Here we go again. Back in 2014, Los Angeles City Attorney Mike Feuer made his stance on medical marijuana delivery services clear when he took aim at Nestdrop, a medical marijuana delivery app. Last week, Feuer’s office filed suit against another popular marijuana delivery service, Cosmic Mind (doing business as SpeedWeed), indicating that the city’s position regarding the legality of marijuana delivery in the city of Los Angeles has not changed.
California’s battle to legalize marijuana has been long and embittered. With the passage of the MMRSA, and now the AUMA Initiative, the momentum for regulation is no doubt building. But Los Angeles, still subject to Proposition D, remains somewhat of an anomaly, having had a long-standing and mixed relationship with marijuana dispensaries.
The Los Angeles Times reports that more than 700 marijuana dispensaries have shut down since the passage of Proposition D in 2013. Recall that the goal of Proposition D was to reduce the number of dispensaries within the city limits to 135 – the number of dispensaries operating prior to September 14, 2007. As of last year, Feuer estimated that only about 120 clinics met the city’s guidelines for immunity under Proposition D, meaning that they possessed a business tax registration or tax exemption certificate issued by the City on or before November 13, 2007, were registered with the City Clerk by November 13, 2007, and registered with the City subject to all subsequent medical marijuana ordinances, among other criteria.
So what about delivery services? We all know these businesses exist and that many of them are extremely popular (and profitable). And our California cannabis lawyers get calls all the time from people wanting to know how to start one, and how to make it compliant. Though the Los Angeles Municipal Code is arguably somewhat ambiguous on the subject, the City Attorney’s office has made its interpretation clear.
Pursuant to the city code, “It is unlawful to own, establish, operate, use, or permit the establishment or operation of a medical marijuana business, or to participate as an employee, contractor, agent or volunteer, or in any other manner or capacity in any medical marijuana business.” LAMC § 18.104.22.168(A). In addition, the definition of “medical marijuana business” includes vehicles, meaning that “any vehicle or other mode of transportation, stationary or mobile, which is used to transport, distribute, deliver, or give away marijuana to a qualified patient, a person with an identification card, or a primary caregiver” constitutes a separate medical marijuana business. LAMC § 22.214.171.124. This issue of “separateness” is key.
In the City of Los Angeles’ 2014 complaint against Nestdrop, LLC, the City Attorney argued that, although Proposition D provides limited immunity to medical marijuana businesses that meet specified requirements, “delivery is not allowed even if the entity distributing the product is, itself, an immunized medical marijuana business.” The People of the State of California v. Nestdrop, LLC, Cal. Super. Ct. C.D. Case No. BC 565409 (2014). Even an immunized business can only claim immunity “at one location” for which the business has a business tax registration certificate from the City. This means that immunity under Proposition D (which most dispensaries operating in the City do not even have) cannot accompany marijuana when it leaves the immunized location to be delivered elsewhere. Of course, any marijuana business in Los Angeles that does not qualify for immunity is unlawful, regardless of how it operates.
Fast-forward to the case filed earlier this month against SpeedWeed, and, unsurprisingly, the City Attorney is making the same argument. The complaint does not mince words: “Defendants’ [SpeedWeed’s] conduct, on its face and in its application, is clearly and entirely illegal.” The People of the State of California v. Cosmic Mind, Cal. Super. Ct. C.D. Case No. BC 609819 (2016). The City has repeatedly stated that the prohibition on medical marijuana delivery within Los Angeles is “integral to Proposition D’s statutory scheme, which is to limit distribution points in the City to a restricted number.”
And there are other issues with these delivery companies. Dispensaries in Los Angeles are not permitted to operate within 1000 feet of a school or within 600 feet of a religious institution, public park, public library, child care facility, youth center, rehab facility or another medical marijuana business. LAMC § 126.96.36.199. The City argues, reasonably, that delivery centers or hubs could be located anywhere, including next to the aforementioned restricted entities.
We will continue monitoring the case against SpeedWeed, but we are of the view that unless or until Proposition D is amended or repealed, marijuana delivery services in the City of Los Angeles will remain illegal. And we anticipate that the City Attorney’s office will continue the crack down until the laws change.