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City of Palo Alto (ID # 3000)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 7/16/2012
July 16, 2012 Page 1 of 8
(ID # 3000)
Summary Title: Medical Marijuana Dispensaries Initiative Measure
Title: Adoption of Resolution Placing an Initiative Measure on November 2012
Ballot to Permit Three Medical Marijuana Dispensaries to Operate in Palo Alto
From: City Manager
Lead Department: City Attorney
Recommendation
In order to implement a ministerial duty under state law, staff recommends that
the City Council adopt a Resolution Calling a Special Election for November 6,
2012 on the Initiative Measure to Permit Three Medical Marijuana Dispensaries in
Palo Alto. (Attachment A.)
Background
In 1996, California voters enacted Proposition 215, the Compassionate Use Act
(CUA), now codified in California Health and Safety Code §11362.5. The CUA
exempts patients and their primary caregivers from criminal liability under State
law for possession and cultivation of marijuana for personal medical use. In 2004,
the State Legislature adopted SB 420, entitled the Medical Marijuana Program Act
(MMPA), codified in Health and Safety Code §11362.7 et seq. The intent of the
MMPA was to clarify the scope of the CUA. In addition, the MMPA provided
patients and caregivers access to medical marijuana through “collective,
cooperative cultivation projects.” The MMPA also provided that cities may adopt
and enforce laws consistent with these State laws.
In contrast to State law, the Federal Controlled Substances Act, codified at 21
U.S.C. §801 et seq., prohibits all activities related to marijuana, including
possession, cultivation, and distribution. Federal law contains no exception for
medical use.
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In 1996 in response to the CUA, the City Council adopted an ordinance prohibiting
Medical Marijuana Dispensaries in Palo Alto. This uncodified ordinance is
contained in Attachment B. Currently, there are no medical marijuana
dispensaries operating in Palo Alto.
Given the conflict between State and Federal law, the CUA and MMPA have been
the subject of extensive litigation and the current state of the law is in flux. For
cities, there are two basic issues regarding medical marijuana. First, to what
extent do California’s medical marijuana laws preempt local regulation or
prohibitions of medical marijuana establishments? Second, to what extent does
the federal Controlled Substances Act preempt local regulations that allow
medical marijuana establishments?
California cities have taken a variety of approaches with regard to medical
marijuana dispensaries. By one advocacy group’s recent count, 76 cities and 9
counties have adopted moratoria prohibiting dispensaries and 178 cities and 20
counties have adopted permanent bans or prohibitions. In addition, 46 cities and
10 counties have adopted regulatory ordinances that allow dispensaries subject
to various permit, location, and operation requirements. Some cities and
counties have also adopted medical marijuana business taxes.
A number of these local ordinances have been challenged in Court, with
somewhat mixed results regarding the permissible scope of local regulations. In
City of Riverside v. Inland Empire Patient’s Health and Wellness Center, Inc., and
City of Lake Forest v. Evergreen Holistic Collective, the Fourth District Court of
Appeal issued directly conflicting opinions on whether local governments can
prohibit medical marijuana dispensaries completely: Inland Empire held that the
CUA and MMPA did not preempt local prohibitions, while Evergreen reached the
opposite conclusion and held a city could not ban dispensaries altogether. With
regard to the federal preemption issue, the Second District Court of Appeal held
in Pack v. Superior Court (Long Beach) that a local permitting scheme actually
conflicts with federal law because it allows activities that the CSA prohibits and,
thus, may not be implemented and enforced.
The California Supreme Court has granted review in each of these cases as well as
one additional case from San Bernardino County in which the Court of Appeal
upheld a local dispensary prohibition (People v. G3 Holistic, Inc.). A summary of
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the four pending Supreme Court cases prepared by the Medical Marijuana
Committee of the City Attorneys’ Department of the League of California Cities is
included as Attachment C.
In addition to court case developments, the area of medical marijuana continues
to be the subject of new legislative developments. On September 1, 2011, the
Governor signed AB 1300, which amends Health and Safety Code §11362.83, to
clarify that cities have the authority to regulate the location, operation, or
establishment of medical marijuana dispensaries (MMD).
July 16, 2012 Page 4 of 8
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Discussion
On July 25, 2011 proponents submitted to the City Clerk a signed Initiative to
Permit Three Medical Marijuana Dispensaries in Palo Alto (Initiative Measure).
(Exhibit 1 to Attachment A).
Summary of Proposed Initiative Measure
The proposed Initiative Measure adds three new sections to the Palo Alto
Municipal Code pertaining to business permits, zoning regulations and taxation of
medical marijuana dispensaries.
Business Permits
The most prominent component of the Initiative Measure is the requirement that
the City “shall as soon as practicable following the operative date of this
ordinance, issue three (3) medical marijuana dispensary permits.” (Initiative
Measure, Section 4.20.050(a).) To be eligible for one of the first three permits, an
applicant must file an application no later than 15 days after the effective date of
the Initiative Measure. (Section 4.20.040(b).) Following the issuance of the initial
permits, the City “shall have no fewer than, and no more than, three (3)
dispensary permits issued and outstanding at all times.” (Section 4.20.040(c).)
The Initiative Measure specifies the type of information that must be contained in
a permit application and specifies limited grounds for denial of a permit.
(Sections 4.20.070 and 4.20.100.) The permit is good for one year, but can be
renewed in one year increments.
The Initiative Measure contains detailed operating requirements. Among these
are that dispensaries may only operate between 9:00am and 10:00pm; that no-
one under 18 may be admitted unless such person is a patient and accompanied
by a parent or guardian; that no marijuana may be ingested on the premises; that
cultivation may occur on the premises provided it occurs in a “secure, locked and
fully enclosed structure, including a ceiling, roof or top.” Additionally; no alcoholic
beverages would be allowed, the facility must have adequate security, and the
proprietors must clean the area around the front door every day during an
operating week. All facilities would need to comply with the Americans with
Disabilities Act (ADA). Finally, all facilities would be precluded from cultivating,
distributing or selling marijuana for profit. (Section 4.20.140.)
July 16, 2012 Page 5 of 8
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Zoning Regulations
Second, the Initiative Measure would amend the Zoning Code to provide for the
placement of medical marijuana dispensaries. The Initiative Measure defines a
medical marijuana dispensary to mean “a cooperative or collective1 of four or
more members who associate at a particular location or real property to
collectively or cooperatively distribute marijuana to members for medical
purposes, and operate on a not-for-profit bases, consistent with California Health
and Safety Code section 11362.5 and 11362.7 et seq.), the Guidelines for the
Security and Non-Diversion of Marijuana Grown for Medical Use issued by the
California Attorney General in August 2008, and this chapter.” (Section
18.45.020(o).) The Initiative Measure provides that a medical marijuana
dispensary would be a permitted use in any commercial or industrial zone, but
contains the following exceptions for “sensitive uses”:
No dispensary permitted within 150 feet of any residential zone;
No dispensary permitted within 600 feet of any public or private school;
and
No dispensary permitted within 500 feet of any public library, public
park, licensed day care center, or substance abuse rehabilitation center.
These distances requirements are to be measured in a straight line from the
primary entrance of the medical marijuana dispensary to the property line of the
sensitive use. A dispensary may not be approved as an accessory use to any other
permitted use in Palo Alto, and no more than one dispensary may occupy a single
building. (Section 18.45.030.)
1The MMPA provides a criminal defense to “qualified patients, persons with valid identification cards, and the
designated primary caregivers of qualified patients and persons with identification cards, who associate within the
State of California in order to collectively or cooperatively to cultivate marijuana for medical purposes.” Health &
Safety Code Section 11362.775 (emphasis added). The terms “cooperative” is a statutory entity that must abide by
strict rules laid out in the California Corporations Code, § 12200, et seq. A “collective,” on the other hand, is not
defined by statute. However, the idea behind both organizations is the same: they must exist as a not-for-profit
“closed-circuit” for the benefit of its members. As such, they “should not purchase marijuana from, or sell to, non-
members; instead, it should only provide a means for facilitating or coordinating transactions between members.”
Atty. Gen’l. Instructions (2007) IV(a)(1), (2). Recent case law, however, has cast some doubt on the Attorney
General’s interpretation. In People v. Colvin, 203 Cal. App. 4th 1029 (2012), the Attorney General argued that a
cooperative must involve “some united action or participation among all” members and that the collective in
question was too big to allow any “meaningful” participation in the cooperative process and therefore was not a
“cooperative” or a “collective” in the way §11362.775 intended. The court rejected this argument and instead
held that §11362.775 does not require a certain number of members to engage in “united action or participation”
in order to qualify as a collective or cooperative under the section. It is likely that this area of law will also continue
to evolve.
July 16, 2012 Page 6 of 8
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Gross Receipts Tax
Finally, the ordinance adds Section 2.49 to the Municipal Code to add a new gross
receipts tax on dispensaries. In essence, this provision would levy a 4 cent per
dollar tax on the gross receipts of all medical marijuana dispensaries, for general
government purposes.2 The section also sets forth the relevant procedural steps
of paying the tax, and powers of the City to collect the tax.
The Charter provides that initiative measures go into effect 10 days after the
Council conducts the official canvass of the election.
Unresolved Legal Issues
As discussed above, the California Supreme Court has accepted review of several
cases that present legal issues that may, depending on the resolution, impact the
validity of the Initiative Measure and/or the City’s current uncodified ban on
dispensaries. If the Supreme Court follows the analysis in Evergreen and holds
that local prohibitions are preempted by the CUA and MMPA, the City’s current
ban may be vulnerable to challenge under state law preemption principles. On
the other hand, if the Supreme Court upholds Pack’s federal preemption analysis,
the Initiative Measure may be unenforceable.3
In summary, depending on the outcome of the 4 cases pending with the Supreme
Court, if the Initiative Measure is adopted by the voters, it is possible that it would
be vulnerable to judicial challenge. Similarly, if the Initiative Measure is not
adopted, the City’s existing ban may also be vulnerable to challenge.
