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Legal yes, but pot delivery can be an issue

While recreational cannabis may be legal statewide, access to the plant is not equal across California, with some cities and jurisdictions banning certain cannabis businesses, including delivery.

And that includes jurisdictions in the North Bay, where cannabis entrepreneurs running pot delivery businesses said while they are allowed to deliver anywhere in the state, many North Bay cities do not allow delivery businesses to be based there.

“We were originally located in unincorporated Marin in Tamalpais Valley,” said Monica Gray, chief operating officer at Nice Guys Delivery which is now located in the City of San Rafael. She said while Marin County does license delivery businesses, when she tried to get her business license the county acted slowly, all while she was running up expenses for her business.

“I had to make a decision of whether or not we would continue with the county process or see if we wanted to get a license with San Rafael,” which she eventually did, securing a delivery and distribution license.

Gray said while other Marin County cities like Fairfax and Novato do not currently license cannabis delivery businesses, she is hopeful they will in the near future.

Eric Sklar owns Fumé, a cannabis cultivation delivery business he runs from Lake County but that delivers into Napa County and elsewhere. Sklar has been spearheading the effort to license commercial cannabis businesses in Napa County and said he has had issues in the past getting a business license.

Sklar said he has had to negotiate with cities which attempted to impose a business license fee that was much higher than normal. He said as a cannabis business he was singled out in the past when authorities attempted to force him to pay $10,000 for a business license and have company drivers pass background checks.

Sklar said in Yountville and American Canyon, he had to explain how the business worked and had to supply information about drivers and their proof of insurance. “They don’t ask FedEx to do that.”

The issue has recently escalated beyond where business can be based and into where they can deliver to. Last month, state officials intervened in a court fight over delivery of cannabis into communities that have banned or restricted pot shops.

Attorney General Xavier Becerra filed a motion on behalf of the California Bureau of Cannabis Control to join a lawsuit by Salinas-based East of Eden Cannabis Co. against Santa Cruz County, which has banned deliveries by companies it has not licensed.

The legal action comes as a group of cities is challenging California’s home delivery rules in Fresno County Superior Court, arguing that state law allows them to decide whether businesses can sell pot in their communities. In January, the Bureau of Cannabis Control issued regulations that permit firms it licenses to deliver marijuana to homes anywhere in the state, including in cities and counties that have banned pot shops.

Santa Cruz County spokesman Jason Hoppin said that under Proposition 64, which voters approved in 2016 to legalize marijuana for recreational use, “the state promised the people of California local control over the time, place and manner of local cannabis operations.”

“The state is now lending the power of the attorney’s general office to a business seeking to break that promise,” Hoppin said. “It is beyond disappointing and should be alarming to cities and counties throughout California.”

The attorney general’s office deferred questions on the legal dispute to the bureau, where a spokesman declined to comment on pending litigation.

Hoppin said he believes the state is trying to sidestep the Fresno lawsuit and have the issue decided by a court in Santa Cruz County, where voters are more in favor of legalization. Proposition 64 won support from 70% of voters in Santa Cruz County and just 47% of voters in Fresno County.

Santa Cruz County has licensed 12 pot sellers in its unincorporated areas and most can deliver to homes in the county, but local officials have sought to ban deliveries by firms outside the area. County officials are concerned they have not been able to vet out-of-county firms as they have those located in Santa Cruz County and noted that the firms do not pay taxes to the county to cover the costs of oversight.

Proposition 64 gave cities and counties the discretion to determine whether marijuana stores are allowed in their communities, and three-quarters of California cities have banned the shops. State legislation that would have required cities to allow cannabis stores if residents voted to support Proposition 64 failed to pass this year, but may resurface when the legislature reconvenes in January.

Santa Cruz County and 24 cities including Agoura Hills, Beverly Hills, Covina and Riverside filed the separate lawsuit in Fresno County this past spring and have been given a trial date of April 20, when they will argue that state delivery regulations violate the local-control guarantee of Proposition 64.

“When Prop. 64 was passed it was also promised that localities would be able to maintain local control over both sales and delivery of cannabis,” said Beverly Hills Mayor John Mirisch, who called Becerra’s latest legal filing “over reaching.”

“This is a bait and switch on the part of Sacramento,” Mirisch added. “Communities are the solution, not the problem, and individual communities should be able to make their own choices.”

Officials in many cities say they have banned marijuana sales out of public safety concerns, arguing that pot shops attract robberies and other criminal activity.

The cities’ lawsuit says that the state regulation “is in direct and irreconcilable conflict” with Proposition 64, which “(preserves) the right of local jurisdictions to regulate commercial cannabis activity at the local level.”

In his Nov. 14 filing, Becerra told the Santa Cruz County court that the state has acted properly in deciding where marijuana can be sold and delivered.

“If the Bureau’s motion for intervention is denied, then this would increase the risk that the Court might issue a decision which serves to enjoin one of the state’s duly-enacted regulations, which would be a substantial harm to the state,” Becerra said.

Santa Cruz County’s ban on outside delivery firms is “inconsistent” with the state regulation allowing state-licensed marijuana firms to deliver anywhere in California, Becerra argued.

The lawsuit by East of Eden says the firm stopped delivering in Santa Cruz County after it was sent a cease and desist order by the county in May that threatened a criminal investigation and confiscation of its marijuana products. Since then, East of Eden’s retail sales via delivery have dropped by 38%, and it is losing more than $1,000 a day, the firm said in its lawsuit.

The Santa Cruz court has set a Jan. 2 hearing to decide whether to allow the state bureau to intervene in the East of Eden case.

The Associated Press contributed to this story.

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