While the impetus to legalize the personal use of marijuana continues to make headway across the country, serious hurdles to acceptance still remain in the real estate and business realms. I’ve previously written in my blog cautioning owners of commercial real estate about the risks associated with leasing space to marijuana-related establishments that are otherwise lawful to operate. A recent appellate decision out of Southern California illustrates how municipalities can erect absolute legal barriers against these types of enterprises, even if they may be legitimate.
On March 25, the Fourth District Court of Appeal upheld the San Bernardino County Superior Court’s rejection of a challenge under the California Environmental Quality Act (“CEQA”) filed by the Union of Medical Marijuana Patients (“UMMP”) in response to the 2013 enactment of an ordinance by the City of Upland (the “City”) prohibiting mobile medical marijuana dispensaries within its limits. While UMMP argued that the City’s adoption of this law mandated environmental impact review under CEQA, the Fourth District concluded that the City’s actions in passing this legislation merely restated existing law and did not constitute a “project” requiring such examination.
In 2007, the City approved an ordinance banning medical marijuana dispensaries in the city limits. The ordinance defined a “medical marijuana dispensary” as a “facility or location, whether fixed or mobile, which provides, makes available or distributes marijuana” in a manner allowed by state law (emphasis added). In the process of taking up this ordinance, the City conducted an initial study of its potential environmental impacts, which concluded that there was no substantial evidence that the ordinance could have a significant effect on the environment. Relying on this conclusion, the City prepared and adopted a negative declaration under CEQA, allowing the new law to proceed without environmental review.
In 2013, the City of Upland enacted a new ordinance that specifically banned mobile medical marijuana dispensaries, citing increased crime associated with such facilities as a justification for the law. Prior to passage, UMMP objected to the proposed legislation, asserting that it was a “project” under CEQA, thus warranting environmental review, due to a variety of environmental impacts allegedly associated with this new law. In adopting this ordinance, the City did not address these claimed impacts; in response, UMMP filed a lawsuit challenging the ordinance under CEQA, which was denied by the trial court.
On UMMP’s appeal of the denial of its challenge, the Fourth District ruled that the 2013 ordinance did not constitute a “project” under CEQA, on the ground that its explicit prohibition against mobile medical marijuana dispensaries was only a restatement of the 2007 ordinance’s broad ban against such facilities, whether fixed or mobile, and thus would not result in environmental change under CEQA. In response to UMMP’s argument that the 2013 ordinance was not a restatement of the 2007 law because the 2007 law was a zoning law that dealt with land use and not vehicular activities, the Fourth District pointed out that the 2007 law broadly prohibited medical marijuana dispensaries regardless of the type of activity involved, and that by adopting the 2007 law, the City intended to regulate these matters broadly, without regard for the distinctions being proffered by UMMP. Finally, the Fourth District ruled that, even if the 2013 ordinance was not a restatement of existing law, it would not constitute a “project” under CEQA, because the environmental impacts of the 2013 ordinance that UMMP alleged would happen were based on its assumptions about various matters that the court found lacking in factual support and thus too speculative or unlikely to be considered reasonably foreseeable.
In reading the Fourth District’s opinion, it is difficult to avoid the impression that the court would have bent over backwards to find a reason to uphold this law. In particular, the court’s dismissal of UMMP’s argument that the 2013 ordinance was not a restatement of the 2007 law asserts a variety of imputed motives to the City’s adoption of that law, without acknowledging the fact that the City’s very adoption of the 2013 law makes a plausible case for the argument that the 2013 law did more than just restate existing law. When faced with this type of reasoning, it is not hard to become skeptical about the wisdom of attempting to pursue profits in the field of “legal” marijuana.
The case is Union of Medical Marijuana Patients, Inc. v. City of Upland (4th Dist., Div. 1, 2016) ___ Cal.App.4th ___, 2016WL ________, Case No. D069293.
