On Monday, Judge Mary Jo Levinger denied a temporary restraining that would have shut down the dispensary, MediLeaf, which opened Nov. 9 on First Street without a business license. However, Levinger plans to hold a hearing on Dec. 14 to decide whether to grant the city an injunction to shut down the cannabis collective.

"The main thing is the city went through this extraordinary relief of trying to close the operation without any due process, and the judge denied them of that," said James Anthony, an attorney for MediLeaf.

On Nov. 20, legal counsel for the City of Gilroy sought a preliminary and a permanent injunction against MediLeaf in addition to the temporary restraining order.

The city's suit contends that MediLeaf violated city code by opening without a business license and that a medical marijuana dispensary is illegal under the federal Controlled Substances Act. It also stated that MediLeaf is operating in a commercial shopping center area that is not zoned for medical marijuana uses.

Andrew Faber, an attorney for the City of Gilroy, said he was not surprised that Levinger denied the temporary restraining order, as such measures typically are used to preserve the status quo.

"But we asked for it anyway, because why not?" he said.

He felt the judge took the appropriate actions in this case, he said.

An opposition brief filed by MediLeaf reiterated the dispensary's stance that nonprofit mutual benefit corporations, such as the dispensary, are not required to obtain a business license, citing portions of the city code regarding business exemptions of business license fees for nonprofits. Still, it stated that dispensary directors sought to get a business license even though it was unnecessary.

City staff have said that nonprofits still need business licenses - even though they don't pay fees for them - and a survey of the city's largest nonprofits showed they were in compliance, according to city data.

MediLeaf's opposition brief also echoed concerns about potential violations of the state's Brown Act and the city's open government ordinance that led council members Perry Woodward, Craig Gartman and Peter Arellano to boycott a closed session on Nov. 16. The three council members expressed concern at the time that zoning and city code issues were being discussed in a closed session without specifically being agendized. MediLeaf attorneys even included statements of concern that Woodward and Gartman had posted to comment boards on the Gilroy Dispatch's Web site.

In addition, MediLeaf attorneys submitted briefs from members who said they have received relief from medical cannabis. As of Saturday morning, MediLeaf posted to Twitter, an online social networking site, that the dispensary had 375 members.

The opposition brief also said the MediLeaf attorneys planned to file an anti-SLAPP suit that could enable them to recoup attorney fees from the City of Gilroy. The Strategic Lawsuit Against Public Participation specifically aims to address lawsuits that aim to diminish public participation. The city is using a litigation process to thwart public participation in an enterprise that benefits the public, said James Roberts, an attorney for MediLeaf, on a cell phone from Cabo San Lucas, Mexico.

Roberts' interpretation of city code is that nonprofits do not need a business license at all.

"I'm not surprised that the city is taking a position that empowers itself," Roberts said.

Mayor Al Pinheiro said council members have been in the loop regarding the legal matters, and he anticipated the judge's decision on the matter.

"I certainly don't want to wait any longer than we have to see this thing (decided) one way or the other," he said.

Meanwhile, Councilman Woodward said he expected a lengthy and expensive legal process.

"This is exactly what I was concerned was going to happen," Woodward said. "Now, the city is paying Berliner-Cohen a lot of money that I believe could have been better spent elsewhere."

Regardless of what happens with the suit, Councilman Gartman said he plans to request that the zoning and city code issues pertinent to MediLeaf be discussed openly in a public setting. Making those discussions public is all part of the due process that MediLeaf deserves, he said.

"This business needs to be conducted in the public," he said.