As patients smoke or otherwise consume medical cannabis to alleviate nausea from chemotherapy or to cope with posttraumatic stress disorder, anxiety, or other disease or infirmity, most are unaware that their use of this drug is at the forefront of two significant legal conflicts: one between the United States and California, and the other between the state and local jurisdictions seeking to ban or regulate it. Prohibited by federal law, California grants limited immunity against criminal prosecution to certain qualified patients who use medical cannabis. While California has enacted laws to regulate medical cannabis, nearly half of its cities and counties have acted at the same time to ban cultivation and dispensaries. And, as if this matter were not sufficiently hazy, California voters approved Proposition ⁶⁴ (Adult Use of Marijuana Act) in November 2016 allowing the recreational use of cannabis by adults.

Nearly 50 years ago, President Richard Nixon declared a national “war on drugs” to address both civilian and Vietnam War veteran drug epidemics and set out to “consolidate various drug laws…provide meaningful regulation…prevent diversion into illegal channels, and strengthen law enforcement tools against the traffic in illicit drugs.” These efforts culminated in enactment of the Comprehensive Drug Abuse Prevention and Control Act of 1970. Title II of this act, the Controlled Substances Act (CSA), makes it unlawful to manufacture, distribute, dispense, or possess any controlled substance, even if based on medical necessity. Marijuana is listed as a Schedule I substance, which is described as having a high potential for dependency and no acceptable medical use. The possession, distribution, and cultivation of marijuana is a federal offense, except for certain limited research purposes. Like federal law, the California Uniform Controlled Substances Act prohibits the use, possession, cultivation, transportation, and furnishing of marijuana.

CSA vis à vis CUA Notwithstanding these prohibitions, California became the first state to remove obstacles preventing qualified patients from obtaining and using medical marijuana when voters approved Proposition 215, the Compassionate Use Act (CUA), in 1996. The CUA allows a patient’s personal use of marijuana for medical purposes upon a physician’s recommendation.⁷

In 2005, the U.S. Supreme Court in Gonzales v. Raich8 was asked to decide if Congress exceeded its authority under the commerce clause by categorically prohibiting the manufacture and distribution of marijuana under the CSA when this act was applied to intra-state regulation of the use of this drug for medical purposes as authorized by California law (i.e., the CUA). Respondents sought injunctive and declaratory relief prohibiting enforcement of the CSA after Drug Enforcement Administration (DEA) agents seized and destroyed their cannabis plants. As the Court’s majority acknowledged, each respondent asserted a compelling medical reason for using marijuana. In addition, the majority also noted that the DEA acted after county officials found their use of marijuana was lawful under California law.

The Supreme Court ruled that congressional authority under the commerce clause of the U.S. Constitution includes the power to prohibit the local cultivation and use of marijuana regardless of whether this complies with California law.9 Relying on its decision in Wickard v. Filburn,10 the majority held that Congress has the power under this clause to regulate an activity even if it is completely intrastate and not necessarily “commercial,” if that activity nevertheless has a substantial effect on interstate commerce. In Wickard, a farmer exceeded his wheat allotment under the Agricultural Adjustment Act of 1938 (AAA) arguing that Congress had no authority to regulate the excess wheat that he grew for home consumption. The Supreme Court upheld the AAA as a legitimate exercise of congressional authority to control the volume of wheat to avoid surpluses and control market prices. The Court applied this rationale in Raich by finding that “a primary purpose of the CSA is to control the supply and demand of controlled substances in both lawful and unlawful drug markets.”¹¹ Thus, “Congress had a rational basis for concluding that leaving home-consumed marijuana outside federal control would similarly affect price and market conditions.” ¹²

The majority also relied on its holding in United States v. Lopez in which the Court concluded that Congress only needs to present a rational basis to believe that the activity would affect interstate commerce. Here, “Congress had a rational basis for believing that failure to regulate the intrastate manufacture and possession of marijuana would leave a gaping hole in the CSA.”¹³

The fact that the CUA exempts the use for patients with a doctor’s prescription was not persuasive in Raich. The Supreme Court noted that “under California law the doctor’s permission to recommend marijuana use is open-ended.”¹⁴ Thus, this exemption “can only increase the supply of marijuana in the California market,”¹⁵ which was a primary concern in the Court’s commerce clause analysis.

