SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR CHELAN COUNTY. Defendant. I. INTRODUCTION

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1 1 SMP RETAIL, LLC, v. SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR CHELAN COUNTY Plaintiff, CITY OF WENATCHEE, a Washington municipal corporation, Defendant. No. COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF I. INTRODUCTION 1. SMP Retail, LLC brings this suit to halt Defendant s prohibition of marijuana businesses in the city of Wenatchee. Defendant s city council has stated that Defendant will not grant city business licenses to State-licensed marijuana businesses seeking to locate in the municipality, citing federal prohibition.. Defendant has further objected to Plaintiff s application to the Washington State Liquor Control Board (the Board ) for a retail marijuana license.. Defendant s actions conflict with and are preempted by State law, exceed regulatory authority granted by Washington State Initiative Measure No. 0 ( Initiative 0 ), and are unconstitutional. AND INJUNCTIVE RELIEF Stewart Street, Suite Phone: () - Fax: () -

2 1. Plaintiff seeks injunctive and declaratory relief, enjoining Defendant s obstruction of its lawful marijuana business and declaring Plaintiff s right to operate within Defendant s city limits as a duly licensed and authorized business in compliance with State law and consistent with current federal enforcement policies as set forth in the August, memorandum authored by Deputy Attorney General of the United States, James M. Cole (the Cole Memo ).. Plaintiff brings this lawsuit under RCW..0, RCW.0.0, and Article XI, Section, of the Washington State Constitution. II. PARTIES. Plaintiff SMP Retail is a Washington State limited liability company with its principal place of business at North Wenatchee Avenue, Wenatchee, Washington, 01.. Defendant City of Wenatchee is a municipal corporation validly formed and existing under the Constitution and laws of Washington located in Chelan County, Washington. III. JURISDICTION AND VENUE. This Court has subject matter jurisdiction under RCW..0 and RCW.0... Jurisdiction and venue are proper under RCW..0, which provides for suits to be brought in any county in which the defendant resides. IV. FACTS. The citizens of Washington State approved Initiative 0 on November,. This Initiative has been codified in RCW.0, et seq. and WAC 1-, et seq.. RCW.0 and WAC 1- now legalize the use and possession of marijuana for adults twenty-one years of age and older. AND INJUNCTIVE RELIEF - 00 Stewart Street, Suite Phone: () - Fax: () -

3 1. RCW.0 and WAC 1- also legalize and regulate the production, manufacture, and retail sales of marijuana by businesses duly licensed by the Board.. The ultimate intent of Initiative 0 is:... to stop treating adult marijuana as a crime and try a new approach that: (1) Allows law enforcement resources to be focused on violent and property crimes; () Generates new state and local tax revenue for education, health care, research, and substance abuse prevention; and () Takes marijuana out of the hands of illegal drug organizations and brings it under a tightly regulated, state-licensed system similar to that for controlling hard alcohol. This measure authorizes the state liquor control board to regulate and tax marijuana for persons twenty-one years of age and older, and add [sic] a new threshold for driving under the influence of marijuana. See Initiative 0, Part I Intent, Section Under RCW.0., [t]here may be licensed, in no greater number in each of the counties of the state than as the state liquor control board shall deem advisable, retail outlets established for the purpose of making useable marijuana and marijuana-infused products available for sale to adults aged twenty-one and over.. RCW.0. mandates that [r]etail sale of useable marijuana and marijuana-infused products... by a validly licensed marijuana retailer or retail outlet employee, shall not be a criminal or civil offense under Washington state law.. RCW.0. also mandates that [t]he state liquor control board... adopt rules... that establish the procedures and criteria necessary to implement the following:... [d]etermining, in consultation with the office of financial management, the maximum AND INJUNCTIVE RELIEF - 00 Stewart Street, Suite Phone: () - Fax: () -

4 1 number of retail outlets that may be licensed in each county, taking into consideration:... [t]he provision of adequate access to licensed sources of useable marijuana and marijuanainfused products to discourage purchases from the illegal market.. RCW.0. empowers the Board to adopt rules regarding [r]etail outlet locations.. On October,, the Board adopted WAC 1--01, setting forth the procedure by which the agency determined the number of retail outlet locations it would license within each city.. The Board allocated three marijuana retail locations to the city of Wenatchee.. SMP Retail timely submitted its retail marijuana license application to the Board for operation in the city of Wenatchee.. The City of Wenatchee requires individuals and business entities to obtain a business license from the City before engaging in any kind of business, trade, or profession within Wenatchee city limits.. Under WCC..0, a business s activities must be lawful under city, state, and federal law to qualify for a City of Wenatchee business license.. On October,, the Wenatchee City Council voted four to three against a proposed ordinance that would have permitted State-licensed marijuana businesses to operate within Wenatchee city limits.. After the October, council vote, Councilman Bryan Campbell stated that Federal law is superior over the state.. Two months earlier, on August,, the United States Department of Justice released the Cole Memo to all United States Attorneys that notes, [o]utside of [eight listed federal law] enforcement priorities, the federal government has traditionally relied on states AND INJUNCTIVE RELIEF - 00 Stewart Street, Suite Phone: () - Fax: () -

