Several years ago, I had written in this blog about commercial real estate and land use challenges that were surfacing in connection with marijuana-related businesses. One of those posts focused on a March 2016 decision by California’s Fourth District Court of Appeal, which held that the City of Upland’s 2013 adoption of a zoning amendment banning mobile medical marijuana dispensaries was not a “project” that required environmental review under the California Environmental Quality Act (“CEQA”) before it could be put in place. At the time, my view was that this case was a stark illustration of the difficulties that California real property interests faced for the foreseeable future with regard to commercial cannabis activities, in view of the ongoing federal prohibition against marijuana.
Since then, a great deal has changed in California. Most significantly, state voters approved the use of recreational cannabis for persons over 21 on November 8, 2016, with the passage of Prop. 64, the Adult Use of Marijuana Act. In the wake of this landmark initiative, the state government has now established a permanent regulatory framework for cannabis businesses. In connection with this development, there has been an explosion of commercial marijuana activity in the state, which has drawn several large law firms into the legal market to provide advice and counsel in this field, joining those boutique practices that had previously dominated this particular practice area.
A few months after the decision in the Upland case that I reported on above, in October 2016, a ruling in a similar case was issued by that same court of appeal. In that litigation, involving the Union of Medical Marijuana Patients, Inc., the same plaintiff as in the Upland matter, that court held that the City of San Diego’s enactment of a zoning ordinance regulating the locations and operations of medical marijuana dispensaries was not a “project” that would mandate review under CEQA. Given that court’s decision in the Upland case less than a year earlier, the outcome in this matter was, to me, quite foreseeable.
Earlier this month, however, the California Supreme Court unanimously reversed the court of appeal’s decision, ruling that San Diego’s ordinance was a “project” requiring environmental review under CEQA. From a technical “legal” point of view, the Court’s reversal of the Fourth District’s holding merely resolved a conflict between two lower courts of appeal and clarified the proper legal standard to employ in analyzing the environmental impact of certain governmental actions. From a broader viewpoint, however, the Court’s ruling also evidences a sharp shift in attitudes and policy towards cannabis-related enterprises, most blatantly illustrated by the contrasting levels of deference shown by the two courts in Upland and San Diego to the two cities’ characterization of their zoning regulations of medical marijuana businesses as not being “projects” under CEQA.
Nowhere are these changes in thinking more plainly demonstrated than in the day-to-day practices of California attorneys across all practice areas. Last year, the Real Property Section of the Santa Clara County Bar Association, which I serve as co-chair, put on a seminar called “Cannabis and California Real Estate Attorneys: Advising Clients Engaged in the Cannabis Industry,” which focused on issues relating to the leasing of retail and industrial property to marijuana-related businesses located in this state. Next month, the SCCBA Labor & Employment Section will be presenting “Cannabis in the Workplace,” a program that will address a variety of practical matters that California employers must now deal with in connection with the legal use and regulation of cannabis in their places of business.
Where once the laws regarding marijuana were the sole province of criminal law attorneys, these days almost all attorneys need to be familiar with the impact of cannabis legislation on their practices. While the federal prohibition of marijuana continues to create risks for commercial cannabis in California, it does not appear that this industry will be going away anytime soon, so practitioners will need to come to grips with it.