2The Initiative Measure defines gross receipts as “the total amount actually received or receivable from all
donations, transactions and sales; the total amount or compensation actually received or receivable for
performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed,
whether or not such act or service is down as a part of or in connection with the sale of materials, goods, wares or
merchandise; discounts rents royalties, fees, commissions, dividends and gains realized from trading in stocks and
bonds, however designated. Included in “gross receipts” shall be all receipts, cash, credits and property of any kind
or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used,
labor or service costs, interest paid or payable, or losses or other expenses whatsoever.” The ordinance lists
13excluded expenses. Initiative Measure Section 2.49.020(b)(1)-(13).
3Especially troubling to cities and their employees, the Pack court questioned whether the City staff person
responsible for issuing the permits could be subject to criminal liability for “aiding and abetting” in a federal
offense (i.e. cultivation and sale of marijuana).] The California Supreme Court has granted review of this case so
that it is currently no longer binding legal precedent. However, the Supreme Court’s review of the matter
indicates this issue is still an open one.
July 16, 2012 Page 7 of 8
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Election Requirements
On October 3, 2011, the City Council accepted the Certificate of Sufficiency of the
Initiative Ballot and directed staff to return with a resolution putting the measure
on the November 2012 ballot. Palo Alto Charter Article VI, Section 2 requires the
City Council to adopt the initiative ordinance verbatim or place it on the ballot.
This initiative is primarily a land use initiative that requires a simple majority vote
of the electorate (50% + 1). The tax component of the Initiative Measure (4 cents
tax) does not alter this voting requirement as it would be a General Tax and thus
subject to a majority vote of the electorate.
The election schedule for the November 6, 2012 election is as follows:
August 10, 2012: Deadline for submitting measure to County
August 14, 2012: Deadline for direct arguments
August 21, 2012: Deadline for rebuttal arguments and impartial analyses
Council Options
Council could direct staff to prepare a companion measure to the Initiative
Ordinance to be placed before the voters that would stay the Initiative Ordinance
unless and until there is a definitive judicial decision removing any question that
local jurisdictions may lawfully regulate medical marijuana dispensaries in the
manner that the Initiative Ordinance regulates, including by adopting land use
measures and operational requirements, and levying business taxes.4
At this point, it is difficult to predict how long this will be. Briefing is underway in
the cases accepted by the California Supreme Court. Because at least some of the
issues involve federal preemption they may be resolved by the United States
Supreme Court.
Resource Impact
The Registrar of Voters has estimated that this election will cost approximately
$75,000. Furthermore, the city Clerk estimates a cost of approximately $50,000
for publishing requirements of the Election Code.
4 If two measures on the same topic are both adopted by the voters at the same election, the courts will try to
harmonize. However, if the provisions of two or more ordinances adopted at the same election conflict, the
ordinance receiving the highest number of affirmative votes shall control. (Elections Code Section 9221.)
July 16, 2012 Page 8 of 8
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Environmental Impact
Initiative measures are statutorily exempt from the California Environmental
Quality Act pursuant to Public Resources Code Section 21080(b)(1).
Attachments:
Attachment A - Resolution Calling Election
Attachment B - Uncodified Ordinance Prohibiting Medical Marijuana Dispensaries
Attachment C - League of California Cities Summary of Pending Supreme Court Cases
Attachments:
A: Resolution Calling Election (PDF)
B: Uncodified Ordinance Prohibiting Medical Marijuana Dispensaries (PDF)
C: League of California Cities Summary of Pending Supreme Court Cases (PDF)
Prepared By: Janet Billups, Sr. Legal Secretary
Department Head: Molly Stump, City Attorney
City Manager Approval: ____________________________________
James Keene, City Manager
Not Yet Approved
120702 cs RESO Special Election on Marijuana Initiative 1
Resolution No. _______
Resolution of the Council of the City of Palo Alto
Calling a Special Election for November 6, 2012 on the Initiative Ordinance to
Permit Three Medical Marijuana Dispensaries to Operate in Palo Alto
WHEREAS, an initiative petition to amend the City of Palo Alto Municipal Code to
Permit Three Medical Marijuana Dispensaries to Operate in Palo Alto has been submitted to the
City in accordance with the requirements of Article VI of the Charter of the City of Palo Alto;
and
WHEREAS, by its Resolution No. 9254, the City Council called a general municipal
election for November 6, 2012 (“Election”);
WHEREAS, on October 3, 2011, the City Council accepted the Certificate of Sufficiency of the Initiative Ballot and directed staff to return with a resolution putting the measure on the November 2012 ballot;
WHEREAS, elections are scheduled to be held on November 6, 2012, in certain
school districts and certain special districts in Santa Clara County; and WHEREAS, under Part 3 of Division 10 of the Elections Code, commencing at
Section 10400, and Education Code Section 5342, elections called by various governing bodies
may be partially or completely consolidated;
NOW, THEREFORE, the City Council of the City of Palo Alto does hereby
RESOLVE as follows:
SECTION 1. Special Election. A special municipal election is called for the City of Palo Alto to be held on Tuesday, November 6, 2012, under Charter Article VI for the purpose of submitting the following question to the voters at the election:
CITY OF PALO ALTO INITIATIVE MEASURE ________:
Shall the Palo Alto Municipal Code be amended to permit three medical
marijuana dispensaries to operate in Palo Alto in any commercial or industrial
zone subject to prescribed zoning criteria?
For the Ordinance ____ Against the Ordinance ____
SECTION 2. Adoption of Measure. The measure to be submitted to the voters is attached to this Resolution as Exhibit “1” and incorporated by this reference. If a majority of
Not Yet Approved
110628 cs RESO Special Election on Marijuana Initiative 2
qualified electors voting on such measure shall vote in favor of City of Palo Alto Initiative
Measure “___”, it shall be deemed ratified and shall read as provided in Exhibit “1”.
SECTION 3. Notice of Election. Notice of the time and place of holding the election is hereby given, and the City Clerk is authorized, instructed and directed to give further or additional notice of the election in time, form, and manner as required by law.
SECTION 4. Impartial Analysis. The City Council hereby directs the City Clerk to
transmit a copy of the measure to the City Attorney. The City Attorney shall prepare an impartial analysis of the measure, not to exceed 500 words in length, showing the effect of the measure on the existing law and the operation of the measure, and transmit such impartial
analysis to the City Clerk on or before August 21, 2012.
SECTION 5. Ballot Arguments. Arguments in favor of or against the measure shall be submitted to the City Clerk on or before August 14, 2012 at 5:30 p.m. under Elections Code section 9286 et seq.. If the City Clerk receives more than one argument for and/or against, the
priorities established by Elections Code section 9287 shall control.
SECTION 6. Rebuttal Arguments. Rebuttal arguments shall be controlled by the provisions of Elections Code section 9285. The deadline for filing rebuttal arguments shall be August 21, 2012, at 5:30 p.m.
SECTION 7. Duties of City Clerk. The Palo Alto City Clerk shall do all things
required by law to effectuate the November 6, 2012, general municipal election, including but not limited to causing the posting, publication and printing of all notices or other election materials under the requirements of the Charter of the City of Palo Alto and the California
Elections and Government Codes.
SECTION 8. Request and Consent to Consolidate. The Council of the City of Palo Alto requests the governing body of any other political subdivision, or any officers otherwise authorized by law, to partially or completely consolidate such elections and the City Council
consents to such consolidation. The Council requests the Board of Supervisors of Santa Clara
County to include on the ballots and sample ballots, all qualified measures submitted by the City
Council to be ratified by the qualified electors of the City of Palo Alto. SECTION 9. Request for County Services. Under Section 10002 of the California
Elections Code, the Council of the City of Palo Alto requests the Board of Supervisors of Santa
Clara County to permit the Registrar of Voters to render services to the City of Palo Alto relating
to the conduct of Palo Alto’s General Municipal and Special Elections which are called to be
held on Tuesday, November 6, 2012. The services shall be of the type normally performed by the Registrar of Voters in assisting the clerks of municipalities in the conduct of elections
including but not limited to checking registrations, mailing ballots, hiring election officers and
arranging for polling places, receiving absentee voter ballot applications, mailing and receiving
absent voter ballots and opening and counting same, providing and distributing election supplies,
and furnishing voting machines.
Not Yet Approved
110628 cs RESO Special Election on Marijuana Initiative 3
SECTION 10. Transmittal of Resolution. The City Clerk shall submit a certified
copy of this resolution to the Board of Supervisors of the County of Santa Clara.
SECTION 11. CEQA. Initiative measures are exempt from the California Environmental Quality Act.
INTRODUCED AND PASSED: AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST: ____________________________ _____
City Clerk Mayor
APPROVED AS TO FORM: APPROVED: ____________________________
Senior Asst. City Attorney City Manager
Notice of Intent to Circulate Initiative Petition
Notice is hereby given of the intention of the persons whose names appear hereon to circulate an initiative petition
within the City of Palo Alto tor the purpose of authorizing three medical marijuana dispensaries within the city,
taxing sales, and regulating die time, place and manner of sales. A statement of the reasons of the proposed action as
contemplated in said petition is as tollows:
THIS ORDINANCE WILL HELP THE
TERMINALL Y ILL IN OUR COMMUNITY
This proposed ordinance would allow our neighbors, who are seriously or terminally ill, to legally and safely obtain
marijuana near their home, if they have the approval of their physician. Proposition 215 WdS pas.sed by California
voters in 1996 with over 5 million votes, and yet Palo Alto has failed to implement the law. 15 years is long enough.
