Public Law Update. Update On The Status of Medical Marijuana Dispensaries Under California Law By Stephen A. McEwen, Esq.

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1 zl`` Public Law Update Update On The Status of Medical Marijuana Dispensaries Under California Law By Stephen A. McEwen, Esq. Of Special Interest PUBLIC LAW...6 ENVIRONMENTAL LAW...8 LABOR AND EMPLOYMENT LAW...9 ELECTIONS AND CAMPAIGNS ABOUT OUR LAW FIRM Published by: Burke, Williams & Sorensen, LLP 444 South Flower Street, Suite 2400 Los Angeles, California (213) To obtain a free monthly subscription, visit:

2 Update On The Status of Marijuana Dispensaries Under California Law By Stephen A. McEwen, Esq. The regulation of medical marijuana dispensaries continues to be a recurring, and controversial, issue for cities throughout the state. As the federal government has backed away from active enforcement actions against such dispensaries, the focus of the debate has shifted from the conflict between federal and state law to the conflict between state law and local regulation. In addition, cities have had to grapple with dispensaries that opened in the absence of, or prior to, local regulations. Stephen A. McEwen, Esq. Partner smcewen@bwslaw.com Orange County Office 2875 Michelle Drive Suite 350 Irvine, California Phone: (949) Fax: (949) Direct: (949) So far, the courts that have considered these issues have ruled in favor of cities authority to regulate and/or ban medical marijuana dispensaries. Furthermore, these appellate decisions have made clear that opening a dispensary before a city enacts a moratorium, regulation, or ban does not result in any vested or legal nonconforming use rights. Background on the Applicable Law In 1996, the voters of California approved by voter initiative The Compassionate Use Act of 1996, also known as Proposition 215, and codified at Health & Safety Code section et seq. The purpose of Proposition 215 was to allow seriously ill people to obtain and use medical marijuana under certain specified circumstances. In 2003, the state legislature approved SB 420 which provided additional statutory guidance for those involved with medical marijuana use. Under SB 420, cities are authorized to enact rules and regulations with regard to medical marijuana consistent with California law. Initially, it was unclear whether a city was required to allow medicinal marijuana dispensaries, as a city is governed by state law; or whether a city is required to prohibit medicinal marijuana dispensaries, because otherwise, a city would be specifically authorizing what is known to violate Federal law; or whether this was simply an issue left to the sound discretion of each city council. There was an obvious tension, if not an outright conflict, between Federal and state law that has not been resolved. Marijuana presently is still categorized as a Schedule I controlled substance by the Federal Government. Schedule I drugs are classified as having a high potential for abuse and no currently accepted medical use. The Controlled Substances Act, a Federal law codified as 21 United States Code Section 841, makes it unlawful for any person to manufacture, distribute, or dispense marijuana, or to possess marijuana with the intent to manufacture, distribute, or dispense the drug. Marijuana used for medical purposes is not exempt from the Controlled Substances Act, and therefore, persons choosing to follow the provisions of California laws are subject Burke, Williams & Sorensen, LLP (800)

3 to prosecution under Federal laws for possession and use of an unlawful controlled substance. In 2001, the United States Supreme Court decided United States vs. Oakland Cannabis Buyers Cooperative, 532 U.S. 483 (2001), holding that there is no medical necessity exception to the Federal Controlled Substances Act. Consequently, medicinal marijuana dispensaries can be barred from producing and distributing this drug, whether for profit or not for profit. On June 6, 2005, the Supreme Court of the United States ruled in Gonzales v. Raich, 545 U.S. 1 (2005), holding that Congress has the power, under the Commerce Clause of the United States Constitution, to prohibit the manufacture, distribution, and possession of marijuana pursuant to the United States Controlled Substances Act, even as such prohibitions apply to marijuana manufactured, distributed, or possessed within the State of California. In Gonzales v. Raich, the Supreme Court of the United States did not indicate that California law was invalid, but rather merely indicated that the Federal Government could continue to enforce its medicinal marijuana laws. Faced with this dilemma, as well as concerns about crime and other negative secondary effects associated with medical marijuana dispensaries, a majority of the cities that have considered the matter have enacted bans on such uses. In response, dispensary operators have made two primary arguments. First, operators have argued that the CUA and SB 420 make medical marijuana dispensaries legal throughout the state and, therefore, preempt local regulations. Second, operators that commence operation before a city enacts a moratorium, regulation, or ban have argued that they established a legal nonconforming use and may continue to operate. Courts have not found merit in either argument. There is No State Law Preemption In City of Claremont v. Kruse, (2009) 177 Cal.App.4th 1153, the defendant applied for a business license and permit for a medical marijuana dispensary. (Id. at p ) At the time of the application, the City did not have an express ban against medical marijuana dispensaries, but such a use was not an enumerated use under the City s zoning code. (Ibid.) Accordingly, the City denied the defendant s application and informed him of his appeal rights. (Id. at p ) The defendant, however, started operating his dispensary without any permits. (Ibid.) The City subsequently enacted a moratorium against medical marijuana dispensaries. (Id. at p ) When the defendant refused to cease his operations, the City filed a complaint and obtained a preliminary injunction. (Id. at pp ) The Court of Appeal upheld the preliminary injunction. The Court of Appeal concluded first that the dispensary was a nuisance per se because it violated the municipal code. (Id. at pp ) Next, the Court of Appeal held that neither the Compassionate Use Act nor the Medical Marijuana Program Burke, Williams & Sorensen, LLP (800)

