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Former strip club owner sues over marijuana dispensary

Former Grants Pass strip club owner Larry Lacey is back in court, only this time he's not the defendant.

Two years after he was sent to prison for illegally taking profit from medical marijuana, Lacey has filed a lawsuit in Josephine County Circuit Court over ownership of a marijuana dispensary in Sunny Valley.

Lacey, 66, is seeking $800,000 and a court order declaring him the true owner of the Exit 71 Cannabis Club, so named because it is by the Interstate 5 Sunny Valley ramp at milepost 71.

Named as defendants are David K. Saunders, James Edward Merrell, Pavel Pavlovich Timofeyev and Azariea Almufleh.

Lacey claims he launched Cannabis Club last year as sole investor and that his money was used to lease the property from Saunders and renovate the facility, as well as advertise and purchase merchandise.

He said he "partnered" with Merrell, who was to run the day-to-day operations, and that Timofeyev was hired as an employee who received additional compensation for living on site.

He claims that Saunders changed the locks on the dispensary May 23 and that Saunders and the other defendants have since forcibly taken over the business.

"Defendants seized the business for an improper purpose, that is, to usurp Plaintiff's cannabis dispensary and product in a burgeoning industry and confiscate all profits therefrom," the lawsuit says.

Lacey claims Timofeyev has partnered with Almufleh, who the suit claims also owns and operates a dispensary in Merlin called Tamerans. As part of the lawsuit, he is seeking an injunction barring the defendants from continuing to operate the business.

In a separate lawsuit against Saunders, Lacey is seeking $500,000 for breach of contract and claims that he exercised an option to purchase the property but that Saunders refused to honor the option.

The lawsuits help explain a disturbance involving Lacey at the dispensary June 19. Sheriff's deputies were called to the scene on a report of a 66-year-old man breaking windows and causing problems with customers, telling them he was going to shut the place down.

In 2005, Lacey opened a strip club at the Sunny Valley location, 102 Old Stage Road, leading to months of controversy over land-use laws and lawsuits over freedom of speech, and a failed attempt by the county to close it.

A year later, he bought a building in downtown Grants Pass at the corner of G and Fifth streets, leading to more controversy.

The second-floor strip club operated for only a few days before Lacey was forced to shut down because of city regulations regarding adult businesses.

Lacey eventually filed a $3.7 million lawsuit in federal court, claiming city officials violated his rights by not allowing him to operate the club. In dismissing the case, a judge ruled the city has a right to regulate where adult businesses locate.

Although Lacey was taken to jail after the disturbance in June, the Sheriff's Office never referred charges to the District Attorney's Office in the case. Lacey claims in court documents that he was merely trying to reassert his rights to the dispensary.

Lacey has a long history in the county's court system. As part of the lawsuit, he sought to disqualify all of the county's Circuit Court judges: Lindi Baker, Thomas Hull, Michael Newman and Pat Wolke.

Newman sent Lacey to prison for two years in 2014 after a jury convicted him of 28 felony counts alleging he used a business called the Grants Pass Compassion Center as a front for marijuana sales, before it became legal to sell medical or recreational marijuana in Oregon.

The store, also known as Get Your Hemp On, was one of three so-called compassion centers that were the subject of a raids by local and federal authorities in 2011. Five homes also were searched.

Authorities said an informant wearing a wire recorded numerous drug sales. At trial, Lacey sparred with prosecutors over the interpretation of ambiguous reimbursement rules for medical marijuana providers.

Despite seeming to agree that the reimbursement rules were indeed confusing, Newman declined the option of giving Lacey probation. In doing so, he said he was convinced Lacey was motivated at least as much by profit as he was by the benefits of medical marijuana, and probably wouldn't comply with probation.

According to published reports at the time of his sentencing, the felony convictions precluded Lacey from operating dispensaries in the future.

It remains unclear whether that was true or, if so, why Lacey would potentially incriminate himself in the form of a civil lawsuit. Prison records show he was released from custody in May 2015.

A spokesman for the Oregon Health Authority, which licenses dispensaries, said dispensary applicants cannot have criminal convictions for Schedule I or II drugs, which includes marijuana.

Lacey is not listed as an applicant for the Exit 71 Cannabis Club, according to an online database maintained by the state. Closer scrutiny of the dispensary's application is off-limits under state confidentiality rules.

Lacey's lawyer, Randy Rubin of Roseburg, did not return a call seeking comment.