The self-proclaimed "largest pot shop on the planet" was dealt a major legal setback last week when a federal judge rejected a lawsuit the City of Oakland filed on behalf of the popular medical marijuana dispensary.

Oakland's Harborside Health Center has been in a legal row with federal authorities since July when Attorney General Eric Holder and U.S. Attorney Melinda Haag filed suit to close Harborside on the grounds that it has become too large of an operation. U.S. Chief Magistrate Judge Maria-Elena James dismissed the City of Oakland's suit against the U.S. attorneys that had sought to block the marijuana dispensary's closure, Huffington Post reported.

"We are, of course, disappointed in today's ruling," said Steve DeAngelo, Harborside's executive director, in a statement, according to Huffington Post. "In the meantime, Harborside will continue to provide our patients with the very best cannabis medicines we can find, in the safest and most beautiful environment we can create, with the very highest level of care and service."

Harborside is able to stay open for business while it challenges the federal effort in court.

The northern California marijuana dispensary sells about $20 million worth of marijuana products annually between its stores in Oakland and San Jose. The operation serves 108,000 patients and generates $3 million in annual local, state and federal tax revenue, the article reported.

Attorneys for the City of Oakland argued in court last month that closing Harborside would "devastate" the health and well-being of many residents, as well as, city revenues, the Huffington Post reported.

The opposition countered that Oakland had no place in the case because the city does not own the building where Harborside operates. According to the Huffington Post, Oakland's defense of Harborside marks the first time a local government has taken legal action against a marijuana dispensary. 

"Leaders of Oakland should be commended for standing up to the federal government's threats against the city's medical marijuana program, which creates jobs and generates tax revenue," Marijuana Majority's Tom Angell said to Huffington Post. "This ruling is a setback, but advocates will continue the battle."

Medical marijuana has been legal in California since 1996, but remains illegal under federal law.

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