4 preempted the City s moratorium against medical marijuana or required the City to allow medical marijuana dispensaries. (Id. at pp ) As the Court observed, there was no express or implied preemption because neither the CUA nor the MMP addressed local zoning authority in any way. Furthermore, neither the CUA nor the MMP authorized the operation of medical marijuana dispensaries. On the contrary, both the CUA and the MMP only provided a narrow set of immunities to cultivation and possession offenses. The issue of state law preemption is again before the Fourth District Court of Appeal in Qualified Patients Association v. City of Anaheim (Case No. G040077). However, given the exhaustive review provided by the same appellate district in Kruse, we do not anticipate a different result. There is No Legal Non-Conforming Use Right In some situations, such as in Kruse and City of Claremont v. Kruse (2009) 177 Cal.App.4th 1153, medical marijuana dispensaries commence operation before a city has enacted a moratorium, regulation, or ban. It has been common in these cases for operators of such dispensaries to argue that they are legal nonconforming uses and may continue to operate notwithstanding subsequent local ordinances. Fortunately, this argument has not been successful. A legal nonconforming use is one that was valid when brought into existence, but by subsequent regulation it becomes no longer conforming. (City of Los Angeles v. Gage (1954) 127 Cal.App.2d 442, 453.) In order to qualify as a legal nonconforming use, the use or structure must be lawful at the time of enactment of the subsequent regulation rendering the use nonconforming. (Melton v. City of San Pablo (1967) 252 Cal.App.2d 794, 804.) The party asserting a right to a nonconforming use has the burden of proof to establish the lawful and continuing existence of the use at the time of the enactment of the ordinance. (Ibid.) A finding of nonconforming use cannot be implied. (City & County of San Francisco v. Board of Permit Appeals (1989) 207 Cal.App.3d 1099, 1107.) In City of Corona v. Naulls, supra, 166 Cal.App.4th 418, the defendant applied for a business license and wrote on his application that the proposed business activity was Misc. Retail. (Id. at pp ) He later elaborated to a City employee that the business would sell miscellaneous medical supplies. (Id. at p. 421.) The City issued the license based on the defendant s representations. (Ibid.) Shortly thereafter, the City enacted a moratorium against marijuana dispensaries. (Ibid.) After receiving his business license and after the moratorium went into effect, the defendant made it known to City staff members that he was going to operate his business as a medical marijuana dispensary. (Ibid.) The City filed a complaint against him and obtained a preliminary injunction preventing him from operating a marijuana dispensary. (Id. at pp ) Burke, Williams & Sorensen, LLP (800)