Terminally ill patients, many of whom are elderly, are faced with a Hobson's choice of buying marijuana illegally,
or traveling many miles to a city that has a dispensary. Marijuana is not a cure, but it can help cancer patients. Many
have severe reactions to the disease and chemotherapy, including nausea One in three patients discontinues chemo
due to these side effects, despite a significant chance of improvement When standard anti-nausea drugs fail,
marijuana often eases patients' nausea and allows continued treatment.
THE TAXES GENERA TED BY SALES CAN SAVE MANY JOBS
OF OUR PUBLIC SAFETY WORKERS AND TEACHERS
A similar ordinance in San Jose generated $290,000 in the tirst month! Think how many police, firetighters,
teachers and libraries that would support. We have a choice: capture these taxes for our city or continue to lose
them to neighboring municipalities. The ordinance will lax marijuana sales and place the revenue in the city's
general fund. This will be in addition to any local sales taxes geoerated. The ordinance urges the City Council to use
the revenue for public safety and education. .
THE THREE DISPENSARIES WILL BE
RESTRICTED TO APPROPRIA TE LOCATIONS
The law will limit the number of dispensaries to three. The dispensaries cannot be located in a residential area, or
near a school, park or day care center. Anyone wishing to operate a dispensary must meet strict qualification
requirements.
MARIJUANA HELPS MORE THAN CANCER PATIENTS
University doctors and researchers have found that marijuana is also effective m: lowering the pressure inside the
eye associated with glaucoma, slowing the onset of blindness, and alleviating muscle problems and chronic pain due
to multiple sclerosis, epIlepsy and spinal cord injuries.
Shouldn't our city support physicians who prescribe a medicine capable of relieving suffering?
Marijuana is not a cure. But often it is the only way to get reliet'. A Harvard University survey found that almost half
of oncologists nationwide would prescribe marijuana to their patients if it were legal in their state.
PLEASE JOIN US BY SIGNING THE PETITION!
Thomas Gale Moore, PhD. Cassandra Chrones Moore, Ph. D.
Petition (or Submission to Voters of Proposed Amendments
to tbe Municipal Code oftbe City o(Palo Alto
To the City Council of the City of Palo Alto:
We, the undersigned, registered and qualified voters o!'the Slate of California, residents of the City of Palo Alto,
California, hereby propose amendments to the Palo Alto Municipal Code, relating to medical marijuana, and present
to the City Council this petition and request that tlie City Council either pass the ordinance without alteration or
submit the same to the registered and qualified voters of the City for their adoption or rejection at a special election
held in 20 II, if the petition contains sufficient signatures. The proposed amendments read as follows:
Text of Proposed Ordinance
ORDINANCE OF THE CJlY OF PALO ALTO AMENDING TITLE 2 OF THE PAW ALTO MUNICIPAL CODE
TO ADD A NEW CHAYfER2.49 MEDICAL MARUUANA DISPENSARY GROSS RECEIPTS TAX; AMENDING
TITLE 4 OF THE PAW ALTO MUNICIPAL CODE TO ADD A NEW CHAPTER 4.20 MEDICAL MARIJUANA
DISPENSARJFS; AND AMENDING TITLE 180F THE PAW ALTO MUNICIPAL CODE TO ADDA NEW
CHAPTER 111.45 MEDICAL MARUUANA DISPENSARIES.
WHEREAS, California voters approved Proposition 215 in 1996, the Compassionate Use Act C"CUA"), to
exempt seriously ill patients and their primary caregivers from criminal liability for possession and cultivation of
marijuana for medical purposes; and
WHEREAS. the legislature enacted the Medical Marijuana Program Act of 2003 ("MMPA") providing
for the association of primary caregivers and qualified patients 10 cultivate marijuana for specified medical purposes
and also authorizing local governments to adopt and enforce laws consistent with its provisions; and
WHEREAS, the City of Palo Alto has a compelling interest in ensuring that marijuana is not distributed in
an illicit manner, in protecting the public health, safely and welfare of its residents and businesses, in preserving the
peace and quiet of the areas in which medical marijuana cooperatives and collectives operate, and in providing
compassionate access to medical marijuana to its seriously and terminally ill residents; and
WHEREAS. the People of the City of Palo Alto express their preference that the City Council consider
using the general tax funds generated by this ordinance for education and public safety, two areas hit very hard by
the recent recession; <
NOW. THEREFORE, the People of the City of Palo Alto do ORDAIN as follows:'
SECTION 1: TITLE 2 of the Palo Alto Municipal Code is amended by adopting a new Chapter 2.49 to read as
follows:
2.49 MEDICAL MARIJUANA DISPENSARY GROSS RECElPTS TAX.
2.49.010 Purpole and Intent.
• (a) Through the passage of the Compassionate Use Act of 1996 ("'CUA"), codified as Health and
Safety Code section 11362.5, the voters of California authorized the limited use of marijuana for medical purposes.
(b) The City of Palo Allo desires to tax medical marijuana dispensary donations. transactions and
sales as a specific category subject to a gross receipts tax, in addilion to any otherwise generally applicable tax,
imposed on businesses within the City of Palo Alto.
2.49.020 Definitions and Construction.
Any reference to California statutes includes any regulations promulgated thereunder and is deemed to
include any successor or amended version of the referenced statute. All definitions set forth in Health & Safety Code
section 11362.7, including but not limited to the tetmS "attending physician," "person with an identification card,"
"primary caregiver," "qualified patient," "identification card," and "serious medical condition," shall apply under
this chapter in addition to the definitions set forth as follows:
. (a) "City Manager" means the City Manager for the City of Palo Alto or designee.
(b) "Gross receipts," except as otherwise specifically provided, means the total amount actually
received or receivable from all donations, transactions. and sales; the total amount or compensation actually received
or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or
credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials,
goods, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from
trading in stocks or bonds, however designated. Included in "gross receipts" shall be all receipts, cash, credits and
property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost
of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that
the following shall be excluded therefrom:
I. Cash discounts allowed and taken on sales;
2. Credit allowed on property accepted as part of the purchase price, and which property may later be
sold. at which time the sales price shall be included as gross receipts;
3. Any tax required by law to be included in or added to the purchase price and collected from the
consumer or purchaser;
4. Such part of the sale price of any property returned by purchasers to the seller as refunded by the
seller by way of cash or credit allowances or return of refundable deposits previously included in gross receipts;
5. Receipts from investments where the holder of the investment receives only interest and/or
dividend" royalties, annuities and gains from the sale or exchange of stock or securities solely for a person's own
account, not derived in the ordinary course of a business;
6. Receipts derived from the occasional sale of used, obsolete or surplus trade fixtures, machinery or
other equipment used by the taxpayer in the regular course of the taxpayer's business;
7. Cash value of sales, trades or transactions between departments or units of the same business;
S. Whenever there are included within the gross receipts amounts which reflect sales for which credit
is extended and such amount proved uncollectible in a subsequent year, those amounts may be excluded from the
gross receipts in the year they prove to be uncollectible; provided, however, if the whole or portion of such amounts
excluded as uncollectible are subsequently collected, they shall be included in the amount of gross receipts for the
period when they are recovered;
9. Transactions between a partnership and its partners;
2
10. Receipts from services or sales in transactions between affiliated corporations. An affil iated
corporation is a corporation:
(i) The voting and nonvoting stock of which is owned at least eighty percent (80%) by such other
corporation with which such transaction is had;
(ii) Which owns at least eighty percent (80%) of the voting and nonvoting stock of such other
corporation; or
(iii) At least eighty percent (8oo!') of the voting and nonvoting stock of which is owned by a common
parent corporation which also has such ownership of the corporation with which such transaction is had.
II. Transactions between a limited liability company and its member(s), provided the limited liability
company has elected 10 file as a subchapter K entity under the Internal Revenue Code and that such transaction(s)
shall be treated the same as between a partnership and its partner(s);
12. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of
.. the business shall not be excluded when in excess of one dollar ($ 1); and
13. Amounts collected for others where the business is acting as an agent or trustee and to the extent
that such amounts are paid to those for whom collected. These agents or trustees musl provide the City Manager
with the names and the addresses of the others and the amounts paid to them. This exclusion shall not apply to any
~ fees, percentages, or other payments retained by the agent or trustees.
"Gross receipts" subject to the medical marijuana dispensary tax shall be only that portion of gross receipts
relating to business conducted within the City of Palo Alto.
(c) "Marijuana" shall have the same definition as set forth in Health and Safety Code 11018.
(d) "Medical marijuana" is defined in Title 4, section 4.20.020.
(e) "Medical marijuana dispensary" is defined in Title 4, section 4.20.020.
(f) "Medical marijuana dispensary tax" means the gross receipts tax payable to the City by a medical
marijuana dispensary pursuant to this chapter.
(g) "Person" mellllS, without limitation, any natural individual, organization, firm, trust, common law
trust, estate, partnership of any kind, association, syndicate, club, joint. stock company, joint venture, limited liability
company, corporation (including foreign, domestic, and nonprofit), municipal corporation (other than the City of
Palo Alto), cooperative, receiver, trustee. guardian, or other representative appointed by order of any court.
2.49.030 Medical Marijuana Dispensary Groll Receipts Tal[.
(a) Every medical marijuana dispensary shall pay a medical marijuana tax of four percent (4%) for
each dollar of its gross receipts.
(b) The tax imposed by this section i~imposed for general governmental purposes.