On remand from the Supreme Court, the Ninth Circuit rejected the respondents’ remaining challenges to the CSA, finding the law does not violate substantive due process or impermissibly infringe upon California’s sovereign powers.¹⁶

Preemption

A significant issue neither raised nor discussed in Raich was preemption.17 As the California

Court of Appeal acknowledged:

The Raich court merely examined the validity of the CSA under the commerce clause; it did not go further and examine the relationship between the CSA and the CUA…[‘the Court’s holding in Raich did not address the preemption of the (CUA)’]…Raich ‘neither declared [the CUA] invalid on preemption or any other grounds nor gave any indication that California officials must assist in the enforcement of the CSA.’”¹⁸

On the contrary, the court stated that “in enacting the CSA, Congress made it clear it did not intend to preempt the states on the issue of drug regulation. Indeed, ‘[t]he CSA explicitly contemplates a role for the States in regulating controlled substances.’”19 The goal of Congress, in enacting the CSA, was to “combat recreational drug abuse and curb drug trafficking…not to regulate the practice of medicine, a task that falls within the traditional powers of the states.”²⁰

The California Court of Appeal has also construed the CUA as a “narrowly drafted statute designed to allow a qualified patient and his or her primary caregiver to possess and cultivate marijuana for the patients’ personal use.”²¹ This act does “not alter the other statutory prohibitions related to marijuana, including those that bar the transportation, possession for sale, and sale of marijuana. When the people of this state passed [the CUA], they declined to decriminalize marijuana on a wholesale basis.”²²

Medical Marijuana Program Act

Before Raich was decided, the California legislature enacted the Medical Marijuana Program Act (MMP)23 in 2003 granting further limited immunity from criminal prosecution for distribution, cultivation, and use of medical marijuana. As the court noted in People v. Urziceanu, the MMP was the legislature’s initial response to the directive in the CUA that it “implement a plan to provide for the safe and affordable distribution of medical marijuana to those patients who need it.”²⁴ “[T]he MMP is more broadly intended to protect a qualified patient ‘who transports…marijuana for his or her own personal medical use.’”²⁵ Under the MMP, the Department of Public Health (DPH) is required to maintain a voluntary program for issuing identification cards to qualified patients who are entitled to protection under Health and Safety Code Section 11362.5 and who are diagnosed and documented by a medical provider as having a serious medical condition as defined in the CUA.²⁶ With this card, patients may use medical marijuana and their legally designated primary caregivers may obtain access to nonprofit collectives and cooperative cultivation projects.27

California courts have upheld these limitations. In 2008, Roger Mentch sought to defend himself against charges of cultivating and possessing marijuana for sale by asserting that he was a “primary caregiver” under the CUA and MMP.²⁸ A “primary caregiver” is defined as “the individual designated by the person exempted under this section who has consistently assumed responsibility for the housing, health, or safety of that person.”²⁹ However, Mentch could only prove that he “took a ‘couple’ of patients to medical appointments on a ‘sporadic basis,’ and that he provided shelter to a patient when he was selling marijuana.”³⁰ Based on this, the California Supreme Court rejected his claim that he was a “primary caregiver.” As the Supreme Court stated:

While the [Medical Marijuana] Program does convey additional immunities against cultivation and possession for sale charges to specific groups of people, it does so only for specific actions; it does not provide globally that the specified groups of people may never be charged with cultivation or possession for sale. That is, the immunities conveyed by [Health and Safety Code] section 11362.765 have three defining characteristics: (1) they each apply only to a specific group of people; (2) they each apply only to a specific range of conduct; and (3) they each apply only against a specific set of laws.³

That same year, the California Department of Justice released the “Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use.”³² The guidelines explained the actions that qualified patients and primary caregivers must take to comply with the then applicable laws, including obtaining a doctor’s recommendation, receiving an identification card, and limiting patients to possessing no more than 6 mature or 12 immature plants. It also created a regulatory scheme permitting nonprofit collectives and cooperatives to operate legally, provided they complied with corporate formalities, required all members to complete a written application to participate in the purchase and sale, and prohibited purchase and sale to nonmembers.³³ Finally, the guidelines made clear that medical marijuana could not be smoked within 1000 feet of a school, recreation center, youth center, school bus, or moving vehicle,³⁴ and that storefront dispensaries engaged in mass production or illegal sales could be subject to seizure, arrest, or criminal prosecution.

