman moved for an evidentiary hearing on the validity of the affidavit supporting the warrant due to alleged material omissions in the affidavit. The district court denied the motions.

         At a pretrial hearing, the district court concluded that any references to medical marijuana would be irrelevant at trial because state law compliance is not a defense to federal charges. During jury selection, the district court emphasized that jurors should not question any purported conflict between federal and state law, and should consider the case under federal law only.

         The jury convicted Kleinman on all counts and found that the amount of marijuana involved in the offenses exceeded 1, 000 kilograms. The district court held a sentencing hearing on December 8, 2014, determined that the applicable United States Sentencing Guidelines (Guidelines) range was 188 to 235 months, and sentenced Kleinman to 211 months. Shortly after Kleinman's convictions and sentence, on December 16, 2014, Congress enacted an appropriations rider that prohibits the DOJ from expending funds to prevent states from implementing their laws authorizing the use, distribution, possession, and cultivation of medical marijuana. Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235, § 538, 128 Stat. 2130, 2217 (2014).

         ANALYSIS

         I. Kleinman is not entitled to remand for an evidentiary hearing on his state law compliance.

         In 1996, California voters approved the Compassionate Use Act (CUA), which decriminalized possession and cultivation of marijuana for medical use. Cal. Health & Safety Code § 11362.5. In 2003, the California legislature enacted the Medical Marijuana Program (MMP), permitting qualified patients to form collectives for the cultivation and distribution of medical marijuana. Id. §§ 11362.7-11362.9. Federal law, however, still prohibits the use or sale of marijuana, even if distributed and possessed pursuant to state-approved medical marijuana programs. See United States v. McIntosh, 833 F.3d 1163, 1179 n.5 (9th Cir. 2016) ("Anyone in any state who possesses, distributes, or manufactures marijuana for medical or recreational purposes (or attempts or conspires to do so) is committing a federal crime.").

         Since December 16, 2014, congressional appropriations riders have prohibited the use of any DOJ funds that prevent states with medical marijuana programs (including California) from implementing their state medical marijuana laws. Consolidated and Further Continuing Appropriations Act, 2015, 128 Stat. at 2217; Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, § 542, 129 Stat. 2242, 2332-33 (2015); Consolidated Appropriations Act, 2017, Pub. L. No. 115-31, § 537, 131 Stat. 135, 228 (2017). All of these riders are "essentially the same, " see United States v. Nixon, 839 F.3d 885, 887 (9th Cir. 2016) (per curiam), and the current rider will remain in ...


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