2.49.040 Payment; Time Limits.
The tax imposed by this Chapter shall be due and payable as follows:
(a) Each person owing a tax under this Chapter shall, on or before the last day of each calendar
month. prepare a tax return to the City Manager of the total gross receipts and the amount of tax owed for the
preceding calendar month. At the time the tax return is filed, the full amount of the tax owed for the preceding
calendar month shall be remitted.
(b) All tax returns shall be completed on forms provided by the City Manager, which shall elicit only
that information necessary to calculate and collect the taxes due under this chapter.
(c) Tax returns and payments for all outstanding taxes owed the City are immediately due the City
Manager upon cessation of business fur any reason.
2.49.050 Payment; When Taxes Deemed Delinquent; Penalties and Interest; Audit.
(a) Unless otherwise specifically provided under other provisions of this Chapter, the taxes required
to be paid pursuant to this Chapter shall be deemed delinquent if not paid on or before the due date· specified in
Section 2.49.040.
(b) Any person who fails or refuses to pay the tax required to be paid pursuant to this Chapter for
more than fifteen days after the due date shall pay a penalty equal to five percent (5%) of the amount of the tax in
addition to the amount of the tax. plus inierest on the unpaid tax calculated from the due date of the tax at a rate of
ten percent (10%) per annum.
3
(c) Whenever a check is submitted in payment orthe tax, and the check is subsequently returned
unpaid by the bank upon which the check is drawn, and the check is not redeemed prior to the due date, the taxpayer
will be liable for the tax amount due plus penalties and interest as provided for in Subsection (a) above.
(d) The tax due shall be that amount due and payable from the first date on which the person was
issued a permit by the City.
(e) The City Manager may waive the penalties imposed upon any person, if the person provides
evidence that failure to pay timely was due to circumstances beyond the control of the person and occurred
notwithstanding the exercise of ordinary care and the absence of willful neglect, and the person paid the delinquent
tax and accrued interest owed the City prior to applying for a waiver.
(0 The City Manager shall have the power to audit and examine quarterly the relevant books and
records of a medical marijuana dispensary, including both state and federal income tax returns, California sales tax
returns, or other evidence documenting the dispensary's gross receipts.
SECTION 2: Title 4 of the Palo Alto Municipal Code is amended by adopting a new Chapter 4.20 to read as
follows:
4.20 MEDICAL MARLRJANA DISPENSARIES.
14.20.010 Purpose and fntent.
(a) It is the purpose and intent of this ordinance to promote the health, safety, and general welfare of
the residents and businesses within the City of Palo Alto by taxing, regulating, and limiting the number of medical
marijuana dispensaries. It is neither the intent nor elfect of this ordinance to restrict or deny qualified patients access
to marijuana for medical purposes as intended by the passage of the Compassionate Use Act of 1996.
(b) The Medical Marijuana Program Act of 2003 allows cities to adopt and enforce rules and
regulations consistent with the Compassionate Use Act. The impacts of medical marijuana dispensaries are documented
in the "White Paper on Marijuana Dispensaries" published by the California Police Chiefs Association' s Task Force on
Marijuana Dispensaries (April 22, 2009), and the United States Depanment of Justice's CalilOrnia Medical Marijuana
Information report (October 19,2009). The City of Palo Alto neither condones nor condemns the use of marijuana.
This ordinance is enacted as a health and safety measure pursuant to the City's police powers as prescribed in Article
XI, Section 7 of the California Constitution.
4.20.020 Definitions and Construction.
Any reference to California statutes includes any regulations promulgated thereunder and is deemed to
include any successor or amended version of the referenced statute. All detlnitions set forth in Health and Safety
Code section 11362.7, including, but not limited to, the terms "attending physician," "person with an identification
card," "primary caregiver," ·'qualified patient," "identification card," and "serious medical condition," shall apply
under this chapter, in addition to the definitions set forth as follows:
(a) "Applicant" means a person who files an application for a medical marijuana dispensary permit
under this chapter.
(b) "City Clerk" means the City Clerk for the City of Palo Alto or designee.
(c) "City Manager" means the City Manager for the City of Palo Alto or designee.
(d) "Cultivation of Medical Marijuana" means the growing of medical marijuana for medical purposes
in accordance with Health and Safety Code sections 11362.5 and 11365.7 III seq.
(e) "Dispensary" shall have the same definition as "medical marijuana dispensary," as set forth in this
section.
(I)
property.
(g)
operated.
(h)
"Dispensary area" means the dispensary property and the area within 100 teet of the dispensary
"Dispensary building" means the building or portion of a building within which a dispensary is
"Dispensary permit" means a medical marijuana dispensary permit
(i) "Dispensary property" means the parcel of real property or portion of the parcel of real property
that is owned or leased by a dispensary and upon which a dispensary is operated.
(j) "Guidelines" means the "(".J\Iidelines For The Security and Non-Diversion of Marijuana Grown for Medical
Use," issued by the California Attorney General in August 2008, as may be amended from time to time.
(k) "Management member" means a member with responsibility for the establishment. registration,
supervision, or oversight of the operations of a medical marijuana dispensary, including but not limited to, a member
who is, or performs the functions of, a board member, director, officer, owner, operating officer, or manager of the
dispensary.
4
(I) "Marijuana" shall have the same definition as set forth in Health and Safety Code section 11018.
(m) "Medical Marijuana" means marijuana used for medical purposes in accordance with Health and
Safety Code sections 11362.5 and 11362.7 el seq.
(n) "Medical marijuana dispensary" means a cooperative or collective of four or more members who
. associate at a particular location or real property to collectively 01 cooperatively distribute marijuana to members for
medical purposes, and operate on a not-for-profit basis, consistent with California Health and Safety Code section
11362.5 and 11362.7 et seq., the Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical
Use issued by the Cltlifomia Attorney General in August 2008, and this chapter. A medical marijuana dispensary
shall not include the following uses: a clinic licensed pursuant to Chapter I of Division 2 of the Health and Safety
Code; a health care filcility licensed pursuant to Chapter 2 of Division 2 of the Health and Safety Code; a resi<\ential
care facility for persons with chronic life-threatening illness licensed pursuant to Chapter 3.01 of Division 2 of the
Health and Safety Code; a residential care facility for the elderly licensed pursuant to Chapter 3.2 of Division 2 of
the Health and Safety Code; and a residential hospice or a home health agency licensed pursuant to Chapter 8 of
Division 2 of the Health and Safety Code, as long as any such use complies with applicable laws including, but not
limited to, California Health and Safety Code section 11362.5 and 11362.7 el seq., and the City of Palo Alto Charter
and Municipal Code.
(0) "Medical Marijuana Dispensary Permit" means a permit that authorizes a medical marijuana I dispensmy to operate within the City.
(p) "Member" means any qualified patient, primary caregiver, or person with an identification card
who is registered with a medical marijuana dispensary.
(q) "Operate a dispensary" means to engage in or conduct the business of a dispensary, including, but
not limited to, distributing medical marijuana and maintaining the facilities of a dispensary.
(r)
Palo Alto.
"Perminee" means a person that holds a valid medical marijuana disPensary permit from the City of
(s) "Person" means, without limitation, any natural individual, organization, firm, trust, common law
trust, estate, partnership of any kind, association, syndicate, club, joint stock company, joint venture, limited liability
company, corporation (including foreign, domestic, and nonprofit), municipal corporation (other than the City of
Palo Alto), cooperative, receiver, trustee, guardian, or other representative appointed by order of any court.
(t) "Physician" means a licensed medical doctor as defined in California Business and Professions
Code section 4039.
4.20.030 Enforcement of Chapter.
The City Manager shall have the responsibility and duty for enforcement of this chapter.
4.20.040 Medical Marijuana Dispensary Pennit; Deadline for Applications.
(a) No person shall operate a medical marijuana dispensary unless the person holds a medical
marijuana dispensary permit issued by the city pursuantto-this chapter.
(b) An applicant for a proposed medical marijuana dispensary shall apply for a medical marijuana
dispensary permilon an application form provided by the City and shall submit a non-refundable dispensary permit
application fee of ten thousand dollars ($ I 0,000). To be eligible to receive one of the City's three (3) medical
marijuana dispensary permits, applicants must submit to the City Clerk a medical marijuana dispensary application
and dispensary application fee no later than fifteen (15) days after the operative date of this ordinance.
(c) The fact that an applicant possesses other types of permits or licenses from the State of Cali fomi a,
County of Santa Clara or City of Palo Alto shall not exempt the applicant from the obligation to obtain a medical
marijuana dispensary permit under this chapter, nor shall the terms and conditions of any other such permit or
license modify the requirements I1f a dispensary permit granted under this chapter.
4.20.050 Limit on Number of Penn its; Dates of lasuRnee.
(a) The City of Palo Alto shall, as soon as is practicable following the operative date of this
ordinance, issue three (3) medical marijuana dispensary permits.
(b) No person shall receive more than one (I) medical marijuana dispensary permit.
(c) The City of Palo Alto shall have no fewer than, and no more than, three (3) dispensary permits
issued and outstanding at aU times after the initial period described in Subsection (a).
4.20.060 Applicant QualiflCJltiollL
(a)
submitted:
L
Every management member of a dispensary shall be at the time the application or renewal is
At least twenty-one (21) years of age; and
5
2, A resident of the State of Cali fomi a
(b) To ensure the health, safety, and welfare of the citizens andbusinesses of the City of Palo Alto, an
applicant shall meet the following qualifications, and affirm the truthfulness of each separately on the application or renewal
form:
I, No management member of the applicant has ever operated, managed, or participated in a medical
marijuana dispensary in the City of Palo Alto without a permit, license, authorization, or other entitlement for use issued by
the City of Palo A Ito;
2, A management member of the applicant has at least twelve (12) months of experience as a board
member, director, officer, owner or operating officer of a medical marijuana cooperative or collective registered or
permitted as a medical marijuana dispensary by a city. wunty, or city and county within the State of California; and
3, No management member of the applicant has been convicted of a misdemeanor involving moral
turpitude, or a felony, This requirement shall not apply to any conviction or plea of guilty or nolo contendere under
federal law for an act that was lawful at the time under the Compassionate Use Act or The Medical Marijuana
Program Act.
