Cannabis delivery serviceOn Monday, Los Angeles City Attorney Mike Feuer made a substantial gain in his crackdown on illegal cannabis delivery businesses when the Court of Appeals upheld a preliminary injunction granted more than a year ago against delivery app Nestdrop. The injunction prohibits Nestrop from facilitating marijuana deliveries in Los Angeles.

We’ve been following the crackdown on medical marijuana delivery services in California primarily because there is so much interest from entrepreneurs, particularly in the tech industry, in developing and providing these types of services. And though we always strive to help our clients execute on their creative, forward-thinking business ideas, delivery in Los Angeles just isn’t feasible. At least for the time being.

Just a couple of weeks ago, we wrote about the lawsuit filed by the City of Los Angeles against another marijuana delivery service, Cosmic Mind (a/k/a SpeedWeed), and reminded everyone that the City’s position on marijuana delivery companies has not changed. Now the City has a California Appellate Court decision in its back pocket it can use to justify its continued crackdown.

Breaking down the Court of Appeals’ decision is straightforward. The Court agreed with the City’s argument that Proposition D, under which medical marijuana businesses must qualify for limited immunity to operate legally, contemplated that only fixed establishments, not vehicles, would be able to assert that immunity. The Court broke down the construction of the ordinance, and noted incongruities that would arise if the city were to allow medical marijuana delivery. For instance, it would be impossible for a vehicle navigating the city to abide by the requirement that medical marijuana businesses must be located more than 1,000 feet from schools, and more than 600 feet from public parks, public libraries, religious institutions, child care facilities, youth centers, alcoholism or drug abuse recovery or treatment facilities, or any other medical marijuana businesses. And further, under the ordinance, the distance between medical marijuana businesses is to be measured property line to property line, an example of one of many provisions in the ordinance that indicates delivery services were never intended to receive immunity.

But the intriguing (though in our opinion, weak) argument made by Nestdrop’s attorneys that the California Vehicle Code preempts Proposition D was not fully fleshed out by the Court in its published opinion. Though the Appellate Court did not review this preemption issue because Nestrop failed to raise it before the trial judge, it gifted us a bit of dicta letting us know that it would have rejected this argument had it actually dealt with it.

Vehicle Code section 21 states that “a local authority shall not enact or enforce any ordinance or resolution on the matters covered by this code, including ordinances or resolutions that establish regulations or procedures for, or assess a fine, penalty, assessment, or fee for a violation of, matters covered by this code, unless expressly authorized by this code.” Nestdrop’s argument was that this code provision preempted Proposition D to the extent that the city ordinance prohibited vehicular deliveries. The Court rejected this argument, without going into much detail, because the Vehicle Code, which does not address medical marijuana or deliveries of medical marijuana, creates no conflict between state and local law. Further, the Health and Safety Code explicitly grants local governments the right to use their police powers to regulate or ban medical marijuana establishments.

Ultimately, the Court found that the City of Los Angeles met its burden of establishing a likelihood of proving Nestdrop violated Proposition D, which does in fact prohibit the delivery of medical marijuana. The Court’s affirmation that immunity for marijuana establishments is tied to a particular location could have broad sweeping implications for other types of events where medical marijuana is distributed and consumed. With the City Attorney stating that the City has thus far filed 365 cases against 1,444 defendants related to medical marijuana, keeping tabs on the City’s enforcement priorities is critical. We’ll take up that issue in a forthcoming post.