Local Bans

While California voters and legislators support the limited use of medical cannabis, many local governments object to its use and have adopted bans based on their authority to regulate land use. As of January 2016, 43 percent of California cities have chosen to ban medical marijuana business operations within their jurisdictions.³⁵ Historically, land use regulation has been a function of local government under the grant of police power contained in the California Constitution: “A county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws.”³⁶

As the California Supreme Court stated in City of Riverside v. Inland Empire Patients Health and Wellness Center, Inc., “The inherent local police power includes broad authority to determine, for purposes of the public health, safety, and welfare, the appropriate uses of land within a local jurisdiction’s borders, and preemption by state law is not lightly presumed.”³⁷ The supreme court acknowledged that “a city’s or county’s power to control its own land use decisions derives from this inherent police power, not from the delegation of authority by the state.”³⁸ The legislature imposes a “minimum of limitation in order that cities and counties may exercise the maximum degree of control over local zoning matters.”³⁹

The decision in Riverside focused on whether the CUA and MMP preempted a ban in the City of Riverside on medical marijuana dispensaries. In enforcing this ordinance, the city brought a public nuisance action against a medical marijuana distribution facility operated by the defendants. The California Supreme Court affirmed the trial court’s issuance of a preliminary injunction barring the facility from distributing marijuana.⁴⁰

In analyzing whether local bans on dispensaries are preempted by state law, the supreme court stated that “local legislation that conflicts with state law is void.…” A conflict exists if the local legislation “duplicates, contradicts, or enters an area fully occupied by general law, either expressly or by legislative implication.”41 “Similarly, local legislation is ‘contradictory’ to general law when it is inimical thereto.”⁴²

In this instance, however, the CUA and the MMP were deemed not to preempt Riverside’s ban. On the contrary, no express conflict existed between the state’s medical marijuana statutes and the city’s action. Further, the court also found no implied conflict:

The MMP merely exempts the cooperative or collective cultivation and distribution of medical marijuana by and to qualified patients and their designated caregivers from prohibitions that would otherwise apply under state law. The state statute does not thereby mandate that local governments authorize, allow, or accommodate the existence of such facilities.⁴³

Accordingly, the supreme court held that “there appears no attempt by the’ legislature to fully occupy the field of medical marijuana regulation as a matter of statewide concern or to partially occupy this field under circumstances indicating that further local regulation will not be tolerated.”⁴⁴ Further, the court stated that “neither the CUA or the MMP expressly or impliedly preempts the authority of California cities and counties, under their traditional land use and police powers, to allow, restrict, limit or entirely exclude facilities that distribute medical marijuana, and to enforce such policies by nuisance actions.”45 There is thus no conflict between the state medical marijuana statutes and a city’s actions in prohibition as the state’s statutes “do no more than exempt specific groups and specific conduct from liability under particular criminal statutes.”⁴⁶

While this legal area evolves and the legislature and voters continue to expand the rights of medical cannabis patients, attorneys representing municipalities have authority that they and their clients can rely upon to support a ban on the sale, cultivation, and distribution of medical marijuana as a legitimate measure.

imate exercise of those jurisdictions’ broad police powers.

Alternatively, municipalities have the option to regulate and tax these businesses. Local regulation and taxation may be extensive. In exercising its land use authority, local governments may impose standards based on location and size and distance of use.⁴⁷ They may also conduct background checks, demand that business entities be fully insured and in good standing, and demonstrate the ability to indemnify the jurisdiction if any litigation or any adverse action arises from the medical marijuana business.⁴⁸ Also, the hours of operation and parking requirements may be strictly regulated. Further, a city wishing to regulate medical cannabis may benefit from sales tax, a special tax on medical marijuana related business, and development fees.⁴⁹

MMRSA

In an effort to adopt uniform standards where medical marijuana is permitted locally, Governor Edmund G. Brown signed three bills in 2015 that are collectively referred to as the Medical Marijuana Regulation and Safety Act (MMRSA).50 The MMRSA overhauled California law relating to the cultivation, processing, and distribution of medical marijuana to patients and caregivers.

