Although the federal Controlled Substances Act prohibits the use, possession, manufacture, and sale of marijuana for all purposes, numerous states have loosened their own marijuana laws. For example, California’s Proposition 215 (the “Compassionate Use Act of 1996”) and its legislatively-adopted “Medical Marijuana Program” have removed certain state law obstacles from the ability of qualified patients to obtain and use marijuana for legitimate “medical” purposes. Among other things, these laws exempt the “collective[ ] or cooperative[ ] cultiva[tion]” of medical marijuana by qualified patients and their designated caregivers from prosecution or abatement under specified state criminal and nuisance laws that would otherwise prohibit such activities.
An ongoing torrent of cases have tested the scope of those state laws in the land use context. The resulting decisions have consistently underscored our long-held understanding that land use regulation in California has historically been a function of local government.
Indeed, California cities were granted home rule power in 1879 under what is now Article XI, § 7 of the state constitution, which provides that “[a] county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws.” This inherent local police power includes broad authority to determine, for purposes of the public health, safety, and welfare, the appropriate uses of land within a local jurisdiction’s borders, and preemption by state law is not lightly presumed.
In light of this legal backdrop, there was little or no surprise when the California Supreme Court ruled, in City of Riverside v. Inland Empire Patients Health & Wellness Center, Inc., 56 Cal.4th 729, 759 (2013), that while California law “permits” the use of “medical marijuana,” it “does not thereby mandate that local governments authorize, allow, or accommodate the existence of” marijuana dispensaries. (Emphasis in original). Thus, state laws permitting medical marijuana use and distribution do not preempt “the authority of California cities and counties, under their traditional land use and police powers, to allow, restrict, limit, or entirely exclude facilities that distribute medical marijuana, and to enforce such polices by nuisance actions.” Id. at 762.
The First District Court of Appeal published the latest expected decision in this highly active area, City of Vallejo v. NCORP4, Inc., __ Cal.App.5th __ (Sept. 29, 2017), just two days after oral argument. The Court held that “[t]he constitutional prohibition on ex post facto laws is inapplicable to local ordinances regulating the operation of medical marijuana dispensaries.”
The case arose out of a somewhat unusual set of local regulations affecting the operation of marijuana dispensaries. As is typical of California cities, Vallejo’s zoning ordinance provides an extensive list of permitted land uses and prohibits all other uses, and the City has never recognized marijuana dispensaries as a permitted use. An unpermitted use is declared to be “a public nuisance.” A marijuana dispensary is not a designated land use and, therefore, is an unpermitted nuisance.
Despite their illegality in Vallejo, marijuana dispensaries proliferated. The City eventually responded by seeking and obtaining voter approval of an ordinance dubbed “Measure C” to tax dispensaries. Like business license taxes generally, however, the ordinance was enacted solely to raise revenue for municipal purposes and was not intended for regulatory purposes.
The city council subsequently adopted a different ordinance to address the continued growth of marijuana dispensaries in Vallejo. While the new ordinance did not change the legal status of dispensaries as an unpermitted land use, it granted “limited civil immunity” to allow existing operators to continue operating if they have obtained tax certificates and paid their quarterly taxes to operate under Measure C.
The City eventually sought an injunction against NCORP4 and denied its request for limited immunity because the dispensary had not paid all taxes due from the start of its operation in 2011 through February 2015. The trial court issued a temporary restraining order in favor of the City but ultimately denied a preliminary injunction because the court concluded the City’s ordinance was an ex post facto law that made activity that was “legal” at the time committed (or at least subject to limited penalties) suddenly and retroactively illegal (or subject to greater and different penalties).
The Court of Appeal agreed with the City’s argument that the city council-adopted ordinance does not increase the penalty for nonpayment of taxes but simply limits the operation of marijuana dispensaries to those that comply with local law by paying Measure C business license taxes as a condition of immunized operation. The Court held that “[l]ocal governments may rationally limit medical marijuana dispensaries to those already in operation and compliant with prior law as past compliance shows a willingness to follow the law, which suggests future lawful behavior.” And the Court recognized that these types of land use regulatory choices are “properly consigned to local authorities, which are ‘endowed with wide-ranging discretion’ in formulating land use policy.”
Following the statewide legalization of recreational marijuana under Proposition 64 (the “Adult Use of Marijuana Act) many cities and counties have taken steps to regulate the land use aspects of this new use. If the past is any indication of the future, however, we can expect an avalanche of additional litigation testing the limits of the police power in this novel area.
Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.
For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.