5 The Court of Appeal affirmed the issuance of the preliminary injunction. (Id. at p. 427.) The Court observed that the defendant failed to provide accurate information on his application and that the City would not have issued the license had the defendant provided an accurate business description. (Id. at p. 428.) Moreover, the Court noted the defendant did not follow the procedures applicable to land uses that were not listed in the zoning code. (Ibid.) Quoting the trial court, the Court of Appeal found that the Corona Municipal Code was drafted in a permissive fashion and that [a]ny use not enumerated therein is presumptively prohibited. (Id. at p. 431.) [W]here a particular use of land is not expressly enumerated in a city s municipal code as constituting a permissible use, it follows that such use is impermissible. (Id. at p. 433 [emphasis in original].) Kruse involved similar facts as Naulls and Kruse, in fact, relied expressly on Naulls in upholding the preliminary injunction. As noted above, the operator in Kruse opened his dispensary at a time when there were no express regulation of such uses. Relying on Naulls, Kruse held that Defendants operation of a nonenumerated and therefore expressly prohibited use, without obtaining a business license and tax certificate, created a nuisance per se under section (Id. at p ) As Naulls and Kruse demonstrate, the absence of regulation pertaining to medical marijuana dispensaries does not mean that a city is powerless to prohibit such uses. It is common for zoning codes to prohibit uses that are not listed expressly as permitted or conditionally permitted uses. Furthermore, many codes, such as those involved in Naulls and Kruse, provide a procedure for determining whether an unlisted use is similar in nature to a permitted or conditionally permitted use. Under these provisions, silence regarding medical marijuana dispensaries is essentially the equivalent of a ban. Moreover, to the extent that operators opened their dispensaries surreptitiously and without proper notice to a city, or the extent that operators used a subterfuge to obtain basic permits and licenses, those facts can be used against the operators if it was legal to open a dispensary, there would not be any need to operate secretly or mislead city staff into granting permits or licenses. Such tactics demonstrate the operator s knowledge that the use is illegal. Conclusion It is likely that medical marijuana dispensaries will continue to pose a challenge for California cities. The decision in Qualified Patients Association v. City of Anaheim will shed more light on cities ability to regulate and/or ban medical marijuana, but thus far the controlling authority supports local bans on dispensaries and collectives. Cities should continue to beware of the argument by dispensary operators that they have legal nonconforming use rights. Under most municipal codes, there will not be any basis for operators to make such arguments. Burke, Williams & Sorensen, LLP (800)

6 Burke, Williams & Sorensen, LLP, 2010, all rights reserved. The case law summaries with a link to a web address are provided as a courtesy to Burke, Williams & Sorensen, LLP, its clients, and its prospective clients by the Metropolitan News-Enterprise. Metropolitan News-Enterprise, SOS and MNC are registered trademarks of the Metropolitan News Company. Summaries are copyrighted by Metropolitan News Company 2010, all rights reserved. The Public Law Update is edited by Erica L. Ball. The cover page photo was provided by Wikimedia.org and Wikipedia commons. PUBLIC LAW California Department of Managed Health Care s regulatory and enforcement authority over managed health care service plans does not preclude city attorney from pursuing unfair competition and false advertising claims against health insurer, managed health care service plan and parent corporation concerning coverage rescission practices. Trial court did not abuse its discretion in declining to abstain from hearing dispute where relief sought included injunctive relief, restitution and civil penalties; court was being called upon to enforce statutory prohibitions; and court was not being asked to assume or interfere with the functions of an administrative agency. Blue Cross of California, Inc. v. Superior Court (People); Second District, Div. One; filed December 15, Cite as B Payment limitations set forth in Government Code Sec apply to any settlement a public employee may receive under his or her contract in the event that contract is severed or terminated before the end of the contract term; employer and employee are entitled to negotiate a cash settlement of any amount up to the specified maximum, depending on the number of months remaining in employee s contract. Legislature intended to set strict limits on cash and noncash items payable in settlements upon termination of a local agency administrator's contract, without regard for circumstances existing at the time of termination, reasons for termination, or nature of any disputes between the parties. It is of no consequence that an employee under contract asserts legal claims against the local agency employer prior to contract termination. Where school district s payments to former employee in settlement exceeded the maximum cash and noncash limitations set out by law on termination of employee s contract, district was not entitled to summary judgment on taxpayer s cause of action asserting an illegal gift of public funds. As there is no express authorization in Sec for a legislative body to meet in closed session to discuss and negotiate with an adversary and her counsel a matter of pending Burke, Williams & Sorensen, LLP (800)