The MMRSA grants regulatory and licensing authority to the Department of Food and Agriculture (DFA) for cultivation sites. This includes the establishment of “State cultivator license classifications,” which are described as “Type(s)” 1 to 4, regulating outdoor and indoor cultivation, square footage and natural versus artificial lighting requirements.⁵¹ Types: 3, 3A, and 3B are subject to a limited number of licenses to be issued by the DFA.52 The DFA has not yet determined the number of licenses that will be issued.

The MMRSA also regulates environmental impacts associated with cannabis cultivation and unlawful water diversions in coordination with the State Water Resources Control Board.⁵³ In addition, the Department of Pesticide Regulation must monitor appropriate pesticide tolerances on cannabis crops intended for human consumption.54 Further, as it relates to “edibles,”55 the DPH must develop standards for the production and labeling of edible medical cannabis products.56 A Medical Marijuana Regulation and Safety Act Fund was created to receive fines and civil penalties for specified violations57 to be appropriated by the legislature in the future.

The MMRSA initially provided that DFA would be the sole licensing authority for cultivation applications if local governments did not adopt land use regulations or ordinances regulating or prohibiting this activity by March 1, 2016.58 However, this deadline has now been superseded.⁵⁹

The MMRSA60 requires the issuance of both a state and local license to cultivate medical marijuana. A license is valid for 12 months from the date of issuance.61 Any facility operating in compliance with a local zoning ordinance on or before January 1, 2018, may continue operating until state licensing authorities approve or deny its application for licensure. Also, any licensee granted a license by a local jurisdiction that demonstrates that it is in good standing with that agency by January 1, 2016, will receive priority from the state.62

The act also created a Bureau of Medical Cannabis Regulation (BMCR) within the California Department of Consumer Affairs. The BMCR oversees the overall regulatory scheme and establishes minimum health and safety and testing standards. It also requires the Board of Equalization, in consultation with DFA, to adopt a system for reporting the movement of commercial cannabis and cannabis products. In this regard, the MMRSA requires that transporters be bonded and insured, and that they adhere to minimum security requirements for the commercial transportation and delivery of medical cannabis products.⁶³ The MMRSA also clarifies that for-profit entities may now be qualified to engage in the medical marijuana business.64

In addition, the MMRSA also sets forth criteria for licensing medical marijuana businesses, regulating physicians and their recommendations of medical cannabis, and recognizes local authority to levy taxes and fees under a unique identifier and track and trace program.65 The BMCR will begin issuing licenses on January 1, 2018. The governor’s administration plans to actively engage with local governments and local law enforcement in implementing the MMRSA.⁶⁶

Federal Enforcement

The legal quagmire over medical marijuana has been exacerbated by a change in federal enforcement policy. In 2013, the U.S. Department of Justice (DOJ) issued a document entitled “Guidance Regarding Marijuana Enforcement.”⁶⁷ In the guidance, the DOJ reiterated its primary objectives to prevent marijuana from being distributed to minors and to thwart criminals from earning revenues from its sale. The DOJ maintains that “[t]he CSA’s prohibitions on the possession, distribution, or manufacture of marijuana remain fully enforceable in this jurisdiction,”68 including California. However, in exercising its prosecutorial discretion, the DOJ has not prosecuted marijuana users and businesses, provided they comply with state and local laws.

