Are California Cities Intentionally Misinterpreting Landmark Cannabis Legislation?

As local control continues to collide with consumer access to California’s licensed cannabis market, one law will soon preempt local bans on medicinal cannabis delivery. But will jurisdictions follow through on their end?

So far, actions taken by some cities indicate lawsuits are likely to unfold come 2024.

Under current law governing the state’s adult-use and medical cannabis markets, cities and counties can prohibit cannabis businesses, like retail, from operating within their jurisdictions, and most of them do. As of February 2023, there were 302 cities and counties in California (or 56% of local jurisdictions) that banned all cannabis business types, according to the state’s Department of Cannabis Control.

And while state law allows cannabis delivery operators to deliver to any jurisdiction within California, Fresno County Superior Court Judge Rosemary McGuire ruled in late 2020 that state law does not preempt local ordinances restricting or prohibiting such deliveries, “whether the ordinance bans all commercial deliveries, bans cannabis deliveries by non-local businesses, requires local licenses for delivery, or regulates local delivery in some other way.”

RELATED: California Judge Dismisses Cannabis Delivery Lawsuit

McGuire’s order calling into question the state’s “outside-in” rule has been enough for many cities to keep cannabis delivery bans codified ever since.

However, jurisdictions that have incorporated this type of prohibition will soon have to change their ways to allow medical cannabis delivery under the Medicinal Cannabis Patients’ Right of Access Act (Senate Bill 1186) that Gov. Gavin Newsom signed last year. The act requires localities that currently ban such access to adopt new zoning regulations by Jan. 1, 2024.

In other words, all California cities and counties must allow medical non-storefront cannabis retail businesses (delivery) by this date or face potential lawsuits, according to Lauren Mendelsohn, a senior associate attorney at the Sonoma County, Calif.-based Law Offices of Omar Figueroa. Her law firm helps write local ordinances and advises local leaders on creating regulations that are compliant with state law.

“It is considered landmark legislation because it goes farther than most other legislation in terms of actually guaranteeing access to medical cannabis delivery to Californians who need it,” said Mendelsohn, who, along with her legal work, currently sits on the board of directors for California NORML.

In addition to patients, S.B. 1186 ensures that medical cannabis deliveries can be made to primary caregivers throughout California.

“It really does prohibit jurisdictions from creating or enacting local regulations, including local zoning regulations, that have the effect of not allowing any medical cannabis deliveries to be located in that jurisdiction [and] to actually have their premises located in that jurisdiction,” Mendelsohn said. “That is specifically listed as an example of one of the things that local jurisdictions can’t do—they can’t ban that outright under this new act. And there’s been some confusion around this.”

Notably, the confusion over requirements outlined in S.B. 1186 revolves around cities passing recent ordinances that don’t actually allow for medical cannabis delivery operators to have physical offices and keep inventory within their jurisdictions, disregarding the “physical premises” language of the bill (Section 26322(a)(5) and (b)(1)), Mendelsohn said.

A key component behind allowing delivery-only businesses to have physical establishments within any local jurisdiction is to ensure that patients and their primary caregivers can receive medical cannabis in “a timely and readily accessible manner,” according to the bill’s language. But some cities are interpreting this law differently.

In San Marcos, a city of roughly 95,000 people in northern San Diego County, local officials adopted an ordinance on Sept. 26 stating that they will allow medical cannabis deliveries from nearby jurisdictions, but they maintained that medical cannabis establishments, even those that are delivery-only, still won’t be permitted, The Coast News Group reported.

Deputy City Attorney Jacqueline Paterno indicated that since San Marcos shares a border with Vista, which has several delivery-only cannabis establishments, residents will have sufficient access to medical cannabis delivery.

“In remote jurisdictions, it would be necessary to allow establishments because there’s no other business nearby that could serve the population,” Paterno told Coast News. “There’s plenty of establishments that can deliver nearby into San Marcos that are nearby, so we don’t have that issue of having to allow actual delivery-only establishments to open or be permitted in San Marcos.”

Cannabis Business Times reached out to Paterno, who clarified her understanding of the new law:

“The bill prohibits cities from passing regulations that ban the establishment of physical premises conducting medicinal cannabis sales, if the regulation has the effect of prohibiting the retail sale by delivery of medicinal cannabis. The San Marcos Municipal Code previously prohibited deliveries of all categories of cannabis; as modified it will permit delivery of medicinal cannabis by licensed premises. There are numerous permitted and licensed facilities that have been and are currently available to make such medicinal cannabis deliveries.”

The idea of a next-door city fulfilling the medical delivery access requirements set forth in S.B 1186 is a misinformed approach, Mendelsohn said.

“That’s not what the law says,” she said. “As of January 1st, 2024, they and other cities that have taken that position or that still have their bans on the books will be in violation of this law and are opening themselves up to lawsuits that can be brought by private parties.”

And the enforcement mechanisms of S.B. 1186 are not limited to the scope of the state’s attorney general or prosecutors, Mendelsohn said. The law can be enforced in litigation brought forth by medical cannabis patients or their primary caregivers, or by medical cannabis businesses trying to sell their products in any given jurisdiction, she said.

“These are private lawsuits that can be brought by a firm such as myself or other law firms, and it’s a mandamus action that would be brought to essentially force the jurisdiction to comply,” she said. “Attorneys’ fees could be awarded in a matter like this.”

Also, there’s no sunset date for when these lawsuits can be filed, she said.

