Public Agencies Should Consider Enacting Regulations Prior to November’s Election Day

By Jordan Ferguson.

California may soon join the growing number of states that allow recreational marijuana with the Control, Regulate, and Tax Adult Use of Marijuana Initiative (or Proposition 64) on the November ballot. The measure would legalize marijuana and hemp under state law. Portions of the measure could take effect as soon as the day after Election Day.

The potential for recreational legalization should cause local officials to rethink the way they currently approach marijuana laws and whether that approach should change before Election Day.

It aims to establish state agencies to oversee the licensing and regulation of a marijuana industry, enacting a sales tax of 15 percent and a cultivation tax of $9.25 per ounce for flowers and $2.75 per ounce for leaves, with exceptions for medical marijuana sales and cultivation. Proposition 64 is considered likely to pass, with recent polls indicating that roughly 60 percent of Californians support recreational legalization, and with a reported excess of 600,000 signatures on the initiative and financial backing of more than $2.25 million to date.

Around the country, the trend toward legalizing recreational use of marijuana is growing more popular. Recreational marijuana use is legal in Alaska, Colorado, Oregon, Washington and the District of Columbia. Eleven other states, including Nevada, Minnesota, New York, Maryland and Massachusetts, may be legalizing recreational marijuana in the near future. Beyond that, 24 states already allow medical marijuana to treat a variety of physical and psychological ailments.

Proposition 64 is endorsed by the Marijuana Policy Project of California and the National Organization for the Reform of Marijuana laws. If passed, it would legalize marijuana for those 21 years of age and over and would establish the Bureau of Marijuana Control within the Department of Consumer Affairs to regulate and license the marijuana industry.

Proposition 64 would allow local governments to “enforce state laws and regulations for nonmedical marijuana businesses and enact additional local requirements for nonmedical marijuana businesses, but not require that they do so for nonmedical marijuana businesses to be issued a state license and be legal under state law.” It would also allow local governments to ban recreational marijuana businesses entirely. With respect to cultivation, Proposition 64 would allow local governments to “reasonably regulate” cultivation through zoning and other local laws, but only to ban outdoor cultivation outright.

Proposition 64 would require local governments to allow indoor cultivation in private residences, and further indicates that any local ban on outdoor cultivation would be automatically repealed if the California Attorney General determines the federal government has legalized marijuana. The wording of the initiative likely makes its application both retroactive and prospective, meaning it would preempt existing regulations if they are inconsistent and prohibit new regulations that violate its provisions.

Beyond that, some of Proposition 64’s provisions would likely take effect almost immediately. While the provisions surrounding recreational retailers and other businesses would not become functionally effective until the State began issuing licenses on Jan.1, 2018, recreational use and cultivation in private residences could begin as soon as the day after the election.

As a result, it is imperative for concerned public agencies to consider, and to enact, regulations surrounding recreational use of marijuana prior to Election Day.

This may seem counterintuitive — after all, it involves regulating around a law that has not even been enacted yet — but public agencies that fail to pass ordinances surrounding these issues could face preemption and grandfathering problems in the days, weeks and months after Proposition 64 passes. Artfully drafted ordinances can avoid some of this awkwardness by including provisions only triggered by the legalization of recreational marijuana.

For example, a public agency could pass an ordinance banning all cultivation outright, and include a subsection clarifying that, in the event indoor cultivation in private residences is legalized, a regulatory scheme of the city’s choosing kicks in immediately. This would allow public agencies to regulate how they wish under current law, while protecting themselves in the event Proposition 64 passes.

But the window is short. Most public agencies would have to take a proposed ordinance to a planning commission and have two readings of the ordinance before their city council, and all of this would arguably need to occur prior to Oct. 8 to allow the 30-day period to lapse so the ordinance is effective prior to Election Day.

Even if Proposition 64 becomes law, local governments still have wide latitude to regulate marijuana within their jurisdictions, but public agencies should act soon to ensure the most protection against grandfathered uses or preempted local schemes. A brand new regulatory scheme is growing in California, and local governments need to act swiftly to cultivate the proper regulations to ensure their communities flourish in the brave new world of recreational marijuana legalization.

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Ferguson_Jordan-c1Jordan E. A. Ferguson provides legal services to cities, special districts and private clients across Southern California. As an associate in the Municipal Law and Special Districts practice groups of Best Best & Krieger LLP, his practice involves city attorney and general counsel services. He can be reached at