4.20.070 Applications.
(a) The applicant for a medical marijuana dispensary permit or renewal shall submit to the City
j Manager an application. provided by the City Manager, The application shall be made under penalty of perjury and
shall include the following infonnation:
I, A description of the statutory entity or business form that will serve as the legal structure for the medical
marijuana dispensary and a copy of its business formation and organizing documents,
2, The name. address, telephone number, title, function(s) and copy of a valid government issued form of
photo identification for each management member,
3, The address to which notice of action on the application is to be mailed;
4, Written proof that the applicant and all management members are at least twenty-one (2 I) years of age;
5, A list of each misdemeanor involving moral turpitude or felony conviction, if any, of any management
member of the applicant;
6, Number of employees, volunteers, and other persons who will work or provide seIVices at the medical
marijuana dispensary;
7, A plan deSCribing how the medical marijuana dispensary will operate consistent with state law and
the provisions of this chapter, including controls to ensure medical marijuana is only distributed to qualified patients
or primary caregivers; and
(b) Each management member shall consent to fingerprinting and a criminal background check,
(c) The applicant shall include a description of the proposed location, including the street address and
parcel number, the square footage, the number of expected members, and the characteristics of the neighborhood or
surrounding area,
(d) The applicant shall provide a current copy of its business operations tax certificate and state sales
tax seller's permit.
(e) The applicant shall authorize the City Manager to seek verification of the information contained in
the application,
(f) If the applicant has completed the application improperly, or if the application is incomplete, the City
Manager shall within ten (10) business days of receipt of the original application notifY the applicant of such fact in writing,
detailing any deficiencies, and allow the applicant a reasonable amount of time to submit an amended application correcting
any deficiencies,
4.20.080 Granting or Denial of Penult Application.
The City Manager shall either grant or deny a dispensary permit within 30 days from the date the
application is submitted to the city and deemed complete,
4.20.090 Priority of Applicants.
If there are more than three (3) applicWlts for dispensary permits who meet all of the requirements of this
ordinance, the City Manager shall give priority in awarding the dispensary pennits to any applicant that provides
documentary evidence that, at any time after the passage of the Compassionate Use Act (Proposition 215) in 19%, the
applicant applied for and was denied or refused a permit, business license. use or occupancy permit, zoning permit, other
entitlement for use, or its equivalent by the City of Palo Alto to operate a medical marijuana dispensary in the City. Such
applicants shall be given priority in the order of denial or refusal, from earliest to most recent. For example, an applicant
who applied for a permit on May I, 1997, shall be given priority over an applicant who applied for a permit on May I,
2000.
6
4.20.100 Grounds for Denial of Permit
A medical marijuana dispensary permit shall be granted or renewed unless the applicant or permit holder has not
complied with the requirements of this ordinance, or any of the following apply:
(a) The applicant knowingly made a false statement of material fact or has knowingly omitted to state a
material fact in the application for a medical marijUlUla dispensary permit.
(b) The applicant or permit holder has not paid any applicable application or renewal fees.
(c) The City of Palo Alto already has three (3) medical marijuana dispensary permits in use.
4.20.110 Requests for Reconsideration.
(a) If the City Manager denies. suspends. revokes. or does not renew a dispensary permit, written
notice of such action shall be served on the applicant or permit holder. The notice shall contain:
I. A brief statement of the grounds for the action.
2. A statement that the applicant may request reconsideration of the action. in writing to the City
Manager, within ten (10) days of the date of service of the notice.
3. A statement that the failure to request reconsideration of the action will constitute a waiver of all
rights to further City or judicial review. and that the action will become linal.
(b) If the applicant properly mes a request for reconsideration, the City Manager shall set the date of
the bearing within 30 days from the date the request is med. The hearing shall be conducted by the City Manager.
(c) Failure to properly me a Written request for reconsideration of the notice of denial within ten days
oftbe date of service of the notice shall constitute a waiver of all rights to a hearing. and the City Manager's
decision shall be linal. Failure to properly and timely me a request for reconsideration of the notice of the action of
the City Manager shall also constitute a failure to exhaust administrative remedies and bar any judicial action
pertaining to the City Manager's decision.
(d) If the applicant tiles a proper request for reconsideration but filils to appear at the hearing, the
request for reconsideration is deemed abandoned. and the decision of the City Manager is tinal and may not be
further appealed. Failure to appear at the hearing constitutes a waiver of all rights to a hearing and shall also
constitute a failure to exhaust administrative remedies and bar to any judicial action pertaining to the City Manager's
decision.
(e) Hearings need not be conducted according to the technical rules relating to evidence and
witnesses. Government Code section 11513. subdivisions (a), (b) and (c) shall apply to hearings under this chapter.
(0 Oral evidence shall be taken only upon oath or affirmation.
(g) Each party shall have these rights:
I. To call and examine witnesses on any matter relevant to the issues of the hearing;
2. To introduce documentary and physical evidence;
3. To cross-examine opposing witnesses on any matter relevant to the issues of the hearing;
4. To impeach any witness regardless of which party first called the witness to testifY;
5. To rebut the evidence presented against the party; and
6. To represent himself, herself. or itself or to be represented by anyone of his. her, or its choosing.
regardless of whether the person is an attorney.
(h) In reaching a decision after reconsideration, otlicial notice may be taken. either before or after
submission of the case for decision. of any fact that may be judicially noticed by the courts of this state or that may
appear in any of the official records of the City or any of its departments.
(i) [fit is shown. by clear and convincing evidence. that one or more grounds exist to deny, suspend,
revoke, or not renew a dispensary permit, the City Manager shall uphold the original decision. The decision of the
City Manager shall be in writing and shall contain findings of fact and a determination of the issues presented.
U) The. decision shall inform the appellant that the decision is a final decision and that the time for
judicial review is governed by California Code of Civil Procedure Section 1094.6. Copies of the decision shall be
delivered to the parties personally or sent by certified mall to the address shown on the appeal. The decision shall be
linal when signed by the hearing examiner and served as provided in this section.
(k) Written notice of the decision of the City Manager shall be served on the applicant within ten days
following the hearing.
7
4.20.120 .Judicial Review.
Judicial review of a final decision after reconsideration may be had by filing a petition for a writ of mandate
with the Superior Court in accordance with Code of Civil Procedure section 1094.5 and 1094.6. Any such petition
shall be filed within ninety (90) calendar days after the day the decision becomes final.
4.20.130 Commencement of Operations; Plan Submilslon Requirements.
(a) A permitted dispenS8l)' shall provide the following to the City within 45 days of commencing
operations:
I. Accessibility Plan. A written evaluation of accessibility by the physically disabled to and within
the building and identification of any planned accessibility improvements to comply with all state and federal
disability access laws, including, but not limited to, Title 24 of the California Code of Regulations and the
Americans with Disabilities Act. The evaluation must be prepared by a licensed civil engineer or architect.
2. Security Plan. A security plan, prepared by a qualified professional, outlining the measures that
will be taken to ensure the safety of persons and to protect the dispensary property from theft.
3. Floor Plan. A scaled floor plan for each level of the entire building showing the interior
confib'llration of the dispensary building, including a statement of the total floor area occupied by the dispensary.
The "floor plan must include entrances, exits, restroQms, waiting area, otlice space, storage, and area for distributing
Imarijuana to members. The flQQr plan must be prepared by a licensed civil engineer or architect.
4. Site Plan. A scaled site plan Qf the parcel of real property on which the dispensary building is
located, including the outline of all structures, driveways, parking and landscape areas, and ooundaries of the parcel.
The site plan must be prepared by a licensed civil engineer or architect.
5. Neighborhood Context Map. An accurate straight-line drawing depicting the boundaries of the
dispensary property, the ooundaries of all other properties within 1000 feet of the dispensary property. The map
must be prepared by a licensed civil engineer or architect.
6. Lighting Plan. A lighting plan showing existing and proposed exterior and interior lighting levels
that would be the minimum necessary to provide adequate security lighting for the use.
7. A copy of the dispensary's commercial general liability insurance policy.
(b) [fthe applicant fails to submit any of the information required by this section by the deadline. the
City Manager shall notify the dispensary to cease operations until the information is submitted.
4.20.140 Operating Requirements.
A medical marijuana dispensary, once permitted by the City Manager, shall meet the following operating
standards:
(a) A medical marijuana dispel1sary shall be open for business only between the hours of9:00 a.m. and
10:00 p.m. on any particular day.
(b) A medical marijuana dispensary shall maintain a current register of the names of all employees
employed by the medical marijuana dispensary.
(c) A medical marijuana dispensary shall maintain a current register of all qualified patients, persons
with identitication cards and primary care givers to whom it provides or distributes medical marijuana. Once
documented the qualified patients, persons with identification cards and primary caregivers shall be "members" of
the medical marijuana dispensary. The medical marijuana dispensary shall further maintain records of all patients
and primary caregivers using the identification card number only when issued by the county, or its agent, pursuant to
California Health and Safety Code section 11362.7 e4 seq .. so as to a protect the confidentiality of the cardholders, or
a copy of the written recommendation from a physician stating the need for medical marijuana.