In Brentwood, a city of roughly 67,000 people in the East Bay region, Senior Analyst Abraham Salinas with the city’s Economic Development Department, acknowledged the potential of individuals being authorized to seek legal recourse under S.B. 1186 during his presentation at a planning commission meeting last month, The Press reported.

However, much like San Marcos, Brentwood’s proposed changes to municipal code would only allow for medical cannabis deliveries to come into the city via outside jurisdictions, as indicated by city Commissioner Dirk Zeigler during the September planning meeting.

Per Brentwood’s proposed changes, a retailer with a physical address outside of the city that wishes to deliver medicinal cannabis within city limits would be required to obtain a city business license. But Brentwood still intends to ban the establishment of physical premises for delivery-only operators within its jurisdiction.

“I understand why we’re doing this,” Zeigler said following Salinas’ presentation. “I just think it’s going to be very difficult to enforce a car coming across city limits. Obviously, there’s no sales in the city, so that means they’re coming from neighboring cities.”

This outside-in approach by Brentwood comes on the legal advice of the League of California Cities, a powerful interest group with a mission to expand and protect local control throughout California.

In an Oct. 10 staff report, Salinas and Brentwood Assistant City Manager Darin Gale wrote that the city’s proposed amendments to comply with S.B. 1186 “have been developed based on reference materials and guidelines provided by the League of California Cities.”

Later in that very staff report includes a FAQ section on S.B. 1186 provided by the League of California Cities, which states that one of five examples of prohibited regulations includes those that “require the establishment of physical premises within the city.”

Hirsh Jain, founder of Ananda Strategy, a consultancy that represents many of California’s cannabis retailers and advises operators across the supply chain, said that regardless of the League of California Cities’ interpretation of this clause, the fact is that cities are relying on an organization that has a been “hostile toward cannabis” for legal advice.

Notably, the League of California Cities strongly opposed S.B. 1186 when it was introduced in early 2022 by state Sen. Scott Wiener, D-San Francisco. In addition, the league helped organize a lawsuit in 2019 to stop the “outside-in” delivery model, which later culminated in judge McGuire’s 2020 court order.

Cannabis Business Times reached out to Wiener for comment on the intentions behind his legislation, but his office has yet to respond.

From the League of California Cities’ perspective, a government that works closest to the people is best, and that happens when local control is preserved.

“My response to that would be that’s kind of hollow if polls show that your residents support legal cannabis,” Jain said. “If the basis for your defense of local control and local government is going to be local democracy, when you are purposefully thumbing your nose at the will of the voters, I don’t think that argument holds weight.”

While many cities have yet to act on adopting new ordinances to comply with S.B. 1186, some already have acted in manners that do in fact include provisions for physical premises, such as Visalia and Beverly Hills.

Elected officials in Visalia, a city of roughly 143,000 people in the agricultural San Joaquin Valley between Fresno and Bakersfield, began drafting a new zoning ordinance for medical cannabis delivery-only licensees to set up shop within their jurisdiction, the Sun Gazette reported.

“I wish the state wasn’t forcing us to do this, but here we are, so I’ll be fully supportive of everything that we’re doing tonight,” Visalia Mayor Brian Poochigian said during a July work session.

In Beverly Hills, a city of roughly 32,000 people in Los Angeles County, local officials with the planning commission recommended rule changes at an Aug. 24 meeting to allow delivery-only medical cannabis operators to conduct business in the city’s Business Triangle, where they will be allowed to have offices, keep inventory or otherwise operate, the Beverly Hills Courier reported.

But these businesses won’t be allowed on the first floor of buildings or within 600 feet of sensitive locations like schools or libraries, and they would be prohibited from displaying logos outside their offices or on any of their vehicles. These types of local control are preserved in the legislation.

“We just don’t want people to know it’s there, so we don’t have crime,” Beverly Hills Municipal Affairs Program Manager Cindy Owens told commissioners at the planning meeting.

While these two cities are adopting regulations that comply with S.B. 1186, despite their history of local bans on all cannabis businesses, one city in Sonoma County is using S.B. 1186 as a launching pad to re-write rules to allow all retail business types.

Healdsburg, a city of roughly 11,300 people, is now going to allow not just medical cannabis delivery, but local officials decided to open a license application process in June for two adult-use cannabis storefront dispensaries. Eight companies applied, The Press Democrat reported. The city is also going to allow an unlimited number of delivery businesses.

The passage of S.B. 1186 spurred the creation of this commercial cannabis ordinance, Mendelsohn said.

“If you go back and read their rationale when they were talking about their proposed ordinance, they specifically cited S.B. 1186 as one of the reasons they had to change their rules because they had disallowed all commercial cannabis activity,” she said. “And they decided to go a step further instead of just modifying their regulations to allow medicinal delivery; they chose to finally regulate everything, create a comprehensive zoning ordinance and an application procedure, et cetera.”

Although Healdsburg appears to be the exception, city officials in San Marcos and Brentwood have interpreted S.B. 1186 differently than those in Visalia and Beverly Hills when it comes to adopting ordinances that actually allow for medical cannabis delivery-only businesses to set up physical establishments in their jurisdictions.

Meanwhile, many cities throughout California appear to be ignoring state mandates under S.B. 1186 altogether. They now have less than three months to act.

“They’re going to be potentially in for a rude awakening come next year or anytime in the future,” Mendelsohn said.