Voters overwhelmingly approved legalizing cannabis. But a court case might determine how many of them will have access.
Californians may have voted to legalize cannabis nearly two and half years ago, but the industry is now facing a formidable opponent: city hall. Or, to be precise, two dozen city halls.
A lawsuit from the League of California Cities, which is representing 24 municipalities and one county in the Golden State, is threatening to derail California’s budding cannabis delivery industry. They have sued the California Bureau of Cannabis Control for adopting a policy earlier this year that allows licensed cannabis companies to deliver anywhere in the state.
The cities claim that the delivery policy overrides their authority to regulate cannabis within their own boundaries. They argue that by allowing cannabis delivery to areas that have outlawed the plant, the state is violating the famous Proposition 64, the law that legalized adult-use cannabis in California in 2016.
Recent events in Sacramento suggest that the cannabis industry has a good chance to prevail here. A legislative committee in the state killed a measure earlier this month that would have banned home deliveries of cannabis on similar grounds.
Despite the victory, the industry is struggling to navigate California’s byzantine legal landscape for cannabis. The main issue is that a majority of the state’s cities have overlaid their own regulatory schemes on top of state rules. Only 161 of California’s 482 municipalities, and 24 of the state’s 58 counties, have opted to allow commercial cannabis activity of any sort, according to data from CannaRegs, which tracks local cannabis regulation in the state. According to research from NorCal Cannabis Company, that has created cannabis deserts, leaving 17.6 million California adults stranded in counties that don’t sell cannabis. If the 24 cities prevail in their lawsuit, those who want to legally use cannabis for medical or other reasons will be in a very precarious position, especially considering that roughly 11% of California’s cannabis consumers have a disability of some kind. There are also around 2 million Army veterans living in California, and more than 26% of them have a service-related disability.
There are some industry insiders who view the lawsuits as an assault on democracy and liberty itself. Veteran industry attorney Khurshid Khoja has urged the state’s lawmakers to respect the will of the majority, who voted in 2016 to guarantee adults and patients a safe and regulated alternative to the illicit cannabis market.
Over 57% of Californians, totaling nearly 8 million people, voted to pass Proposition 64. The vote had a healthy turnout of 75%. Khoja has also accused the cities of “overreaching” with their lawsuit, saying that any ban to home deliveries would impact individual rights guaranteed under Proposition 64.
The cities’ lawsuit will be closely watched by the growing cannabis industry and consumers. The state should also have an interest in encouraging market growth since the state coffers stand to benefit from the flourishing of the legal market. If there is any ban on home deliveries, it might drive people to the state’s rampant black market. It is estimated that as much as 80% of the cannabis sold in California comes from illicit sources, and that this black market is worth $3.7 billion — more than four times the size of the legal market in the state. It’s no surprise that the state’s tax revenues from legal sales are coming in well short of expectations.
California’s cannabis industry may have won a battle in 2016 with Proposition 64 — now it’ll have to fight the war.
