The Battle for the Future of Cannabis Delivery in California
Statewide cannabis delivery has come under increasing fire in the recent weeks with the battle over AB 1530 in committee and a new lawsuit against the Bureau of Cannabis Control over permanent regulations passed in January 2019.
On April 9, 2019, the Assembly Committee on Business & Professions voted down AB 1530, an assembly bill that would have expressly authorized local jurisdictions to restrict or ban the delivery of cannabis or cannabis products to a location within that jurisdiction. AB 1530 also proposed to create a grant program available to localities that authorize or license both cultivation and retail cannabis activity. AB 1530 was sponsored by Assemblymember Ken Cooley (D-AD 8, Rancho Cordova) with support from the California League of Cities, the California State Association of Counties, and the City of Placentia. It was opposed by a broad coalition of stakeholders in the cannabis industry and chambers of commerce throughout the state.
AB 1530 follows efforts from pro-delivery advocates in 2018, who pushed SB 1302 (Lara), which would have expressly prohibited a local jurisdiction from banning local delivery of cannabis. Though SB 1302 made it out of committee, it was ultimately pulled from its third reading on the Senate Floor and eventually died on the inactive file in 2018, leaving the status of statewide cannabis delivery under Proposition 64 still uncertain.
In the hearing on April 9, 2019, AB 1530 was voted down by a vote of 7-7-6 in the Business & Professions Committee in part because it was deemed "premature" to enact legislation preempting legislation (and litigation) regarding the permissibility of local cannabis delivery bans under Proposition 64.
As discussed below, that litigation will rest heavily on the meaning of voters' intent with regard to both local control and delivery authorization under the Adult Use Marijuana Act (“AUMA”) which passed in Prop 64. AB 1530, however, may still come back if Assemblymember Cooley pursues reconsideration in the Business & Professions Committee.
BCC Regulation 5416(d)
AB 1530 followed closely on the heels of the enactment of Regulation § 5416(d) of the Bureau of Cannabis Control (BCC), in January 2019, which provides that "[a] delivery employee may deliver to any jurisdiction within the State of California provided that such delivery is conducted in compliance with all delivery provisions of this division." Regulation § 5146(d) was adopted, in part as the logical extension of Cal. Bus. & Prof. Code § 26090(e), which provides that under Proposition 64 "[a] local jurisdiction shall not prevent delivery of cannabis or cannabis products on public roads by a licensee acting in compliance with this division and local law as adopted under Section 26200."
Opponents of Regulation § 5416(d) include the League of California Cities, which immediately objected to § 5416, stating that it "subverts the intent of the voters who approved Proposition 64 by removing local governments' ability to prohibit cannabis deliveries within its jurisdiction." The League of Cities point to Section 26200(a)(1) of the Business & Professions Code, or the "local control" provision of Proposition 64, which provides that:
This division shall not be interpreted to supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances to regulate businesses licensed under this division, including, but not limited to, local zoning and land use requirements, business license requirements, and requirements related to reducing exposure to secondhand smoke, or to completely prohibit the establishment or operation of one or more types of businesses licensed under this division within the local jurisdiction.
Cal. Bus. & Prof. Code § 26200(a). As noted in the hearing on AB 1530, the passage of Regulation § 5416 "recognized the statutory ban on a jurisdiction preventing 'delivery' as an exception to the statute more broadly granting and preserving local control of cannabis activities." Background, Comment, AB 1530, Assembly Business & Professions Hearing Report (Apr. 5, 2019).
City of Santa Cruz v. Bureau of Cannabis Control
Regulation § 5416(d) is now the target of a new lawsuit filed on April 5, 2019, City of Santa Cruz, et al. v. Bureau of Cannabis Control, in which 25 local jurisdictions1 have sued the BCC on the grounds that Regulation § 5416 violates the "local control" promise of the AUMA under Proposition 64. The core question in this litigation is whether the local control provision (Cal. Bus. & Prof. Code § 26200) permits local bans on cannabis delivery, or whether cannabis delivery is expressly authorized statewide as an exception to local control, see id. at §26090 (e).
Plaintiffs in the Santa Cruz litigation argue that Regulation § 5416(d) is expressly prohibited by §26200, and moreover, that the regulations contradict the intent of the voters in California, given that the AUMA ballot materials and public statements expressly reserved "local control" rights.
Opponents of the lawsuit point to the legislative purpose of Proposition 64, to legalize adult marijuana use and to eliminate the illicit market for cannabis as fundamentally frustrated by potential local prohibitions on delivery. Delivery prohibitions also raise significant issues regarding accessibility and mobility, particularly for cannabis patients and adult users who may live in "cannabis deserts" with no access to dispensary retailers or delivery services.
Though the litigation is in its early, cannabis industry stakeholders are closely monitoring this litigation for long-term impacts on the future of cannabis delivery throughout the state.
What Happens Next
Though AB 1530 was voted down initially in the Business & Professions Committee, it is subject to possible reconsideration in committee. However, given the timing of the Santa Cruz lawsuit, we expect the legislature may defer to the courts on interpreting the meaning and scope of Proposition 64's "local control" provision vis-à-vis delivery before enacting any potentially preemptive legislation.