(d) The building entrance to a medical marijuana dispensary shall clearly and legibly have posted a
notice indicating that persons under the age of eighteen (18) years are precluded from entering the medical
marijuana dispensary, unless they are a qualified patient and accompanied by their parent or guardian.
(e) No marijuana shall be smoked, ingested or otherwise consumed on the premises of the medical
marijuana dispensary. The term "premises" includes the actual building, as well as any accessory structures, parking
areas, or other immediate surroundings. Notice shall be clearly and legibly posted within the premises of a medical
marijuana dispensary that smoking, ingesting or consuming marijuana on the premises of the medical marijuana
dispensary or in the vicinity of the medical marijuana dispensary is prohibited
(t) Any cultivation of medical marijuana or processing of medical marijuana conducted by the
medical marijuana dispensary shall at all times occur in a secure, locked, and fully enclosed structure,
including a ceiling, roof or top.
8
(g) No medical marijuana dispensary shall sell, provide or dispense alcoholic beverages at the medical
marijuana dispensary.
(h) A medical marijuana dispensary shall provide adequate security on the medical marijuana
dispensary premises, including lighting and alarms, to ensure the safety of persons and to protect the premises from
theft.
(i) A medical marijuana dispensary shall provide litter removal services once during each day of
operations on and in front of the premises and, if necessary, on public sidewalks within one hundred (100) feet of
the medical marijuana dispensary premises.
(j) A medical marijuana dispensary shall not cultivate, distribute or sell medical marijuana for a profit.
A medical marijuana dispensary may receive compensation for its actual expenses, including reasonable
compensation for service provided, or for payment of out-of-pocket expenses incurred in providing those services.
However, any such medical marijuana dispensary must pay the applicable sales or use tax on such sales or services
and maintain the applicable seller's permit or similar permit from the Stale Franchise Tax Board or other applicable
agency.
(k) A medical marijuana dispensary shall meet all of the operating criteria for the dispensing of
medical marijuana required by California Health and Safety Code sections 11362.5 and I 1362.7 el seq.
(I) A medical marijuana dispensary shall comply with all applicable laws and regulations related to the
A'lmericans with Disability Act.
Failure to comply with any of the above operating requirements shall result in the City of Palo Alto
informing the permittee of any violation of this chapter, and revocation of the medical marijuana permit ifthe
permittee does not remedy the violation within fourteen (14) calendar days.
4.20.150 Suspension· or Revocation o(Pennit.
The City Manager may suspend or revoke a dispensary permit if the permittee engages in any act or
conduct that would be grounds for denial of the permit in the first instance.
4.20.160 Term, RenewaIa and Fees.
(a) A medical marijuana dispensary permit shall be renewed annually, The City Manager shall renew a
medical marijuana dispensary permit unless grounds exist in this ordinance for denial of the permit.
(b) The City Manager shall renew each dispensary permit upon tender of a nonrefundable fee of ten
thousand dollars ($ I 0,000).
4.20.170 Zoning and Development Standards.
The provisions of Chapter 18.45 of Title 18 ("'Zoning") of the Palo Alto Municipal Code, adopted in this
ordinance, are applicable to medical marijuana dispensaries and compliance with those provisions shall be
considered additional requirements for issuance of a dispensary permit.
4.20.180 Minors.
(a) It shall be unlawful for any dispensary to employ, or allow to volunteer, any person who is under
the age of twenty-one (2 I).
(b) Persons under the age of eighteen (18) years shall not be allowed on the premises of a medical
marijuana dispensary unless they are a qualified patient and accompanied by their parent or guardian.
4.20.190 Display of Permit.
Every medical marijuana dispensary permittee shall display the medical marijuana dispensary permit at all
times during business hours. The dispensary permit shall be displayed in a conspicuous place so all persons entering
the medical marijuana dispensary may readily see the permit.
4.20.200 Location; Tran8fer of permits.
(a) A permittee shall not operate a medical marijuana dispensary under the authority of a medical
marijuana dispensary permit at any place other that the address of the medical marijuana dispensary stated in the
application for the permit.
(b) A permittee shall not transfer ownership or control of a medical marijuana dispensary permit to
another person unless and until the transferee obtains an amendment to the permit from the City Manager, which
shall not be unreasonably withheld, stating that the transferee is now the permittee. Such an amendment may be
obtained only if the transferee tiles an application with the City Manager in accordance with the provisions of this
Chapter, and the City Mangerdeternlines that the transferee meets all of the requirements of applicants pursuant to
this chapter.
9
(c) Any transfer or attempt to transfer a permit in violation of this section shall be void, and the
unlawfully transferred permit shall be deemed revoked by operation of law.
4.20.210 Operation Without. Permit.
The operation of a medical marijuana dispensary without first having obtained a permit from the City of
Palo Alto pursuant to the provisions of this chapter shall constitute a violation of this chapter and shall be deemed a
public nuisance.
4.20.220 Violations of Chapter; Enforcement.
(a) Any permittee who violates any provision of this chapter shall be given written notice of the
violation. Notice of the violation of any provision of this chapter shall be delivered to the permittee by overnight
mail. The permittee shall have fourteen (14) calendar days following notice of any violation of this chapter to cure
the violation prior to any penalty or adverse action being taken against the permittee.
(b) Any permittee who violates any provision ofthis chapter and fails to cure the violation within
fourteen (14) calendar days following notice of the violation shall be subject to a five hundred dollar ($500) fine for
each day the violation persists.
(c) Any permittee who violates any provision of this chapter and fails to cure the violation within
~irty (30) calendar days following notice of the violation shall be declared a public nuisance that may be summarily
mated by the City of Palo Alto pursuant to the Palo Alto Municipal Code.
SECTION 3: Title 18 ofthe Palo Alto Municipal Code is amended by adopting a new Chapter 18.45 to read as
follows:
Chapter 18.45 MEDICAL MARIJUANA DISPENSARIES.
18.45.010 Purpose and Intent.
(a) It is the purpose and intent of this ordinance to promote the health, safety, and general welfare of
the residents and businesses within tile City of Palo Alto by regulating the location and manner of development of
three medical marijuana dispensaries within the City. It is neither the intent nor effect of this ordinance to restrict or
deny qualified patients access to marijuana for medical purposes as intended by the passage of the Compassionate
Use Act of 1996, codified as Health and Safety Code section 11362.5-
(b) The Medical Marijuana Program Act of 2003, codified as Health and Safety Code section 11362.7
e/ seq., allows cities to adopt and enforce rules and regulations consistent with the Compassionate Use Act. The
impacts of medical marijuana dispensaries are documented in the "White Paper on Marijuana Dispensaries" published by the
CalifOrnia Police Chiefs Association's Task Force on Marijuana Dispensaries (ApriI22, 2009), and the United States
DepartmentofJustice's California Medical Marijuana Information report (October 19, 2009). The City of Palo Alto
does not condon~ or' condemn the use of marijuana: It is the intent of this chapter, however, to prevent secondary
adverse impacts brought about by the close proximity of medical marijuana dispensaries to incompatible uses, such
as schools, parks and residentially zoned districts and uses, while allowing for the location of medical marijuana
dispensaries in suitable areas. in compliance with Compassionate Use Act and the Medical Marijuana Program Act.
18.45.020 Definitions and Construction.
Any reference to California statutes includes any regulations promUlgated thereunder and is deemed to
include any successor or amended version of the referenced statute. All definitions set forth in Health & Safety Code
section 11362.7, as may be amended, including but not limited to the terms "attending physician," "person with an
identification card," "primary caregiver," "qualified patient," "identification card," and "serious medical condition,"
shall apply under this section in addition to the definitions set forth as follows: .
(a) "Applicant" means a person who tiles an applicarion for a medical marijuana dispensary permit
under Ihis chapter.
(b) "City Clerk" means the City Clerk for the City of Palo Alto or designee.
(.e) "City Manager" means the City Manager for the City of Palo Alto or designee.
(d) "Collective or Cooperative Cultivation" means the association within California of qualified patients,
persons with valid identification cards, and designated primary care givers to cultivate marijuana for medical purposes
as defined in strict accordance with California Health and Safety Code sections 11362.5 and 11362.7 el seq.
(e) "Cultivation of Medical Marijuana" means the growing of medical marijuana for medical purposes
in accordance with Health and Safety Code sections 11362.5 and 11365.7 el seq
(f) "Dispensary" shall have the same definition as "medical marijuana dispensary," as set forth in this
section.
(g) "Dispensary area" means the dispensary property and the area within 100 feet of the dispensary
property.
to
(h)
operated.
(i)
"Dispensary building" means the building or portion of a building within which a dispensary is
"Dispensary permit" means a medical marijuana dispensary permit.
(j) "Dispensary property" means the parcel of real property or portion of the parcel of real property
that is owned or leased by a dispensary and upon which a dispensary is operated.
lk) "Guidelines" means the "Guidelines For The Security and Non-Diversion of Marijuana Grown for Medical
Use," issued by the California Attorney General in August 2008, as may be amended from time to time.
(I) "Management member" means a member with responsibility for the establishment, registration,
supervision. or oversight of the operations of a medical marijuana dispensary, including but not limited to, a member
who is. or pertorms the func..1ions of, a board member. director, otlicer. owner. operating offi~er, or manager of the
dispensary.
(m) "Marijuana" shall have the same detinition as set torth in Health and Safety Code I \0 18.
(n) "Medical Marijuana" means marijuana used for medical purposes in accordance with Health and
Safety Code sections 11362.S and 11362.7 el seq.
