Local Governments Respond to AUMA with Wide Variety of Ordinances

Proposition 64 - also known as the Adult Use of Marijuana Act, or AUMA - marks a critical step in California’s transition to a formalized and regulated cannabis market. It builds on and utilizes many aspects of the regulatory structure established by California’s Medical Cannabis Regulation and Safety Act (MCRSA), 2015 legislation that comprehensively regulates commercial medical cannabis for the first time since the passage of Proposition 215 in 1996.

A common element of both the MCRSA and the AUMA, is the inclusion of strong “local control” provisions that impact both commercial and personal cannabis activity. The precise nature of local control does notably differ between the two laws in that MCRSA requires strict “dual licensing,” whereas the AUMA’s only requires a state licensee to prove non-violation of local law as a condition of being granted a state license.

Local governments so far have responded in many different ways to AUMA’s “local control” provisions both before and after the passage of the AUMA. Some enacted moratoriums and others moved quickly to regulate personal cultivation. Finally, the AUMA has built into it economic incentives for local governments to seriously consider allowing cultivation.

Moratoriums and Preemptive Bans on Non-Medical Commercial Activity

Local governments can choose to allow all, some, or none of the 18 different types of commercial cannabis licenses AUMA creates to span the supply chain from cultivation and manufacturing to testing, distribution, and retail sales.

A significant number of localities did not even wait until the election to adopt policies prohibiting non-medical cannabis businesses. As just one example among dozens, Antioch adopted a preemptive moratorium on commercial non-medical businesses prior to the election, which it recently extended after expiration of its initial 45 day effective period (moratoriums may be extended for a period totaling a maximum of two years from the date of adoption).

State licenses are not expected to be issued until at least January 1, 2018, and only after the state agencies fully staff their cannabis divisions and engage in a public rulemaking process to implement the statutes -- hurdles that the Legislative Analyst’s Office recently said make that timeline imposed by AUMA “ambitious,” even before considering the possibility of further changes to the statute by the legislature during 2017 (watch the recently introduced Assembly Bill 64 as a likely legislative vehicle for such “clean-up” effort).

Since any adult use commercial cannabis activity requires a state license, any non-medical commercial cannabis activity occurring before that time will necessarily be unlawful.

Nonetheless, some jurisdictions that are expected to eventually permit non-medical cannabis activity have also moved to adopt provisions clarifying that such businesses are, for the time being, prohibited.

In Berkeley, rather than adopting a urgency interim ordinance, the City enacted this clarification by adopting a simple one sentence amendment to its municipal code stating that no recreational cannabis use may be approved “until the City Council adopts a licensing process and standards for such uses.”

The City of San Diego, which currently formally permits medical cannabis dispensaries, recently adopted a moratorium on adult use businesses. At the same time, however, it introduced ordinance amendments that would amend its permitting process for medical dispensaries to allow for  “marijuana outlets,” which would eventually be allowed to engage in adult use sales. The proposed amendments “appropriately balance the will of the voters with the concerns related to the potential impacts associated with commercial marijuana use.”

This sort of minor definitional change to existing or contemplated medical cannabis regulations is likely to be an attractive option for many localities, made relatively straightforward by the similarity in license types between the MCRSA and the AUMA, as well as provisions in the AUMA that afford (notably undefined) priority to adult use license applicants that were operating as medical cannabis businesses prior to September 1st, 2016.

Local Approaches to Personal Cultivation

Independent of the commercial regulatory framework, AUMA allows individuals over 21 to lawfully cultivate up to six plants per household for personal use, a provision that is already in effect. Localities may prohibit outdoor personal cultivation and impose “reasonable regulations” -- but not a total prohibition, as courts have permitted localities to do under the Compassionate Use Act -- upon cultivation occurring inside a residence or an enclosed accessory structure.

Scores of cities have already moved to prohibit outdoor personal cultivation on at least a temporary basis, usually in conjunction with prohibitions on commercial activities. As the initial 45 day moratorium periods on these moratoriums comes to an end, most localities are opting to extend these policies for an additional 10 months and 15 days. A notable exception is Mountain View, which chose not to extend its outdoor cultivation moratorium after finding that existing ordinances on odors and nuisances were likely adequate to address issues related to outdoor cultivation, rendering an emergency finding unwarranted.

Other cities have begun to explore permanent ordinances that would impose regulations and permit requirements on personal cultivation. For example, Lompoc introduced an ordinance that would have imposed 17 additional conditions on personal residential cultivation, including: annual permits from the Fire, Police, and Building departments, a limitation of cultivation area to 32 square feet, a ventilation system “designed by a licensed engineer”, notarized authorization of the property owner, installation of an alarm system specifically for the cultivation area, and a wastewater plan that must be approved by the City. But the Lompoc city council was persuaded to not adopt the policy at first reading of the ordinance by citizens concerned about the burdens, opting to study the issue further. Fontana is another example of an early mover in this domain, contemplating the creation of a “Residential Indoor Marijuana Permit” that would, among numerous other conditions, require personal cultivation applicants to complete a State Department of Justice live scan.

It is yet to be seen to what degree these types of ordinances will be deemed “reasonable regulation” as required by the AUMA, but it is likely that more of the hundreds of localities that have been historically hostile towards cannabis cultivation will attempt similar approaches. Whether these approaches are “reasonable” will inevitably be subject to civic debate and litigation in the coming years.

Economic Effect of Local Ban on Cultivation

In addition to legal and public policy questions that bear on the ability of local governments to allow or prohibit commercial and personal cannabis is a provision in AUMA, Revenue and Tax Code Section 34019(f)(3)(C), that will deny access to some grant programs funded by state cannabis revenue to “local governments which have banned the cultivation, including personal cultivation...or retail sale of marijuana or marijuana products.”

 

Alex Zavell is a Senior Regulatory Analyst with Oakland law firm Robert A. Raich, P.C, where he focuses on California’s cannabis regulatory framework at the state and local level. He is the chair of the National Cannabis Bar Association’s committee on Local Policy and Regulation and, while not an attorney, is regularly considered an expert on a variety of policy issues related to the legalization of cannabis.

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