The DOJ relies on state and local law enforcement to address marijuana activity through enforcement of their own narcotics laws.⁶⁹ To further complicate the situation, the Ninth Circuit in United States of America v. McIntosh held in August 2016 that the DOJ is prohibited “from spending funds…for the prosecution of individuals who engaged in conduct permitted by the State Medical Marijuana Laws and who fully complied with such laws.”70 The court in McIntosh relied on the Consolidated Appropriations Act, 2016,71 which “prohibits the Department of Justice from spending funds to prevent states’ implementation of their medical marijuana laws.”⁷² The appellate court ruled that “the Appropriations Clause constitutes a separation-of-powers limitation that Appellants can invoke to challenge their prosecutions.”⁷³ Consistent with this decision, the U.S. attorney in the Northern District of California dismissed a complaint with prejudice in November 2016 against a collective in Oakland that sells cannabis to more than 100,000 patients.⁷⁴

This hands-off policy by the federal government appears to be consistent with the trend as more states and cities legalize medical cannabis. However, there is no guarantee that the federal government will continue with this liberal policy. Vested interests should be aware that the federal statutes of limitations may range from five to 10 years; thus, it is possible that those engaging in medical marijuana-related businesses could be prosecuted by the federal government in the future.

Attorneys may take sanctuary in the fact that the Los Angeles County Bar Association Professional Responsibility and Ethics Committee has opined that a member does not violate the California Rules of Professional Conduct or the California State Bar Act by advising or assisting clients who wish to engage in medical marijuana and related business activities.⁷⁵

Proposition 64

As if use of marijuana for medical purposes did not already present a myriad of legal challenges, law enforcement and local government will now be further challenged by Proposition 64. Under this recent voter-approved initiative, possession of one ounce for recreational use is allowed, as is the cultivation of up to six plants per residence and the possession of the marijuana produced by these plants for adults 21 or older. Proposition 64 becomes effective on January 1, 2018.

This is also the date when the DFA is expected to issue licenses to marijuana retailers, distributors, and microbusinesses. Plants and harvest exceeding one ounce must be kept in a locked space not in public view at one’s residence. Local governments may still forbid cultivation outdoors but must allow it inside a private residence or accessory structure that is “fully enclosed and secure.”76 Also, under limited circumstances, local jurisdictions “may allow for the smoking, vaporizing, and ingesting of marijuana or marijuana products on the premises of a [licensed] retailer or microbusiness.”⁷⁷

Proposition 64 is not meant to interfere with the ongoing implementation of the CUA. Medical marijuana patients retain their existing rights under the CUA to possess and cultivate as much as they need for personal medical use so long as they have a doctor’s recommendation, irrespective of the Proposition 64 limits for adult users. Local governments may still restrict cultivation based on their land use and taxation authority, excluding the six indoor plant minimum allowed for personal use.

The administrative, statutory, and taxation scheme of Proposition 64 is complex and comprehensive.7 It imposes excise and cultivation taxes that will be distributed by the state controller to various interested public agencies and entities in the state. However, local governments may not be the recipient of grants that may assist with law enforcement, fire protection, or other local programs addressing public health and safety associated with Proposition 64 if they have banned cultivation for commercial or recreational use.⁷⁹

Enforcement of Proposition 64 presents unique challenges. For instance, smoking of cannabis is prohibited in “any public place.”⁸⁰ In addition, local governments may continue to enforce ordinances that regulate reduction of exposure to secondhand smoke or “contact high.”81 The enforcement of these provisions on private businesses and landlords and tenants of public housing is yet to be determined.

Fiscal Impact

State and local government anticipate a positive fiscal impact of Proposition 64, but the health and safety and public policy impacts are daunting.⁸² It is premature to estimate the exact fiscal impact or law enforcement problems associated with the few cities that have opted to regulate medical marijuana pursuant to the MMRSA, as they are still in the entitlement stage. The only likelihood is that medical marijuana is here to stay in one form or another subject to the broad police powers of local governments that can use that power to protect the public health, safety, and welfare of its constituents.

At the same time, however, the risk still exists that with the new presidential administration, Congress could restore funding for prosecution for violations of the CSA. Nevertheless, these prosecutions will not likely be at the forefront of the new administration. President Trump has inferred his deference to states in this public policy issue.⁸³ Further, the CSA was adopted during the Nixon era, when the war on drugs was paramount. It appears that regulation, not prohibition, is the wave of the future for voters and society-at-large, which Congress may seek to honor someday.