(0) "Medical marijuana dispensary" means a cooperative or collective of four or more members who
" associate at a particular location or real property to collectively or cooperatively distribute marijuana to members for
t medical purposes, and operate on a not-for-profit basis. consistent with Califomia Health and Safety Code'section
11362.S and 11362.7 el.req.). the Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical
Use issued by the California Attorney General in August 2008, and this chapter. A medical marijuana dispensary
shall not include the following uses: a clinic licensed pursuant to Chapter I of Division 2 of the Health and Safety
Code; a health care facility licensed pursuant to Chapter 2 of Division 2 of the Health and Safety Code; a residential
care facility for persons with chronic life-threatening illness licensed pursuant to Chapter 3.01 of Division 2 of the
Health and Safety Code; a residential care facility for the elderly licensed pursuant to Chapter 3.2 of Division 2 of
. the Health and Safety Code; and a residential hospice or a home health agency licensed pursuant to Chapter 8 of
Division 2 of the Health and Safety Code, as long as any such use complies with applicable laws including. but not
limited to, California Health and Safety Code section 11362.5 and 11362.7 el ,req.), and the City of Palo Alto
Charter and Municipal Code.
(p) "Medical Marij uana Dispensary Permit" means a permit that authorizes a medical marijuana
dispenswy to operate within the City.
(q) "Member" means any qualified patient, primary caregiver, or person with an identification card
who is registered with a medical marijuana dispensary.
(r) "Operate a dispensary" means to engage in or conduct the business of a dispensary, including, but
not limited to, distributing medical marijuana and maintaining the facilities of a dispensary.
(s)
Palo Alto.
"Permittee" means a pelSOn that holds a valid medical marijuana dispensary permit from the City of
(t) "Person" means, without limitation, any natural individual, organization, firm, trust, common law
trust, estate, partnership of any kind, association, syndicate, club. joint stock company, joint venture, limited liability
company, corporation (including foreign, domestic, and nonprofit), municipal corporation (other than the City of
Palo Alto), cooperative, receiver. trustee. guardian, or other representative appointed by order of any court.
18.45.030 Pennitted Zones; Minimum Proximity; Other Requirements.
(a) Except as set forth in subsection (b) of this section, a medical marijuana dispensary shall be
allowed to operate in any commercial or industrial lone, or equivalent, in the City of Palo Alto.
(b) Notwithstanding subsection A of this Section, no medical marijuana dispensary shall be located:
I. Within 150 feet of any residential zone;
2. Within 600 feet of any public or private school; or
3. Within 500 feet of any public library, public park, licensed day care center, or substance abuse
rehabilitation center.
Subsections (b)I., (b)2., and (b)3. of this section shall be collectively known as "sensitive uses." The
distance between a medical marijuana dispensary and a sensitive use shall be measured in a straight line, without
regard to the intervening structures or objects, from the primary entrance of the medical marijuana dispensary to the
property line in which the sensitive use is located.
(c) A medical marij uana dispensary is not and may not be approved as an accessory use to any other
use permitted by the Palo Alto Municipal Code.
(d) No more than one medical marijuana dispensary may operate out of a single building.
11
SECTION 4: Liberal Construction. This ordinance shall be liberally construed to effectuate its purposes.
SECTlON 5: Severability. Should any provision or this ordinance, or its application to any person or
circumstance, be determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void,
that detemiination shall have no effect on any other provision of this ordinance or tbe application of this ordinance
to any other person or circumstance and, 10 that end, the provisions hereof are severable.
SECTION 5: Operative Date. This ordinance shall become operative on the next day following its adoption or
enactment.
12
· ._--------------.................................................................. .. -~:l~:~
~i~fJ~~Q-MtQ
Office of the City Clerk
ORDINANCE NO. 4422
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
DECLARING THE ESTABLISHMENT AND OPERATION OF
MEDICAL MARIJUANA DISPENSARIES TO BE A PROHIBITED
USE UNDER THE ZONING ORDINANCE, AND DECLARING THE
URGENCY THEREOF, TO TAKE EFFECT IMMEDIATELY
The City Council of the City of Palo Alto does ordain as
follows:
Si<:r!ON 1. Findings. The Council finds and declares:
A. In November 1996 the voters of the' State of California
approved an initiative measure known as Proposition 215, which
added Code Section 11362.5 to the California Health and Safety
Code. Proposit ion 215 created a defense to the criminal laws
forbidding possession and cultivation of marijuana, for persons
possessing or cultivating the drug for personal medical purposes
upon the written or oral reconunendation or approval of a physician.
The defense also extends to -the individual's primary caregiver as
defined by law.
B. Since enactment of Proposition 215, persons throughout
the State have expressed a desire to establish locations where
marijuana can be dispensed to those persons who qualify for its use
under state law. Because possession and cultivation of marijuana
was illegal until enactment of Proposition 215, cities and counties
had not addressed in their zoning and other regulations the
requirements for establishment and operation of facilities at which
medical marijuana would be dispensed. Some cities and counties
have responded to Proposition 215 by enacting ordinances which
establish new· zoning and police regulations governing medical
marijuana dispensaries, or impose a limited-term moratorium on the
opening of such facilities, to allow time for study and development
of appropriate regulations.
C. The District Attorney's Office of Santa Clara County
has announced its intent to inteipret Propertion 215 in a manner
which takes into account the humanitarian purposes of the
Proposition, allowing for some reasonable production and
distribution for medicinal purposes only. The nature and extent of
cultivation and distribution which may lawfully be undertaken by
private parties other than the medical marijua~a users themselves
is thus an open quest ion. Special zoning and perhaps other
regulations would therefore be necessary in order to adequately
control such uses in Palo Alto.
D. The State Legislature is currently considering bills
which would regulate the distribution of medical marijuana. Any
city regulations of such activities may. be required to be
consistent with such state laws, once enact~d.
1
P.O. Box 10250
Palo Alto, CA 94303
650.328.3631 fax
, ..... ~_:-i'F' _____________________________ _
~!~fJ~9J9/~JtQ
Office of the City Clerk
B. It is necessary for the preservation of the public
pea.ce, health and safety t.o enact as an urgency measure an
ordinance. declaratory of existing law, prohibiting the
establishment and operation of medical marijuana dispensaries. The
reasons for the urgency are as follows:
1. The City has in recent weeks received inquiries
about establishment of a medical marijuana dispensary in the City.
2. Such inqulr1es should be taken seriously,
inasmuch as nearby communities have also received such requests and
experienced high interest by persons wishing to establ ish such
facilities. The City of San Jose, ~or example, has recently
obtained a court order requiring closure of an illegal medical
marijuana dispensary, and is processing permit requests for two
other facilities for which applications were filed under a
recently-enacted ordinance regulating medical marijuana
dispensaries.
3. While the City's zoning ordinance (Title 18, Palo
Alto Municipal Codel allows various kinds of medical and related
uses as perm~tted or conditional uses in specified zoning
districts, it does not providl:: for the medicinal distribution of
marijuana. Because cu.ltivation and possession of marijuana in
California was illegal until passage of Proposition 215, facilities
dispensing medical marijuana are not an enumerated use under the
zoning ordinance.
4. Experience in other communities suggests th~t a
number of regulatory issues should be carefully considered prior to
allowing establishment of medical marijuana dispensaries in order
to prevent crime and ensure compatibility with other uses,
including residential uses and schools. These issues include
security requirements, appropriate zoning designations and
development standards,and monitoring and reporting requirements.
Study of these issues and development of recommendations will
require prioritization with other projects currently being
undertaken by the Police Department and the Department of Planning
and Community Environm~nt.
5. Because dispensation of medical marijuana is not
an activity currently addressed in the MUnicipal Code, the City can
expect to experience enf~rcement problems if persons attemp~ to
dispense medical marijuana in Palo Alto, in the absence of
regulations specifically governing such uses.-In light of the
expressed interest in establishing a medical marijuana dispensary
in Palo Alto, and the time requiJ:·ed to study and develop
appropriate regulations, an urgency ordinance is necessary to
provide a clear statement of existing law and to protect the public
peace, health and safety.
SBCTION ~ . pef initions . F0r the purposes of th.is
Ordinance, the following definition shall apply:
2
p.o. Box 10250
650.329.2571
650.328.3631 fax
P-----~--------------------------------------------------------------------,
C!~fI~~Q!\li9
Office of the City Clerk
ti" ~' .... ~ ....... 1--"'; fl.'; l\t "~" ,t.·
"Medical Marijuana Dispensary" is a fac.~lkY~.r.e markJ ...... , "
is made available for medical purposes in accordance -wlth .. 1Walth; ;'j
and Safety Code Section 11362.5 (Proposition ~l5*)r. ;,·Ttfi8'~oe.!1idt:·,"~
include the cultivation or possession of "lrla:rij'uana:~"'''by.~~l:9'<~J
patient or carggiver, for medical use in acco~ce with Health and
Safety Code Section 11362.5. ,tI, .. ~, .. >".:." • ., .. ,. ,' •.. ,,'
~~~ C 4 .. -"'II .••• ,.:~.\.~ .. ~t'i ••.. "':-
SECT10N-l.
• 4 ••• } .. ~ • ~Y"'.J.. istgblishment and Oper:ation Prohibited: .'
(a) No person shall operate • o~'~ ali;-\r 'or ~ffe;~:fte' . ~
operation of a Medical Marijuana Dispensary within the City of Palo
Alto.
(b) No permit or certificate of use and occupancy shall ba
issued for a Medical Marijuana Dispensary.
(c) This section is declaratory of existing law.
SECT.lQN 4.. Effective Dgte. This ordinance shall be
effective immediately upon adoption.
SECTIQN 5. The Council tinds that. this project is
exempt from the provisions of the Em'-ironmental Quality Act ("CEQA")
because it can be seen with certainty that there is no possibility
that/this project, which consists of a declaration of existing law,
will have a significant effect on the environment.
