California officials side with marijuana company in new fight over home deliveries

SACRAMENTO —  Escalating a legal battle with California cities and counties over where marijuana can be sold, state officials are intervening in a new court fight over home delivery of cannabis in communities that have banned or restricted pot shops.

Earlier this month, Atty. Gen. Xavier Becerra filed a motion on behalf of the California Bureau of Cannabis Control to join a lawsuit by Salinas-based East of Eden Cannabis Co. against Santa Cruz County, which has banned deliveries by companies it has not licensed.

The legal action comes as a group of cities is challenging California’s home delivery rules in Fresno County Superior Court, arguing that state law allows them to decide whether businesses can sell pot in their communities. In January, the Bureau of Cannabis Control issued regulations that permit firms it licenses to deliver marijuana to homes anywhere in the state, including in cities and counties that have banned pot shops.

Santa Cruz County spokesman Jason Hoppin said that under Proposition 64, which voters approved in 2016 to legalize marijuana for recreational use, “the state promised the people of California local control over the time, place and manner of local cannabis operations.”

“The state is now lending the power of the attorney’s general office to a business seeking to break that promise,” Hoppin said. “It is beyond disappointing and should be alarming to cities and counties throughout California.”

The attorney general’s office deferred questions on the legal dispute to the bureau, where a spokesman declined to comment on pending litigation.

Hoppin said he believes the state is trying to sidestep the Fresno lawsuit and have the issue decided by a court in Santa Cruz County, where voters are more in favor of legalization. Proposition 64 won support from 70% of voters in Santa Cruz County and just 47% of voters in Fresno County.

Santa Cruz County has licensed 12 pot sellers in its unincorporated areas and most can deliver to homes in the county, but local officials have sought to ban deliveries by firms outside the area. County officials are concerned they have not been able to vet out-of-county firms as they have those located in Santa Cruz County and noted that the firms do not pay taxes to the county to cover the costs of oversight.

Proposition 64 gave cities and counties the discretion to determine whether marijuana stores are allowed in their communities, and three-quarters of California cities have banned the shops. State legislation that would have required cities to allow cannabis stores if residents voted to support Proposition 64 failed to pass this year, but may resurface when the Legislature reconvenes in January.

Santa Cruz County and 24 cities including Agoura Hills, Beverly Hills, Covina and Riverside filed the separate lawsuit in Fresno County this past spring and have been given a trial date of April 20, when they will argue that state delivery regulations violate the local-control guarantee of Proposition 64.

“When Prop. 64 was passed it was also promised that localities would be able to maintain local control over both sales and delivery of cannabis,” said Beverly Hills Mayor John Mirisch, who called Becerra’s latest legal filing “over reaching.”

“This is a bait and switch on the part of Sacramento,” Mirisch added. “Communities are the solution, not the problem, and individual communities should be able to make their own choices.”

Officials in many cities say they have banned marijuana sales out of public safety concerns, arguing that pot shops attract robberies and other criminal activity.

The cities’ lawsuit says that the state regulation “is in direct and irreconcilable conflict” with Proposition 64, which “[preserves] the right of local jurisdictions to regulate commercial cannabis activity at the local level.”

In his Nov. 14 filing, Becerra told the Santa Cruz County court that the state has acted properly in deciding where marijuana can be sold and delivered.

“If the Bureau’s motion for intervention is denied, then this would increase the risk that the Court might issue a decision which serves to enjoin one of the state’s duly-enacted regulations, which would be a substantial harm to the state,” Becerra said.

Santa Cruz County’s ban on outside delivery firms is “inconsistent” with the state regulation allowing state-licensed marijuana firms to deliver anywhere in California, Becerra argued.

The lawsuit by East of Eden says the firm stopped delivering in Santa Cruz County after it was sent a cease and desist order by the county in May that threatened a criminal investigation and confiscation of its marijuana products. Since then, East of Eden’s retail sales via delivery have dropped by 38%, and it is losing more than $1,000 a day, the firm said in its lawsuit.

The Santa Cruz court has set a Jan. 2 hearing to decide whether to allow the state bureau to intervene in the East of Eden case.