7 litigation, trial court erred in sustaining defendant s demurrers to plaintiff s Brown Act violation. Individual contacts or conversations with a member of a local body and another person are outside the scope of a Brown Act meeting. Issuance of a notice identifying litigant, and minutes showing board had reconsidered and approved her settlement agreement did not cure board's acts in impermissibly conducting information gathering in the course of mediating and negotiating with litigant in a closed meeting. Page v. MiraCosta Community College District; Fourth District, Div. One; filed November 23, 2009, publication ordered December 18, Cite as 2009 SOS 7187 Contingency fee lawyers are not barred from assisting government lawyers as co-counsel in a tax assessment proceeding. Priceline.com Incorporated v. City of Anaheim; Fourth District, Div. Three; filed January 5, Cite as G Neither Planning and Zoning Law nor Community Redevelopment Law requires a redevelopment agency to provide notice and conduct public hearings when it is performing the nonlegislative function of implementing a redevelopment plan. Design guidelines are not a zoning ordinance under the Planning and Zoning Law. Evidence that provisions of the design guidelines and general plan with respect to specific land uses differed was insufficient to demonstrate that those guidelines were not compatible with objectives, policies, general land uses, and programs specified in city s general plan. Because the Los Angeles Municipal Code allows a redevelopment plan to adopt a base density that is lower than the maximum allowable residential density under an applicable zoning ordinance, developer was not entitled to maximum allowable residential density under the zoning code and trial court s finding that design guidelines would not deprive a developer of a density bonus under the Planning and Zoning Law was supported by substantial evidence. Agency was authorized by Community Redevelopment Law and general plan to develop and adopt disputed design guidelines. Developer s claim that design guidelines violated California Environmental Quality Act was time-barred where brought more than 30 days after notice of determination was posted; contention that notice failed to adequately describe the guidelines was forfeited where raised for first time in reply brief. PR/JSM Rivara LLC v. Community Redevelopment Agency of the City of Los Angeles; Second District, Div. Four; filed December 17, 2009, publication ordered January 13, Cite as 2010 SOS 149 Burke, Williams & Sorensen, LLP (800)

8 ENVIRONMENTAL LAW For purposes of demurrer, petition for writ of mandate challenging certification of EIR was not precluded by doctrine of res judicata where petitioners were not in privity with prior petitioner, a citizens group that dismissed its petition due to having inadequate funds to litigate. Department of Water Resources was not required to conduct CEQA review of water transfer agreement between local agencies where the transfer agreement was not part of earlier DWR project. Trial court s determination that transferee agency, rather than DWR, was appropriate lead agency to conduct review was correct where transferee agency alone had the responsibility to determine the water needs of its service area and to obtain the necessary water for those needs, and that agency negotiated and entered into the transfer contract, and performed the contract by obtaining private investors who paid for the water and by taking delivery of the water; fact that DWR facilitated the transfer as required by statute did not make it the lead agency. Trial court erred in sustaining challenge to EIR based on deficiency not asserted during agency review. Planning and Conservation League v. Castaic Lake Water Agency (Kern County Water Agency); Second District, Div. Four; filed December 17, Cite as 2009 SOS 7160 County s decision not to renew a conditional use permit for continued airport operations at a privately owned airport was not a project under the California Environmental Quality Act; by declining to authorize an activity that required issuance of a permit, county did not directly undertake action to close airport. Sunset Sky Ranch Pilots Association v. County of Sacramento (Taylor); filed December 28, Cite as S A hearing in an action alleging noncompliance with the California Environmental Quality Act must be made in a writing filed with the Court to avoid dismissal under Public Resources Code Sec (a) for failure to request a hearing within 90 days of the filing of the petition. County of Sacramento v. Superior Court (Forster-Gill, Inc.); Third District; filed December 29, Cite as C Coastal Commission did not abuse its discretion in denying coastal development permit where project was admittedly inconsistent with existing zoning and Burke, Williams & Sorensen, LLP (800)

9 commission reasonably concluded from evidence in the record that project was larger in scale and different in architectural style than was typical of the surrounding area. Commission was not required to approve project merely because developer revised its plans in order to meet commission staff s objections. Claim that denial of permit constituted a taking of developer s property was not ripe for adjudication, where denial did not constitute a final determination as to how the property might be developed. Reddell v. California Coastal Commission; Second District, Div. Six; filed December 1, 2009, modification published December 29, Cite as B LABOR AND EMPLOYMENT LAW Where civil service rules vested civil service commission with jurisdiction over employee s appeal of her discharge, including an attendant claim for a resulting loss of pay, employee s retirement during the pendency of proceedings divested the commission of jurisdiction over the appeal. County of Los Angeles Department of Health Services v. Civil Service Commission of the County of Los Angeles; Second District, Div. Eight; filed December 18, Cite as 2009 SOS 7213 Trial court did not err in granting summary judgment for plaintiff s former employer and others on claims of sexual harassment because allegations did not establish, as a matter of law, conduct sufficiently severe or pervasive as to alter plaintiff s conditions of employment and create a work environment that qualified as hostile or abusive to her based on sex. Trial court did not err in granting summary judgment on plaintiff s retaliation claim where there was no evidence that adverse employment action against her was based on her complaints about harassment rather than her failure to meet annual sales goals for three years, and where there was no evidence showing decision-makers were aware of any of plaintiff s complaints at the time. Trial court s grant of summary judgment on plaintiff s intentional infliction of emotional distress claim was proper where the record did not contain any evidence showing plaintiff was subjected to extreme or outrageous conduct by defendants as a matter of law. Haberman v. Cengage Learning, Inc.; Fourth District, Div. Three; filed December 10, 2009, publication ordered December 18, Cite as 2009 SOS 7217 Burke, Williams & Sorensen, LLP (800)

