Medical Dispensaries, Hookah Bars, and Head Shops

Peter Spoerl Leah Peachey 555 12th Street, Suite 1500 Oakland, CA 94607 Tel: 510.808.2000 Fax: 510.444.1108 E-mail: [email protected] [email protected]

With offices in:

Sacramento Santa Rosa Los Angeles

Medical Marijuana Dispensaries, Hookah Bars, and Head Shops League of California Cities 2006 City Attorneys Spring Conference May 4, 2006

Medical Marijuana Dispensaries

State Law: The Compassionate Use Act (Prop 215) and the Medical Marijuana Program (SB 420)

In 1996, California voters enacted the Compassionate Use Act of 1996 (“Act”), now codified in Health & Safety Code Section 11362.5. The Act permits possession and cultivation of marijuana for limited medical treatment purposes, subject to certain conditions.

Effective January 1, 2004, the California Legislature enacted Sections 11362.7 through 11362.83 (“SB 420”), which creates a state-approved voluntary medical marijuana identification card program, establishes the quantity of marijuana that a qualified patient or primary caregiver may possess, and provides for additional immunities from state marijuana laws, among other provisions.

• Qualified Patient=not defined in Act, but SB 420 provides that a “qualified patient” is a person entitled to the protections of the Act, but who does not have an identification card1 2 o Act requires “written or oral recommendation or approval” from a physician o SB 420 requires participants in voluntary identification card program to provide written documentation by attending physician that medical marijuana is appropriate3

• Primary Caregiver=a person designated by the qualified patient “who has consistently assumed responsibility for the housing, health or safety” of the qualified patient4 o No limit to the number of patients a primary caregiver may serve, so long as all patients “reside in the same city or county” as the primary caregiver5

• State-Approved Identification Card Program: SB 420 establishes voluntary identification card program to be administered by State Department of Health Services,6 and requires county health departments, or county’s designee, to provide and process application forms and issue cards.7

• Quantity of Marijuana: SB 420 limits the amount of marijuana a patient or primary caregiver may possess to no more than 8 ounces dried marijuana, plus 6 mature or 12 immature marijuana plants. 8 9 o Cities may increase the limits above those established by SB 420

• Collectives: SB 420 provides that qualified patients and primary caregivers shall not be subject to criminal sanction solely because they meet “collectively and cooperatively to cultivate marijuana for medical purposes.”10

1 Health & Saf. § 11362.7(f) 2 Health & Saf. § 11362.5(d) 3 Health & Saf. § 11362.715(a)(2) 4 Health & Saf. § 11362.5(e) 5 Health & Saf. § 11362.7(d)(2) 6 Health & Saf. § 11362.71 7 Health & Saf. §11362.71(b) 8 Health & Saf. §11362.77(a) 9 Health & Saf. §11362.77(c) 10Health & Saf. §11362.775

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Federal Law: The Controlled Substances Act

The Controlled Substances Act (CSA) makes it “unlawful for any person knowingly or intentionally to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance.”11 Although there are exceptions to this prohibition, the only exception available to categorized as “schedule I” drugs is for government-approved research projects.12 Marijuana is categorized as a “schedule I” under the CSA.13 Federal law does not prohibit the simple possession or use of marijuana, because it acts pursuant to the Commerce Clause power.

• Federal Preemption of the Act: The Supreme Court has not addressed whether the Compassionate Use Act or any other state medical marijuana laws are preempted by federal law.

• No medical necessity exemption to CSA: The Ninth Circuit recognized an implied “medical necessity” exception to the Controlled Substances Act,14 but the Supreme Court overturned the Ninth Circuit and held that “a medical necessity exception is at odds with the terms of the Controlled Substances Act.”15 The Court reasoned that marijuana is classified as a “schedule I” drug, and as such, the only exception to its prohibition is for government-approved research projects.

• CSA as Applied to Intrastate Medical Marijuana Growers does not Violate Commerce Clause: Angel Raich and Diane Monson argued that the Controlled Substances Act as applied to intrastate manufacture and possession of marijuana for medical purposes exceeds the Commerce Clause power.16 The Court held that Congress may regulate a purely local activity when the failure to regulate that activity “would undercut the regulation of the interstate market in that commodity.”17 The Court analogized the cultivation and use of medical marijuana to a 1942 Supreme Court case involving the cultivation of wheat for consumption on a farm. 18

o Appeal of Raich: Raich has filed an appeal with the Ninth Circuit, which heard argument on the appeal on March 27, 2006. In her opening brief, appellant argues that the application of the CSA to her use of medical marijuana violates the Tenth Amendment by controlling California’s regulation of private parties’ medical practices, among several other arguments.