5 1 and local law enforcement agencies to address marijuana activity through enforcement of their own narcotics laws.. The Cole Memo also states that, enforcement of state law by state and local law enforcement and regulatory bodies should remain the primary means of addressing marijuana-related activity.. After the October, council vote, Councilman Keith Huffaker stated, It s still federal law. If we want it changed, we need to go to the federal government and get it changed.. Contrary to the notion that federal law must change before Washington State marijuana laws (as amended by Initiative 0) can take effect and be implemented, the Cole Memo states that a robust [state regulatory] system may affirmatively address [federal] priorities by, for example, implementing effective measures to prevent diversion of marijuana outside of the regulated system and to other states, prohibiting access to marijuana by minors, and replacing an illicit marijuana trade that funds criminal enterprises with a tightly regulated market in which revenues are tracked and accounted for (emphasis added).. Multiple other cities and counties in Washington have decided to allow Statelicensed marijuana businesses within their city limits. 0. Pasco City Councilmember Rebecca Francik correctly pointed out that "[t]he argument that individual counties [and cities] can selectively choose which state laws they wish to obey leads to chaos and inefficiency for our citizens... [W]hen a city council votes to substitute their personal wisdom over the vote of a democratically certified election, we are taking a step away from democracy." 1. On April, 1, the Board notified SMP Retail that its application had been AND INJUNCTIVE RELIEF - 00 Stewart Street, Suite Phone: () - Fax: () -

6 1 selected as a potential marijuana retail store in Wenatchee.. On May, 1, the Board received a written Notice of Objection to SMP Retail s marijuana application from Defendant.. Defendant s Objection stated: The City disapproves of the application because it violates current City code... It is a condition precedent to the issuance of a business license under the City code that the business engaged in by the applicant be lawful under any applicable city, state or federal law. The Federal Controlled Substances Act classifies marijuana as a Schedule I drug. Under federal law it is illegal to grow, manufacture, distribute, or possess marijuana. Consequently, the proposed marijuana production business [sic] would be ineligible to obtain a City business license. If it attempted to operate without a City business license, it would be operating contrary to City code and federal law. (Emphasis added.). On May, 1, the Board sent SMP Retail a letter stating that SMP Retail had the option to: negotiate with the city concerning its objection, withdraw its retail marijuana license application, or move forward in the State licensing process despite Defendant s objection. A true and correct copy of that letter and corresponding objection are attached hereto as Exhibit 1.. On May, 1, SMP Retail notified the Board that it would move forward with the State s licensing process, regardless of Defendant s objection.. The Board has exclusive authority under State law to issue a marijuana retail license to SMP Retail and it has the authority to do so over Defendant s objection.. The Board has continued to process SMP Retail s marijuana retail license application without issue.. To receive a marijuana retail license from the State, SMP Retail must undergo a final site inspection of its business location by the Board. AND INJUNCTIVE RELIEF - 00 Stewart Street, Suite Phone: () - Fax: () -

7 1. The State s site inspection requires that SMP Retail s business location be fully operational. 0. In turn, in order to receive its marijuana retail license, SMP Retail must complete any necessary build-outs prior to the State s inspection. 1. SMP Retail has yet to undertake any necessary build-outs for purposes of its State inspection.. Nonetheless, SMP Retail has expended approximately $,.0 to date on rental fees to its current landlord, utilities, sewer usage, and the Board s marijuana license application fee.. In May 1, SMP Retail applied for a business license from Defendant.. To receive a business license from Defendant, Defendant requires that applicants undergo a full site inspection of the business location.. As a result, SMP Retail must complete any necessary build-outs prior to the City s inspection.. Even if SMP Retail completes a full build-out that would meet the Board s licensing requirements and also meet Defendant s licensing requirements, the City will ultimately deny SMP Retail a city business license solely on the basis of the federal law language in WCC..0.. Though SMP Retail may receive a license to operate from the Board upon a successful final inspection, Defendant will not permit SMP Retail to open its doors due to its prohibition against marijuana businesses.. Plaintiff seeks to avoid incurring immediate and substantial costs for any required build-outs that will only be met with a business license denial by Wenatchee. AND INJUNCTIVE RELIEF - 00 Stewart Street, Suite Phone: () - Fax: () -