10 Modification Millennium Rock etc. v. T.D. Service etc.; Third District; filed December 17, Cite as 2009 SOS 7226 ELECTIONS AND CAMPAIGNS Assuming, without deciding, that discovery orders denying claims of First Amendment privilege are not reviewable under the collateral order doctrine, Court of Appeal nonetheless had supervisory mandamus authority to review district court s orders rejecting defendants objections to disclosure of internal campaign communications relating to strategy and advertising behind ballot initiative eliminating same-sex marriage where adequate, alternative means of review were unavailable; the harm to defendants and the public interest was not correctable on appeal; the order was clearly erroneous; and case presented a significant issue of first impression that might repeatedly evade review. Defendants challenging discovery were entitled to protective order where discovery would have the practical effect of discouraging their exercise of First Amendment associational rights, and where plaintiffs seeking discovery failed to demonstrate a need for that information sufficiently compelling to outweigh impact on defendants rights. Perry v. Schwarzenegger; filed December 11, 2009, amended January 4, Cite as ao Question of whether 2 U.S.C. 441b which prohibits corporations and unions from using their general treasury funds to make independent expenditures for speech that is an electioneering communication applied to advertisements for corporation s documentary critical of then-sen. Hillary Clinton could not be resolved on narrower grounds than whether Sec. 441b was facially valid. Holding in Austin v. Michigan Chamber of Commerce that political speech may be banned based on the speaker s corporate identity was erroneous and thus provides no basis for allowing government to limit corporate independent expenditures in Sec. 441b. Bipartisan Campaign Reform Act s disclaimer and disclosure requirements were valid as applied to advertisements and to documentary. Citizens United v. Federal Election Commission; filed January 21, Cite as A polling station is a nonpublic forum and ban on photography at polling station represents a reasonable accommodation of voters interest in casting a secret ballot and privacy interests, without significantly impinging on any constitutionally Burke, Williams & Sorensen, LLP (800)

11 protected rights of poll watchers. Trial court did not abuse its discretion in denying declaratory relief where requested declaration would have little practical effect in terms of altering parties behavior in light of substantial evidence that registrar of voters provided tamper evident seals for ballot boxes which were difficult to reproduce and controlled, and registrar provided training to poll workers on sealing boxes, which was remedy plaintiff had requested. Registrar s policies requiring poll workers to conduct an accounting of ballots; file a roster; and certify on that roster the total number of official ballots received, voted, rejected, spoiled and canceled as indicated on the ballot statement did not violate requirements imposed by law. Where appeal implicitly challenged trial court s factual findings based on evidence received by declaration, appellate court will resolve all conflicts in favor of trial court s judgment. Registrar's lack of foundation and hearsay objections to plaintiff s statements on her state of mind that led her to file suit were properly sustained absent any indication such evidence was relevant to any disputed issue. Where excluded photographs depicted facts conceded by defendant, any alleged error was harmless. Trial court did not abuse its discretion in declining to consider supplemental declarations which merely expanded on a previous claim and were untimely. Poniktera v. Seiler; Fourth District, Div. One; filed January 21, Cite as 2010 SOS 272 ABOUT OUR LAW FIRM At Burke, Williams & Sorensen, LLP, diversity precisely describes not only our demographic makeup but also the scope of our legal expertise, both of which support our ability to fulfill your legal needs. We are as diverse as California itself. The broad range of our areas of expertise mirrors California s own vitality, with respected, proven practices in six general areas: Public Law Education Law Environmental Law & Sustainability Labor & Employment Law Litigation Real Estate & Business Law Burke, Williams & Sorensen, LLP (800)

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