Dispensary Permitting Freezes Up

Appeals court decision chills activists from San Diego to Arcata.

The hotbed of marijuana law reform, San Francisco, has frozen medical cannabis dispensary permitting this winter as the city — and dozens of others across the state — nervously await a decision by the California Supreme Court on the very legality of such permits. Nine groups that are seeking permits to open new San Francisco clubs — mostly in the Mission — have been caught in limbo, the Department of Public Health told Legalization Nation. San Francisco currently has 26 permitted dispensaries. However, an October decision by California’s Second District Court of Appeals, in the case of Pack v. Superior Court, states that local regulations such as permits and fees are preempted by federal drug law.

California cities and counties can either help Uncle Sam prosecute the Drug War or stand idly by, the appeals court found. But local jurisdictions can’t actively contravene federal law with medical marijuana distribution permits, fees, and mandates for lab testing.

As a result, progressive cities with dispensary regulations have paused their programs; cities and counties opposed to medical marijuana are using Pack to ban all clubs; and unregulated clubs now have legal cover to open without any rules. The California Supreme Court has until February 8 to decide whether to hear the City of Long Beach’s appeal or let the appellate decision stand. The decision will be pivotal, lawyers say. If Pack is upheld, “We have an out-of-control industry we could not effectively regulate,” said Bob Shannon, Long Beach’s city attorney. “It’s a totally unacceptable set of circumstances, at least for us.”

Shannon said his office will go to the Long Beach City Council on January 17 and request a ban on all dispensaries until the Pack appeal is settled. There are about sixty dispensaries in Long Beach. None has received a permit under the city’s ordinance — which called for a lottery system and steep fees to determine which operators could stay open. It also mandated safety testing.

Long Beach dispensary operator Ryan Pack, represented by attorney Matt Pappas, sued Long Beach over its permit program. Pappas argued in court that the federal Drug War preempts localities from picking winners for pot permits. Astonishingly, the appellate court upheld Pappas’ interpretation in October, prompting Long Beach’s appeal to the state Supreme Court.

The American Civil Liberties Union, several cities, and national marijuana patient lobby Americans for Safe Access have denounced the appellate court’s decision and asked the Supreme Court to wipe out its existence by de-publishing it. Pack stymies regulation and leads to bans that prevent safe access, they say. Three other California appellate courts have ruled to the contrary on issues of federal preemption, critics note.

Shannon agrees. “The law on this issue is chaotic, and has not been consistently applied,” he said.

Los Angeles City Attorney Asha Greenberg seemed exasperated. “With Pack we can’t regulate, we can’t control what kind of quality products people are getting when it comes to things people eat, pesticides, potency, any of that.” Los Angeles is also mulling a ban again.

Seven-year-old delivery-only dispensary The Green Cross has been applying for a permit to open a physical location at 4218 Mission in San Francisco for a year. Manager Caren Woodson said the city put their permit hearing on hold in November, citing the Pack case. She called the situation “unfortunate” and awaits the Supreme Court’s decision.

Five other groups are seeking permits on Mission. The popular dispensary The Green Door is seeking a second location on Lombard Street.

Northern California dispensary developer Debby Goldsberry said cities and counties quickly used Pack as an excuse to ban dispensaries. “Right now is the worst time to pursue a city permit almost anywhere,” she said. “Pack has had a big effect. A lot of cities are just waiting it out at this point. Some big change is coming if Pack stands.”

However, some cities are advancing. Oakland intends to permit four groups to open new dispensaries by the month’s end. In December, the City of Richmond permitted its first three dispensaries.

Cities might be able to reword their permitting schemes to survive preemption, Pack noted. Arturo Sanchez, assistant to the city administrator in Oakland, indicated it that it could take three weeks to four months for the city to rewrite its ordinances around Pack, if it’s upheld.

The San Francisco City Attorney’s Office stated in an email: “If the Supreme Court does not grant review, the City Attorney’s Office will work with the City to address SF’s conformance with this decision.”

But Shannon said rewording ordinances to comply with Pack is too difficult. It would mean switching from a system of “permits” to something like “certificates of non-disallowal,” Shannon said. “It doesn’t make any sense,” he added.

Robert Raich, an Oakland lawyer and advisor to a dispensary permit applicant, expects the Supreme Court to de-publish Pack. The high court has a history of upholding state law in the face of federal preemption challenges, he said. “It was wrongly decided and it will be de-published or review will be granted,” Raich said. “Eventually, the state Supreme Court will reverse it.”

Still, the Pack decision exposes the fault line running through the national terrain of medical marijuana law. “We’ve known for some time that [regulation] isn’t consistent with federal law,” Shannon said. “Unfortunately, Long Beach just got put at the front of the class.”

Correction: The original version of this story erroneously stated that Robert Raich was a dispensary applicant. He is an advisor to the applicant.

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