Options for Cities in Addressing Medical Marijuana Dispensaries

1. Adopt or Extend a Moratorium on Dispensaries a. 56 California cities and 6 California counties with moratoria19

2. Adopt an Ordinance Requiring Land Uses to be Consistent with State and Federal Law

11 21 U.S.C. § 841(a)(1) 12 21 U.S.C. §823(f) 13 21 U.S.C. § 812(c) 14 U.S. v. Oakland Buyers’ Cooperative (9th Circuit 1999) 190 F.3d 1109, 1115. 15 U.S. v. Oakland Cannabis Buyers’ Club (2001) 532 U.S. 483. 16 Gonzalez v. Raich (2005) 125 S.Ct. 2195. 17 Id. at p. 2206. 18 Wickard v. Filburn (1942) 317 U.S. 111. 19 Information obtained from Americans for Safe Access Website, www.safeaccessnow.org.

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3. Adopt a Zoning Ordinance Regulating Dispensaries a. 23 California cities and 3 California counties with established ordinances (may be zoning, regulatory or combination)20 b. Zoning ordinance may limit location of dispensaries to certain land use designations (i.e. Industrial, commercial, etc.) c. Zoning ordinance could require conditional use permit for dispensaries, allowing the city to review and approve the proposed facility subject to conditions imposed by city

4. Adopt a Regulatory Ordinance Regulating Dispensaries a. Regulatory ordinance may contain the following: i. Require a business license ii. Require special permit involving background checks for dispensary participants iii. Impose permit fee iv. Limit total number of dispensaries within the city v. Impose distance restrictions on dispensaries (i.e. dispensary shall not locate within 1,000 feet of another dispensary and/or school) vi. Limit the number of plants that can be kept in the facility per patient (for example 6 mature plants and 12 immature plants) vii. Limit the hours of operation viii. Restrict signage on the dispensary ix. Limit patients served by the dispensary to residents of the county (or perhaps, the city?) within which the dispensary is located x. Require a safety and security plan approved by the police department xi. Impose documentation requirements on dispensary participants

5. Amend Zoning Ordinance to Prohibit Dispensaries a. 19 California cities and 2 California counties with bans21 b. Medical Marijuana Advocacy group Americans for Safe Access sued the cities of Concord, Fresno, Pasadena, and Susanville i. Americans for Safe Access v. City of Concord: Americans for Safe Access voluntarily dismissed its complaint against Concord in response to Concord’s demurrer. 1. Safe Access argued: State preemption of local laws under California Constitution Article 11, section 7; Act and SB 420 create a right to form collectives and operate dispensaries; Act and SB 420 not preempted by the CSA; among other arguments 2. Concord argued: City has constitutional police power to pass ordinances prohibiting conduct deemed harmful or offensive by city council; CSA expressly preempts Act and SB 420; CSA also preempts Act and SB 420 under conflict preemption principles; courts give “considerable weight” to views of federal agency charged with administering federal law and Drug Enforcement Agency maintains that state laws like the Act and SB 420 impede enforcement of CSA; among other defenses

20 Information obtained from Americans for Safe Access website, www.safeaccessnow.org. 21 Information obtained from Americans for Safe Access web site, www.safeaccessnow.org.

Page 4 o f 7 Medical Marijuana Dispensaries, Hookah Bars, and Head Shops League of California Cities 2006 City Attorneys Spring Conference May 4, 2006 ii. Americans for Safe Access v. City of Fresno: Case is stayed while Fresno amends its ordinance. Fresno’s position is that the medical marijuana statutes do not require cities to license medical marijuana dispensaries; rather the statutes merely exempt qualified patients and primary caregivers from liability if they choose to posses, cultivate, grow it collectively. iii. Status on other cases?

Hookah Bars

City Authority to Regulate Use

• Constitutional Police Power22: Regulation of protects the health and safety of the local residents, and is a valid exercise of police power.23

• Statutory Authority: The California Indoor Clean Air Act authorizes local governments to regulate or ban completely the smoking of tobacco, so long as consistent with state law.24 The Clean Air Act not only declares the California Legislature’s intent not to preempt the field of tobacco smoking regulation,25 it expressly permits local ordinances to go beyond State law in regulating tobacco use.26

Regulating Smoking in “Places of Employment”

• Labor Code Prohibition: The Labor Code prohibits tobacco smoking in “places of employment,” but exempts 14 types of establishments from the definition of “place of employment.”27 When an establishment falls outside the definition of a “place of employment” the Labor Code expressly empowers the local government to regulate tobacco smoking in such an establishment.28

o Long-Term Health Care Facility Exemption: The Court of Appeals upheld San Jose’s smoking ordinance, which prohibited tobacco use in “all enclosed areas of buildings which are open to the public or which are places of employment.”29 The Department of Health Services sued when San Jose enforced ban at Westgate Convalescent Center, claiming that San Jose’s ordinance was preempted by the Labor Code. The Court reasoned that the Westgate Convalescent Center was a “long-term health care facility” and thereby exempt from the definition of “place of employment.” Therefore, the Labor Code, by its own terms, empowered San Jose to regulate tobacco smoking at the convalescent center.

o Retail Tobacco Shops Exemption: Hookah bars fall outside of the definition of “places of employment” under the Labor Code as “retail or wholesale tobacco shops and private smokers’ lounges.”30 Consequently, they are subject to local regulation.

