California Cannabis Delivery Law Challenge to Be Weighed by Courts in 2020

Last year, the California Bureau of Cannabis Control adopted a controversial policy allowing marijuana deliveries everywhere in the state – even in locations where city officials formally banned adult use retail sales, as is their express right under Proposition 64. Our Los Angeles marijuana delivery attorneys recognize this provision as key to the future success of the legal cannabis market in California. That’s why we’ll be closely following the developments in the case of County of Santa Cruz et al v. Bureau of Cannabis Control, slated to be heard in the Superior Court in Fresno in April 2020. A countersuit filed against the county by a marijuana retailer out of Salinas is slated to be heard by the Superior Court in Santa Cruz in July 2020.

If this challenge to marijuana’s delivery law succeeds, it would not only threaten the many marijuana delivery services that rely on the state’s protection, it would also be yet another significant threat to the success of California’s struggling legal market by giving black market vendors a major inroad to under-served consumers.

The lawsuit was filed by 24 cities and Santa Cruz County, all of them contending that the state regulatory agency crossed the boundaries of its authority when it made the rule pertaining to marijuana deliveries. They assert that Prop. 64 expressly imbued local governments with the authority to restrict and even prohibit cannabis sales and activity inside their own districts, and the bureau’s policy is a direct affront to that right.

This could effectively upend most cannabis delivery operations as we know them. By some estimates, three-fourths of some delivery service models business rely on services to neighboring regions where the possibility of brick-and-mortar pot shops have been nixed. The reality is that too few legal marijuana dispensaries exist as it is because so many cities and counties – two-thirds of the state – have banned them. Yet the drug is decriminalized at the state level, making enforcement of black market sales tricky.

As it stands, there are only about 260 cannabis delivery operations servicing the entire state.

In an interesting and significant move, California’s attorney general has asked to join as a party to the initial case – in defense of the cannabis bureau’s delivery policy. Some have speculated that had this action not been taken, the bureau might have faced a much steeper uphill battle. But the state’s policy is widely recognized as a game-changer for delivery companies that are trying to carve out a successful – and legal – niche in a cannabis market with potential for immense growth.

When state-legal adult use sales were first permitted in early 2018, delivery services were confined to the municipality that had issued them a local license. Those areas tended to be more cannabis-friendly to start, so there was less of a need for them in the first place. They were a convenience in those locations (perhaps more where medicinal patients were concerned). However, where delivery services were truly needed were in those so-called “pot deserts,” where buyers would otherwise have to travel extensive distances to make a purchase. Delivery services have been shown to undercut black market operators in these areas.

Los Angeles marijuana delivery businesses are banking on success in this case, though we anticipate no matter which way it goes, there will be appeals to follow.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Statewide delivery policy ‘critical’ to cannabis industry success, California insiders say ahead of key court case, Dec. 19, 2019, By John Schroyer, Marijuana Business Daily