SAN DIEGO CITY TREASURER REFUSING TO PROCESS
BUSINESS TAX APPLICATIONS FOR COLLECTIVES
NORML has recently learned that the San Diego City Treasurer’s office has instituted a new policy refusing to process (let alone approve) Business Tax Certificate Applications submitted by medical marijuana collectives. Although it is currently unclear how this policy will ultimately affect safe access for qualified patients, it is clearly a disturbing, discriminatory and possibly illegal policy that must be addressed immediately.
In response to this new policy position we asked NORML attorney Jeff Lake what he thought of this developing issue. He responded by telling NORML that he wrote a letter to San Diego City Treasurer, Gail R. Granewich with copies to City Attorney Jan Goldsmith and Mayor Jerry Sanders asking for a response to the following questions:
1. Confirm or deny the City’s Treasurer’s office position regarding the policies that business tax certificate applications submitted by medical marijuana collectives are no longer being accepted for processing and that the City Treasurer’s office is no longer issuing or renewing business tax certificates previously submitted by medical marijuana collectives;
2. Provide the factual basis, legal basis and rationale for the City’s Treasurer’s office position regarding these policies;
3. Provide the name and contact information of the person or persons that instigated and authorized these policies on behalf of the City Treasurer’s office;
4. Provide the date and manner in which the City Treasurer’s office instituted these policies;
5. Provide an explanation of the procedures required by the City Treasurer’s office for medical marijuana collectives properly formed pursuant to California state law to operate within the City of San Diego;
6. Provide a description of the penalties and consequences the City Treasurer’s office will pursue against medical marijuana collectives should they fail to comply with the requirements set forth by the City Treasurer’s office in order to operate within the City of San Diego.
Mr. Lake also requested that City of San Diego through the office of the City Treasurer:
1. Promptly and thoroughly respond to the inquiries he submitted;
2. Consider his correspondence a formal dispute and objection to the City of San Diego Treasurer’s office refusal to process applications for Business Tax Certificates and potential future determination that the use and subuse of collectives is not permitted as a violation of the SDMC;
3. Refrain from instigating any formal legal proceedings against his clients;
4. Provide a legal opinion in support of the City’s position that Collectives without “Dispensaries” are illegal and impermissible under California State law;
5. Accept his correspondence as a formal request to meet and confer with the City Treasurer’s office regarding a mutually agreeable resolution of these issues.
NORML will immediately notify its members of the City Treasurer’s office response to Mr. Lake’s questions and requests if and when they respond.
In addition to seeking clarification from the City Treasurer’s office about its new policies surrounding the issuance of Business tax certificates to collectives, Mr. Lake also provided the city Treasurer the following legal analysis of the issue:
I.
SAFE ACCESS TO MEDICAL MARIJUANA IS REQUIRED PURSUANT TO CALIFORNIA STATE LAW.
In 1996 the citizens of California passed the Proposition 215, commonly known as the Compassionate Use Act. As a result, section 11362.5 was added to the California Health and Safety Code, to read:
“(b) (l) The people of the State of California hereby find and declare that the purposes of the Compassionate Use Act of 1996 are as follows:
(A) To ensure that seriously ill Californians have the right to obtain and use marijuana for medical purposes where that medical use is deemed appropriate and has been recommended by a physician who has determined that the person’s health would benefit from the use of marijuana in the treatment of cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which marijuana provides relief.
(B) To ensure that patients and their primary caregivers who obtain and use marijuana for medical purposes upon the recommendation of a physician are not subject to criminal prosecution or sanction.
(C) To encourage the federal and state governments to implement a plan to provide for the safe and affordable distribution of marijuana to all patients in medical need of marijuana.” (See California Health and Safety Code Sections 113625 and 11362.75.)
II.
ANY MUNICIPAL POLICY IN CONFLICT WITH GENERAL LAW IS VOID.
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. (Cal.Const. Art. 11, Section 7). The legislative body may also pass ordinances not in conflict with the Constitution and laws of the State or the United States (Cal Gov Code § 37100).
However, an ordinance that conflicts with state law is void (O’Connell v. City of Stockton {Ca. Sup. Ct.} (2007), 41 Cal. 4th 1061); Bldg. Indus. Ass’n v. City of Livermore (1996) 45 Cal. App. 4th 719,724). Furthermore, a conflict exists if the local legislation duplicates, contradicts, or enters an area fully occupied by general law, either expressly or by legislative implication. (Sherwin-Williams Co. v. City of Los Angeles (1993) 4 Cal.4th 893, 897; see also American Financial Services Assn. v. City of Oakland (2005) 34 Cal.4th 1239, 1251)
The Medical Marijuana Program Act contains section 11362.775, which states,
“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 collectively or cooperatively to cultivate marijuana for medical purposes, shall not solely on the basis of that fact be subject to state criminal sanctions under Section 11357, 11358, 11359, 11360, 11366, 11366.5, or 11570.”
