California, Licensing

California Medical Marijuana: Priority Licensing and Local Law Compliance

We’ve written extensively about California’s passage of the Medical Marijuana Regulation and Safety Act (MMRSA) and what it means for California medical marijuana operators looking to secure “priority” licensing status pursuant to AB 266, at Article 4, Section 19321:

In issuing licenses, the licensing authority shall prioritize any facility or entity that can demonstrate to the authority’s satisfaction that it was in operation and in good standing with the local jurisdiction by January 1, 2016.

In our last post on this topic, we outlined the issues surrounding state and local taxes and how they will likely play into the priority licensing status. In this post, we’re going to delve into the issue of “local law compliance,” and why it will be an impediment to many marijuana operators seeking priority status.

Inevitably, the question of what it means to be “in good standing with the local jurisdiction” will vary depending on the city or county in which the collective or dispensary is located. The difficulty here is that local regulations are often tough to track down, and are sometimes comprised of a web of ordinances and code provisions that aren’t entirely clear-cut. Add to this the fact that local law enforcement is frequently lax and unpredictable, and one can see why so many collectives choose to operate in contravention of city and county law. However, figuring out what local zoning ordinances and licensing schemes apply to your entity, and then figuring out how to comply with them, will be a key component in your obtaining priority licensing status.

Medical Marijuana and CaliforniaAnd local law compliance matters, even if you don’t intend to seek priority licensing status. On November 20, 2015, California Superior Court Judge Timothy Taylor entered a judgment against SoCal Holistic Health Inc. and its president, ordering the Pacific Beach dispensary to pay the City of San Diego $1.8 million in civil penalties for operating a pot shop in violation of the city’s zoning ordinances. The judge also issued a permanent injunction barring the dispensary and its president from operating another dispensary anywhere within the city. These penalties break down into fines of $2,500 for each day the dispensary was in operation.

Though harsh, these penalties are within the scope of what most cities and counties can assess in the event of code violations. A history of lax enforcement or acquiescence on the part of local law enforcement does not preclude local officials from changing their tune, assessing large fines, and shutting your dispensary down. Especially now when some of them are angry about California’s legalization moves on both the medical and the recreational front. Whether you intend to seek priority licensing status pursuant to the MMRSA or not, it’s important to know where you stand under local law, and it’s important that you fall into compliance. Now. As regulations in California tighten under the new regulatory framework, local crackdowns on bad actors are sure to increase.

2 responses to “California Medical Marijuana: Priority Licensing and Local Law Compliance”

  1. If my collective does not sell MMJ in California, (notice that there are no quotation marks on the word sell, because we don’t buy it and we don’t sell it either!) how can I be in compliance with local ordinances which are aimed at storefronts anyway? I am just a club with a virtual presence. The club is incorporated and has bylaws, etc., strictly follows the 420 and the state Guidelines. I get a call from my member, and I go visit my member. Whatever happens in private, well, you know, 2 guys in a room….There is no sale, no retail sale. I checked with the Board of Equalization, they said my business plan does not result in a taxable event. Apparently, according to the BoE, if you don’t sell anything, you don’t have to collect nor remit sales tax.
    I don’t understand how local law can affect my club?

  2. In my County the law for outdoor is Simple-NO….Nodda….so its impossible to be in compliance with the Local Ordinances as they say no….does that mean that there will be NO Priority Licenses then based on the fact its illegal to do outdoor now or will there be Priority ONLY on the Indoor Facilities that can prove they met the guidelines as written?

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