It is no secret that California’s cannabis operators are presently in a regulatory and company atmosphere exactly where red tape, the illegal industry, and substantial taxes make life challenging. At the identical time, the state is attempting to defend, market, and develop the sector in a selection of approaches, one particular of which is fighting off cities and counties to guarantee that retail cannabis property delivery is permitted in each and every city and/or county no matter what.
As a short history primer, California is a quite robust nearby handle state when it comes to cannabis. Pursuant to the Medicinal and Adult-Use Cannabis Regulatory and Security Act (“MAUCRSA”), just before you can safe a state license for your cannabis company you ought to 1st receive nearby approval from the city or county in which you program to operate. And the majority of cities and counties nonetheless ban industrial cannabis activity the ones that do let it have a tendency to lean towards healthcare-only sales and/or there can be some critical barriers to entry based on the city or county. Additional, Proposition 64 (which co-exists with MAUCRSA) has clear promises and directives to keep nearby handle and a city’s or county’s capacity to ban any sort of industrial cannabis activity outright (with the exception of the transport of cannabis among licensees through public roads).
At the moment, according to MAUCRSA:
- “[MAUCRSA shall] not be interpreted to supersede or limit the authority of a nearby jurisdiction to adopt and enforce nearby ordinances to regulate firms licensed below this division, such as, but not restricted to, nearby zoning and land use specifications, company license specifications, and specifications connected to decreasing exposure to secondhand smoke, or to absolutely prohibit the establishment or operation of one particular or additional forms of firms licensed below this division inside the nearby jurisdiction.”
- “A nearby jurisdiction shall not avert delivery of cannabis or cannabis goods on public roads by a licensee acting in compliance with [MAUCRSA] and nearby law. . . .” and
- “Licensing authorities shall not approve an application for a state license below this division if approval of the state license will violate the provisions of any nearby ordinance or regulation [. . .] The licensing authority shall deny an application for a license below this division for a industrial cannabis activity that the nearby jurisdiction has notified the [Bureau of Cannabis Control (“BCC”)] is prohibited [. . .].”
In January of this year, pursuant to the final MAUCRSA regulations, and in spite of the foregoing, the BCC determined–seemingly primarily based on the “use of public roads” language above–that property delivery does not need any city or county nearby approval below MAUCRSA. Consequently, BCC explained that retailer licensees can undertake property delivery in any jurisdiction in the state– even in these that absolutely ban delivery. Particularly, the BCC adopted Rule 5416(d), which says that “A delivery employee could provide to any jurisdiction inside the State of California offered that such delivery is performed in compliance with all delivery provisions of this division.”
As a outcome of BCC’s action, 24 cities sued the BCC in Fresno County court earlier this year to overturn the new delivery rule. Here’s the complaint for your viewing pleasure. The crux of the fight is regardless of whether the new delivery rule is constant with Proposition 64 and MAUCRSA and regardless of whether the BCC has the authority to adopt and implement the rule. The cities argue the new delivery rule is absolutely inconsistent with each, and that the BCC has gone beyond its rulemaking authority below MAUCRSA. The cities also allege that if the BCC desires statewide delivery with out any sort of nearby handle the California Assembly is the physique to lawfully make that contact through a adjust to the statute.
Whilst the cities and the BCC duke it out more than interpretations of MAUCRSA and the BCC’s regulatory authority (with a calendared trial date of April 20 subsequent year), a new litigation matter has created exactly where a cannabis operator (East of Eden) is suing Santa Cruz County to enforce its rights below the new delivery rule. Earlier this month, the BCC (through the State Lawyer Basic) filed a motion to join the nearby lawsuit to defend the new delivery rule. The BCC is otherwise staying mum for any other strategic causes it has for joining the nearby beef. We’ll know by January two regardless of whether or not the BCC will get to be a celebration in the Santa Cruz lawsuit. And we completely anticipate that this could not be the final nearby fight more than the new delivery rule.
The bottom line is that in the wake of the BCC and the cities fighting it out more than the new delivery rule, cannabis operators hang in the balance however once again. Threat tolerant firms will no doubt attempt to take benefit of the new delivery rule, but they do so at substantial threat exactly where cities and counties are nonetheless taking the position that the rule is invalid anyway. In turn, unless and till we have a final choice from a court on the matter, cannabis retailers would be sensible to pump the brakes on delivery into cities and counties that explicitly ban it.