Thus, the California State Legislature also exempted those qualifying patients and or primary caregivers who collectively or cooperatively cultivate marijuana for medical purposes from criminal sanctions for possession for sale, transportation or furnishing marijuana, maintaining a location for unlawfully selling, giving away, or using controlled substances, managing a location for the storage, distribution of any controlled substance for sale, and the laws declaring the use of property for these purposes a nuisance.
As stated in People v. Urziceanu, (2005) 132 Cal.App.4th 747:
“This new law represents a dramatic change in the prohibitions on the use, distribution, and cultivation of marijuana for persons who are qualified patients or primary caregivers and fits the defense defendant attempted to present at trial. Its specific itemization of the marijuana sales law indicates it contemplates the formation and operation of medicinal marijuana cooperatives that would receive reimbursement for marijuana and the services provided in conjunction with the provision of that marijuana.”
The expanded protection of the activities mentioned above “represents a dramatic change in the prohibitions on the use, distribution and cultivation of marijuana for persons who are qualified patients or primary caregivers . . . .” (People v. Urziceanu, (2005) 132 Cal.App.4th 747, 785.).
By way of contrast, the City of San Diego’s refusal to issue Business Tax Certificates to medical marijuana dispensaries makes any location where medical marijuana is available to one qualified patient or more a medical marijuana dispensary unlawful. Therefore, by enacting a policy forbidding Business tax certificates to medical marijuana collectives, the City of San Diego makes unlawful otherwise lawful activities, i.e. prohibiting distribution or availability of medical marijuana by one or more qualified patients or caregivers at any location, thereby constricting and reducing rather than enhancing access of patients and caregivers to medical cannabis. This is a direct contradiction of the stated intent of the Legislature and Health and Safety Code Section 11362.775.
The courts have also construed the MMPA, which authorizes medical marijuana collectives and cooperatives, as the State’s initial response to the voters’ request for a safe and affordable distribution system for marijuana. (See People v. Urziceanu (2005) 132 Cal.App.4th 747). Under these laws, qualified patients and their primary caregivers have a right to associate with other qualified patients and primary caregivers to cultivate, process, administer, deliver or give away medical marijuana to each other, without limitation as to number. The City of San Diego’s refusal to issue Business tax Certificates improperly limits associational membership for purposes under California Health and Safety Code§§ 11362.5 and 11362.7 without cause, reason or justification, thus impinging on statutory rights of qualified patients in San Diego.
It should be mentioned here that nowhere in either the Compassionate Use Act or Medical Marijuana Protection Act is the term “Dispensary” used or defined and as such are not expressly or impliedly prohibited. Moreover, to allow the City of San Diego to arbitrarily define and make illegal the undefined, and by conduct presumed by State law to be lawful, would lead to municipal tyranny and allow each individual city or county throughout the state to outlaw conduct otherwise protected. Such conduct by the City of San Diego would also further obstruct and frustrate the stated legislative intent to “Promote uniform and consistent application of the act among the counties within the state” ( See California Health and Safety Code§11362.7, Section 1(b)(2))
Additionally, the much anticipated case of Qualified Patients Association v. the City of Anaheim is due for publication by the Fourth District Court of Appeals on August 19, 2010. It is expected that the court will rule consistently with well established precedent that as a result of the passage of the Compassionate Use Act, the denial of safe access to qualified medical marijuana patients and their primary caregivers to medical marijuana is a violation of the equal protection laws of the State of California and the United States Constitution thereby affirming that any ordinance or other policy enacted by a city, county or other municipality that unreasonably regulates qualified patients’ safe access to medical marijuana is void and unenforceable as an impermissible sanction.
II.
DISCRIMINATORY BUSINESS PRACTICES ARE ILLEGAL IN CALIFORNIA
The Unfair Practices Act as codified in Business and Professions Code sections 17000, et seq. Sets forth in pertinent part:
“Individuals are prohibited from unfair, dishonest, deceptive destructive, fraudulent and discriminatory practices by which fair and honest competition is destroyed or prevented.”
Business and Professions Code section 17070 states:
“Any person may bring an action to enjoin restrain any violation of said laws and, in addition thereto, for the recovery of damages.”
Pursuant to Business and Professions Code section 17078, any defendant violating these code sections shall be enjoined by the appropriate court from all acts which are prohibited by said laws. Furthermore, pursuant to Business and Professions Code section 17082, it is not necessary for a plaintiff to allege or prove actual damages caused by a defendant’s actions or the threat thereof, nor actual injury or threat thereof.
In addition to injunctive relief, a plaintiff, in any action initiated in response to a defendant’s illegal behavior shall be entitled to recover three times the amount of actual damages sustained. Also, in any action commenced under this chapter in which judgment is entered against a defendant, the plaintiff shall be awarded a reasonable attorneys’ fee together with the costs of suit pursuant to the specific language of section 17082.
III.
THE SAN DIEGO MUNICIPAL CODE SETS FORTH REQUIRED REVIEWS AND ENFORCEMENT AS WELL AS THE GENERAL REMEDIES FOR VIOLATIONS OF THE LAND DEVELOPMENT CODE
A. The Zoning Requirements in the San Diego Municipal Code Applicable to the Issuance of Business Tax Certificates Have Not Changed Since 2009.
