It is no secret that California’s cannabis operators are presently in a regulatory and business enterprise atmosphere exactly where red tape, the illegal industry, and considerable taxes make life tough. At the identical time, the state is attempting to guard, market, and develop the market in a assortment of strategies, a single of which is fighting off cities and counties to make certain that retail cannabis household delivery is permitted in every single city and/or county no matter what.

As a short history primer, California is a really sturdy regional handle state when it comes to cannabis. Pursuant to the Medicinal and Adult-Use Cannabis Regulatory and Security Act (“MAUCRSA”), ahead of you can safe a state license for your cannabis business enterprise you will have to very first receive regional 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 health-related-only sales and/or there can be some significant barriers to entry based on the city or county. Additional, Proposition 64 (which co-exists with MAUCRSA) has clear promises and directives to retain regional handle and a city’s or county’s potential to ban any sort of industrial cannabis activity outright (with the exception of the transport of cannabis involving licensees through public roads).

At the moment, according to MAUCRSA:

  1. “[MAUCRSA shall] not be interpreted to supersede or limit the authority of a regional jurisdiction to adopt and enforce regional ordinances to regulate corporations licensed below this division, like, but not restricted to, regional zoning and land use needs, business enterprise license needs, and needs connected to decreasing exposure to secondhand smoke, or to totally prohibit the establishment or operation of a single or additional kinds of corporations licensed below this division inside the regional jurisdiction.”
  2. “A regional jurisdiction shall not stop delivery of cannabis or cannabis merchandise on public roads by a licensee acting in compliance with [MAUCRSA] and regional law. . . .” and
  3. “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 regional ordinance or regulation [. . .] The licensing authority shall deny an application for a license below this division for a industrial cannabis activity that the regional 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 household delivery does not call for any city or county regional approval below MAUCRSA. Thus, BCC explained that retailer licensees can undertake household delivery in any jurisdiction in the state– even in these that totally ban delivery. Particularly, the BCC adopted Rule 5416(d), which says that “A delivery employee may possibly provide to any jurisdiction inside the State of California offered that such delivery is carried out 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 no matter if the new delivery rule is constant with Proposition 64 and MAUCRSA and no matter if the BCC has the authority to adopt and implement the rule. The cities argue the new delivery rule is totally 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 without having any sort of regional handle the California Assembly is the physique to lawfully make that get in touch with through a modify to the statute.

When 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 Common) filed a motion to join the regional lawsuit to guard the new delivery rule. The BCC is otherwise staying mum for any other strategic factors it has for joining the regional beef. We’ll know by January two no matter if or not the BCC will get to be a celebration in the Santa Cruz lawsuit. And we completely anticipate that this may possibly not be the final regional 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 but once again. Threat tolerant corporations will no doubt attempt to take benefit of the new delivery rule, but they do so at considerable danger 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 selection 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.