22 Cal. Const., art XI, § 7. 23 City of San Jose v. Dept. of Health Services (1998) 66 Cal.App.4th 35. 24 Health & Saf. §118910 25 Health & Saf. §118910 26 The Health & Safety Code provides: “This article does not preempt any local ordinance on the same subject where a local ordinance is more restrictive to the benefit of the nonsmoker.” (§ 118940.) 27 Lab. Code § 6404.5(d) 28 Lab. Code § 6404.5(a) and (i) 29 City of San Jose, supra, 66 Cal.App.4th at p. 42. 30 Lab. Code §6404.5(d)(4)

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Head Shops

Head Shop (a.k.a. Smoke Shop)= “retail outlet specializing in paraphernalia related to consumption of cannabis, other recreational drugs, and New Age herbs, as well as generally selling art, magazines, music, clothing, and home décor. Products typically include water pipes (colloquially called ), clips, pipes, rolling papers, rolling machines, scales or balances, whipped-cream chargers (which contain ), blacklight-responsive posters, , cigarette lighters, and products claimed to give false negative results for drugs on urinalysis tests.”31

State Statutes Regulating

• Pre-1983 Statutory Scheme Focused on Minors: makes it a misdemeanor to sell drug paraphernalia to minors32 and requires that businesses marketing drug paraphernalia to adults display it in separate rooms or enclosures from which minor are excluded33

• Post-1983 Statutory Scheme Regulates Drug Paraphernalia as to Adults and Minors:

o Prohibition as to Minors and Adults: “Except as authorized by law, any person who delivers, furnishes, or transfers, possesses with intent to deliver, furnish, or transfer, or manufactures with the intent to deliver, furnish, or transfer, drug paraphernalia, knowing, or under circumstances where one reasonably should know, that it will be used to plant, propagate, cultivate, grow, harvest, compound, convert, produce, process, prepare, test, analyze, pack, repack, store, contain, conceal, inject, ingest, inhale, or otherwise introduce into the human body a controlled substance, except as provided in subdivision (b), in violation of this division, is guilty of a misdemeanor [emphasis added].”34

o Drug Paraphernalia Definition= “all equipment, products and materials of any kind which are designed for use or marketed for use, in planting, propagating, cultivating, growing, harvesting, manufacturing, compounding, converting, producing, processing, preparing, testing, analyzing, packaging, repackaging, storing, containing, concealing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance in violation of this division.”35 . The definition provides a non-exhaustive list of 17 examples of drug paraphernalia, including kits designed for compounding controlled substances, roach clips, and bongs; as well as a set of criteria for courts to consider when determining what constitutes drug paraphernalia.36

31 Definition for “head shop” obtained from www.wikipedia.org. 32 Pen. Code § 308 33 Health & Saf. §11364.5 34 Health & Saf. § 11364.7 35 Health & Saf. §11014.5(a) 36 Health & Saf. §11014(a)

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State Preemption of Local Regulation of Drug Paraphernalia

• City of Escondido Drug Paraphernalia Ordinance: Escondido enacted an ordinance that required any person selling any item “designed or marketed for use with illegal drugs” to obtain a license from the City, pay a license fee, provide affidavits that each employee had never been convicted of a drug- related offence, and maintain records of the purchasers of such items.

o City Arguments: City ordinance does not contradict or duplicate state law because: 1) state statutes are silent as to licensing and record-keeping; 2) state’s statutory scheme specifically contemplates licensing by local governments, and 3) state law does not make all sales of drug paraphernalia unlawful due to the knowledge requirement imposed on retailers.

o Held: City’s ordinance is preempted because the Legislature’s addition to the statutory scheme regulating drug paraphernalia,37 effective in 1983, demonstrates the Legislature’s “intent to establish a total ban on the manufacture and distribution of drug paraphernalia in California, so as to occupy the entire regulatory field to the exclusion of local legislation.”38

820577v.1

37 Health & Saf. Code §§ 11014.5 and 11364.7 38 A&B Cattle Company of Nevada, Inc. v. City of Escondido (1987) 192 Cal.App.3d 1032,1041.

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