It is well established that in order a business to operate within the City of San Diego it must procure a Payment of Business Tax Certificate (“BTC”) from the San Diego City Treasurer. The City’s issuance of a BTC is predicated by a zoning review by the City’s Development Services Department (“DSD”). If the DSD does not approve the zoning usage for the business at the location listed on the BTC application, the BTC may be denied by the City Treasurer and the business may ultimately be shut down if certain procedures are followed and a court of law issues an appropriate order.
It is not disputed by the City that prior to July of 2009, the City Treasurer’s office issued BTC’s to medical marijuana collectives. In 2009, pursuant to correspondence generated by DSD director, Kelly Broughton, it was the City’s position that although no Use or Subuse category existed that specifically referenced medical marijuana collectives, the definition of a medical marijuana dispensary fit into one of the existing Use and/or Subuse categories set forth in the San Diego Municipal Code (“SDMC”).
At that time, the City did not regulate uses to such minutia as to require a business owner to specify every detail of the type of use contemplated when operating. For example, according to Kelly Broughton, if a clothing manufacturer wanted to open its business in a zone designated as “Light Industrial” it would not be required to specify what type of products it was manufacturing such as belts, shoes, etc. Rather, it would simply list the type of business it was conducting on the BTC application and the City, per the SDMC, would determine which Use category for the proposed business was most suitable. Upon making that determination, the city would issue a BTC and allow the business to operate in the appropriate zone.
At that time, the same concept applied to medical marijuana collectives. If a collective desired to conduct business within the City of San Diego to facilitate the distribution of marijuana to its members, it need only notify the City that it intended to operate a Organic Health Care Store, Holistic Wellness Center or other similar description and the City would determine if the address listed on the BTC application was in an appropriate zone as set forth in the SDMC. A specific description of the goods and/or services to be provided by the business was not required in order for a BTC to be issued to the collective. This position was confirmed by Kelly Broughton in 2009 in an email he wrote to Mr. Lake.
Thereafter, in July of 2009 Mr. Broughton authored a memorandum calling for a more thorough investigation as to which Use and Subuse categories should be applicable to medical marijuana collectives. Shortly thereafter, his suggestion was accepted by the City of San Diego and a medical marijuana task force was created to review, analyze and issue recommendations to the City Council as to whether or not medical marijuana dispensaries should be permitted within the City of San Diego and if so under what circumstances and in which Land Use Zones.
However, on October 8, 2010, subsequent to the formation of the medical marijuana task force and shortly prior to the issuance of the task force’s recommendation to the San Diego City Council by virtue of their report dated November 14, 2009 wherein they unanimously recommended to the San Diego City Council that “…dispensing cooperatives be allowed to locate (by permit as referenced above) in the following zones under the City of San Diego Municipal Code: regional (CR), Commercial – Office (CO), Commercial Community – (CC), Commercial Neighborhood – (CN), Commercial Visitor (CV), Industrial – Park (IP), Industrial Light – (IL) and Industrial Heavy – (IH)”, Mr. Broughton wrote a second memorandum that conveyed a different, inconsistent, one-hundred and eighty degree about-face change in his opinion from the position he took less than six months earlier. Namely, in October of 2009, Mr. Broughton opined, despite the fact that previous BTCs had been issued to medical marijuana collectives and regardless of the fact that the San Diego Municipal Code had not been changed in any material way as to the land use and zoning requirements applicable to medical marijuana collectives, that now according to him, medical marijuana collective were not a permitted use anywhere within the City of San Diego.
B. San Diego Municipal Code Section 131.0110 Sets Forth The Procedure For Determining Use And Subuse Categories.
§131.0110 Determination of Use Category and Subcategory provides in pertinent part:
“(a) A use shall be identified as belonging to a use category and use subcategory based upon the descriptions in section 131.0112 and the facility needs and operational characteristics of the use including type of use, intensity of use, and development characteristics of use. The Use Regulation Tables in the base zones shall be used to determine in which base zones the use is permitted. If a use could meet the description of more than one use subcategory, the subcategory with the most direct relationship to the specific use shall apply. The City Manager shall identify a particular use’s category and subcategory upon the request of an applicant or a property owner.” (Emphasis added.)
San Diego Municipal Code section 131.0110 provides that if a use could meet the description of more than one use subcategory, the subcategory with the most direct relationship to the specific use shall apply. Furthermore, when determining which use categories and use subcategories best apply, despite the fact that the City of San Diego now utilizes a “Strong Mayor” form of government, pursuant to SDMC section 131.0110 it is clearly the burden of the City to identify a particular use category and subcategory upon the request of an applicant.
Such a request has been made by many collectives by virtue of the fact that they attempted to apply for a Business Tax Certificate. Therefore, the City Treasurer’s office refusal to process, let alone, determine are client’s request is a direct violation of SDMC section 131.0110.