8 . Therefore, Plaintiff files this action for declaratory and injunctive relief to request that this Court grant it an exemption from Defendant s business license code and also declare WCC..0 s prohibition on State-licensed marijuana businesses preempted by State law and unconstitutional as applied to businesses licensed by Washington State to produce, process, and sell marijuana in compliance with Chapter.0 RCW and Chapter 1- WAC. 1 V. FIRST CAUSE OF ACTION DECLARATORY JUDGMENT 0. Plaintiff re-alleges and incorporates by reference all of the allegations contained in the preceding paragraphs. 1. The State of Washington fully occupies and preempts the entire field of setting penalties for violations of the State s controlled substances act. RCW Cities, towns, and counties or other municipalities may enact only those laws and ordinances relating to controlled substances that are consistent with RCW.0, and such local ordinances shall have the same penalties as provided for by State law.. Local laws and ordinances that are inconsistent with the requirements of State law shall not be enacted and are preempted and repealed, regardless of the nature of the code, charter, or home rule status of the city, town, county, or municipality. RCW Although Plaintiff is a lawful business under RCW.0 and WAC 1-, Defendant, in conflict with RCW.0.0, deems Plaintiff an illegal business pursuant to Defendant s current business license code.. Defendant is preempted from applying its current business license requirements to Plaintiff as that application violates RCW Article XI, Section, of the Washington State Constitution, provides that [a]ny AND INJUNCTIVE RELIEF - 00 Stewart Street, Suite Phone: () - Fax: () -

9 1 county, city, town, or township may make and enforce within its limits all such local police, sanitary, and other regulations as are not in conflict with general laws.. An ordinance is in conflict with general laws if it forbids that which the statute permits.. By passing Initiative 0, Washington voters sought to displace the illegal marijuana market by providing broad access to a tightly regulated, State-licensed market.. Defendant s prohibition of marijuana businesses through application of its business license ordinance directly conflicts with State law by barring local access to legal, regulated marijuana, frustrating the stated intent of Initiative Defendant s prohibition of marijuana businesses through its business license code is an unconstitutional abuse of its police powers since SMP Retail is a lawful business under State law. 1. This claim presents a justiciable controversy for which declaratory relief is appropriate.. The validity of WCC..0 as applied to Plaintiff, and Defendant s actions to date affirming that it would neither grant a business license to Plaintiff nor exempt it from that requirement, present an actual and existing dispute, where the parties have genuine and opposing interests.. Plaintiff has a well-grounded fear of immediate invasion of its rights to act as a State-licensed retail marijuana outlet in the city of Wenatchee where Defendant is entrenched in its position that it should uphold and enforce federal law against marijuana businesses, including SMP Retail. AND INJUNCTIVE RELIEF - 00 Stewart Street, Suite Phone: () - Fax: () -

10 1. A positive conflict exists between State and local law where Plaintiff is a lawful business under State law but would be forced to operate illegally should it fail to obtain a business license from the City of Wenatchee.. Plaintiff s interest in resolution of the matter, specifically whether it can legally open its doors for business, is direct and substantial, and a judicial determination of Plaintiff s rights will be final and conclusive. VI. SECOND CAUSE OF ACTION INJUNCTIVE RELIEF. Plaintiff re-alleges and incorporates by reference all of the allegations contained in the preceding paragraphs.. Defendant s refusal to allow Plaintiff to operate as a business is an actual and substantial injury to Plaintiff.. Plaintiff has no other complete, speedy, and adequate remedy at law by which to prevent harm to itself.. Plaintiff is therefore entitled to an injunction preventing Defendant from denying Plaintiff its right to operate in the city of Wenatchee pursuant to RCW.0 and WAC 1-. VII. AND INJUNCTIVE RELIEF - REQUEST FOR RELIEF Plaintiff respectfully requests the following relief from this Court: A. Declaratory judgment that Defendant s actions prohibiting State-licensed marijuana businesses in Wenatchee conflict with general laws and violate RCW.0.0 and Article XI, Section, of the Washington State Constitution. B. Alternatively, declaratory judgment that Plaintiff is not subject to Defendant s business license regime and may operate in Wenatchee without receiving a Wenatchee business license. 00 Stewart Street, Suite Phone: () - Fax: () -

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