This ordinance was passed at a regular meeting of the
Council of the City of palo Alto on Monday, June 9, 1997, and was
passed by a four-fifths vote of all Council members present at the
meeting as follows:
INTRODUCED AND PASSED: June 9» 1997
AYES: EAKINS, FAZZINO, HUBER, MCCOWN, ROSENBAUM. SCHNEIDER, WEELEIl
NOES:
ABSTENTIONS:
ABSENT: ANDERSEN. KNISS
A~
/0.-1-< {bffdiu ~" Ci't~. Cler
970603bdc 0080520
3
ector of Planning and
Community Environment
P.O. Box 10250
Palo Alto, CA 94303
650.328.3631 fax
, , --------------------------------------------
C!ty9f):~9JQ_Al!Q
Office of the City Clerk
P.O. Box 10250
Palo Alto, CA 943Q~ ___ _
650.329.2571
650.328.3631 fax
The following message is being sent on behalf of the Medical Marijuana Committee of the City Attorneys'
Department of the League:
On January 19, 2012, the California Supreme Court granted review in four cases involving cities'
regulation of medical marijuana dispensaries/collectives. The cases are as follows:
• Pack v. Superior Court (2011) 199 Cal. App. 4th 1070 ("Pacl<') (Long Beach's
ordinance allowing dispensaries subject to permit provisions, application fee,
renewal fees, and lottery system for permits were preempted by the federal
Controlled Substances Act).
• City of Riverside v. Inland Empire Patient's Health & WeI/ness Center, Inc. (2011)
200 Cal. App. 4th 885 ("Riverside") (Riverside's zoning ordinance banning
dispensaries was a lawful regulation and restriction on the location and
establishment of dispensaries, and was not preempted by the Compassionate
Use Act of 1996 ("CUA"), Health & Safety Code § 11362.5, or the Medical
Marijuana Program Act ("MMPA"), Health & Safety Code §§ 11362.7-11362.83).
• People v. G3 Holistic (2011) 2011 Cal. App. Unpub. LEXIS 8634 ("G3") (Upland's
zoning and business license ordinance banning dispensaries was not preempted
by the CUA or the MMPA).
• Traudt v. City of Dana Point (2011) 199 Cal. App. 4th 886 ("Traudf') (an
individual dispensary patron does not have standing to challenge Dana Point's
zoning ordinance prohibiting cooperative or collective entities engaged in the
production and distribution of marijuana to their members for medicinal
purposes).
This memorandum sets forth the Committee's preliminary observations in response to the grant of
review in these four cases. This memorandum is provided for general information only and is not
offered or intended as legal advice. Readers should seek the advice of an attorney when confronted
1
with legal issues and attorneys should perform an independent evaluation of the issues raised in this
memorandum.
1. The legal effect of the Supreme Court's order granting review is to effectively
depublish those appellate decisions that had been published.
A Supreme Court order granting review has "the effect of depublishing" the Court of Appeal's
decision. (See, e.g., Quintano v. Mercury Casualty Co. (1995) 11 Cal.4th 1049,1067, fn.
6.) Unpublished California appellate decisions may not be cited in or relied on by any court. (Cal.
Rules of Court, Rule 8.1115.) Thus, the Pack, Riverside and Traudt decisions may no longer be cited
or relied on. The G3 decision, previously unreported, remains so. None of the four has any
precedential value until the Supreme Court issues a decision.
2. Do cities still have authority to enact dispensary prohibitions following the order
granting review in Riverside? Yes.
Following the Court of Appeal's decision in Riverside, cities had clear authority to adopt zoning
provisions prohibiting dispensaries outright, without concern of CUA or MMPA preemption. The
question arises whether, in light of Riverside's effective depublication, cities still may adopt such a
permanent prohibition. (Because it was unpublished even before the Supreme Court granted review,
G3 never provided precedential authority.) Answering this question requires resort to both the
decisional law prior to Riverside, as well as statutory changes since.
The case law decided prior to Riverside and G3 strongly suggests that the answer is "yes." County of
Los Angeles v. Hill (2011) 192 Cal.App.4th 861 ("Hilt') involved an ordinance that prohibited
dispensaries without a permit, not a permanent total prohibition, and City of Claremont v. Kruse
(2009) 177 Cal.App.4th 1153 ("Kruse") involved a temporary as opposed to a permanent
prohibition. Both cases upheld the challenged ordinances against claims that they were preempted
by the CUA and MMPA.
Following these decisions, marijuana advocates argued that neither Hill nor Kruse would support a
total permanent prohibition against preemption challenge. Without engaging in an extended
discussion of this issue, it is the consensus view of the Committee that the analysis and conclusions
in both Hill and Kruse would apply with equal force to ordinances imposing total permanent
prohibitions.
In addition, the 2011 statute, AB 1300, amended part of the MMPA, Health & Safety Code §
11362.83, to explicitly authorize the enactment and civil and criminal enforcement of local laws
regulating dispensaries. That section now provides:
Nothing in this article shall prevent a city or other local governing body from adopting
and enforcing any of the following: (a) Adopting local ordinances that regulate the
location, operation, or establishment of a medical marijuana cooperative or
collective. (b) The civil and criminal enforcement of local ordinances described in
subdivision (a). (c) Enacting other laws consistent with this article.
(This Amendment of Section 11362.83, and its reference to civil and criminal enforcement, were in
response to the issue considered in Qualified Patients Assn. v. City of Anaheim (2010) 187
Cal.App.4th 734 ("Qualified Patients").)
2
The Hill Court considered similar language in Section 11362.768 ("Nothing in this section shall
prohibit a [county] from adopting ordinances or policies that further restrict the location or
establishment of a medical marijuana ... dispensary .... "). Hill held that this language authorized not
only local regulations allowing dispensaries, but also those prohibiting those that have not complied
with permit requirements. (192 CaLApp.4th at 868.) Even after the grant of review in Riverside, Hill
remains good law. Again, although Hill involved a prohibition only against non-permitted
dispensaries, and not a total permanent prohibition, the Committee's view is that Hill's analysis in this
regard will apply with equal force to whether Section 11362.83 authorizes total permanent
prohibitions. It unquestionably allows regulations similar to those in Hill.
3. Do cities have authority to enact and enforce ordinances allowing dispensaries
subject to permit. fee, operational and other regulations following grant of review in
Pack? The answer is unclear, and there are risks in doing so.
The Committee set forth its observations with respect to the effect of the Court of Appeal's decision in
Pack in its memorandum dated October 26, 2011, which is available on the League's
website. (http://www.cacities.org/resource files/30268.Pack%20Memo Final· 2011.10.26.pdf.) The
memorandum raised and answered several questions.
Most prominently, the memorandum concluded that under Pack, cities no longer could require a
permit as a condition of operating a dispensary or collective. Nor could cities adopt or enforce zoning
or business license ordinances that effectively "authorize" dispensaries or make dispensaries
permitted or "enumerated" uses.
Following the grant of review in Pack, there is currently no reported appellate authority precluding
such ordinances. In addition, prior to Pack, the appellate courts that had in some manner considered
an argument that the federal CSA preempts the CUA and/or MMPA had rejected it (albeit in different
contexts not involving a local ordinance allowing marijuana dispensaries). (See, e.g., Qualified
Patients, 187 CaLApp.4th 734; County of San Diego v. San Diego NORML (2008) 165 CaLApp.4th
798; County of Butte v. Superior Court (2009) 175 CaLApp.4th 729; City of Garden Grove v. Superior
Court (2007) 157 Cal.App.4th 355.) (This point is noted in the City Attorney's Municipal Law
Handbook.)
The recent amendment of Section 11362.83, discussed above in the context of local prohibitions, also
bears on the issue. Clearly, Section 11362.83 expresses the Legislature's intent that cities be
allowed to regulate the operation of dispensaries.
The Committee's view, however, is that cities nevertheless should remain cautious in recognizing that
neither the effective depublication of Pack following the grant of review, nor AB 1300's amendment of
Section 11362.83, eliminates the strong possibility that claims of federal preemption will continue to
be made. Moreover, if the Supreme Court ultimately upholds the Pack Court of Appeal's decision and
analysis, cities with regulatory ordinances permitting dispensaries will again face the risks and
concerns (e.g. arguments about fees already collected, vesting for operators previously granted
permits) that followed the issuance of the Pack decision last year. Moreover, the Committee cautions
cities to bear in mind that United States Attorneys have continued to enforce the CSA against
dispensary operations in various parts of the state, and have in some instances threatened
enforcement against local government. Those issues are not resolved either by the grant of review in
Pack or the amendment of Section 11362.83.
4. Pending the Supreme Court's further guidance, cities may look to violations of the
CUA and MMPA as a basis for enforcement.
3
, , Jn'light of the grant of review in the four cases, cities may want to consider regulatory/enforcement
approaches based on state rather than local law. Specifically, to the extent cities choose not to rely
on local ordinances prohibiting or regulating dispensaries, they may wish to focus efforts on
operations that do not comply with either the CUA or the MMPA. Dispensaries that do not strictly
comply with the CUA and the MMPA remain illegal under California law, and cities may prohibit their
operation on that basis. (See, e.g., People v. Mentch (2008) 45 C.4th 274; People v. Hochanadel
(2009) 176 Cal.App.4th 997.) Some cities have experienced success along such lines, and have
developed discovery requests (interrogatories etc.) aimed at determining whether a dispensary
operation does, in fact, satisfy the requirements of the CUA and MMPA. Other cities may wish to
consider using this approach to determine a disperi'sary's compliance with the CUA and MMPA.