Medical Marijuana Dispensaries Face Confusion Over Local Zoning Laws

October 29, 2009

It has been 13 years since California voters passed Prop. 215, the Compassionate Use Act, which allows users to obtain medical marijuana with a doctor’s authorization in California.

In the 13 years, hundreds of medical marijuana dispensaries have cropped up in communities throughout the state.  In spite of the growing number of dispensaries however, numerous communities have no zoning regulations addressing where, when, and how medical marijuana dispensaries can operate within their boundaries while other cities and towns have banned their operations entirely.

Federal law still outlaws possession, cultivation and distribution of marijuana, whether for medical purposes or otherwise.  During the Bush Administration, this conflict in state and federal law created confusion as federal authorities raided, arrested, and prosecuted medical marijuana dispensary operators in California and other states which had legalized medical marijuana.  Earlier this month, the Obama Administration announced it would end the Bush Administration’s practice of raiding dispensaries and restrict prosecutions of medical marijuana dispensaries to traffickers who falsely masqueraded as medical dispensaries and who “use medical marijuana laws as a shield.”

In directing U.S. Attorneys, Deputy Attorney General Eric Ogden wrote that “prosecution of individuals with cancer or other serious illnesses who use marijuana as part of a recommended treatment regimen consistent with applicable state law … is unlikely to be an efficient use of limited federal resources.”

While the new U.S. Attorney General guidelines have helped, confusion remains for owners and operators of medical marijuana dispensaries which are allowed to operate under state law but which remain illegal under federal law and face an array of differing approaches from local cities, from bans to strict zoning regulations to moratoriums. While more than 40 localities have adopted ordinances regulating medical marijuana dispensaries, at least 120 localities have banned their operation outright.
In 2003, the state Legislature enacted legislation (the aptly numbered “SB 420“) which was intended to clarify confusion created after Prop. 215, establishing a medical marijuana ID card program to issue identification cards to qualifying patients.
In August 2008, the California Attorney General’s office issued guidelines pursuant to SB 420 which were designed to  ensure the safe regulation of medical marijuana and their dispensaries in California.

In spite of these guidelines, it remains unclear whether, and how much, cities can regulate  medical marijuana dispensaries.  Last month, the Fourth District Court of Appeal heard oral arguments in a Qualified Patients Association v. City of Anaheim which may decide whether local governments can ban medical marijuana dispensing collectives from operating entirely.  That case arises out of a citywide ban on medical marijuana dispensaries the City of Anaheim implemented in July 2007.  If the Court of Appeal rules in favor of the city, it may mean any city can ban entirely medical marijuana dispensaries.  If, on the other hand the Court of Appeal overturns Anaheim’s ban, it may open the floodgates, requiring cities to allow dispensaries to operate within their borders.

In another case published in September of this year, the Second District Court of Appeal upheld an injunction disallowing a medical cannabis dispensary in Claremont, California. The court ruled that the city could deny a dispensary a business permit on the grounds that no such businesses were authorized under the city’s land use and development code. It left open the possibility of applying for a code amendment.  That decision applies only to situations where a local ordinance states explicitly “if not listed as a use, it is prohibited.”  It does not necessarily apply to other situations, such as the permanent dispensary bans enacted by Anaheim and Fresno, which are still under litigation.

As advocates of medical marijuana use await the court’s ruling, the Obama Administration’s ruling provides little comfort.  What point is it, after all, in being told medical marijuana users won’t be prosecuted if their cities have nowhere to buy it?

Related Reading:

  1. California Appellate Court Continues Uncertainty for Medical Marijuana Dispensaries
  2. Update: Still No Decision on Major Medical Marijuana Case

Gov. Schwarzenegger Signs SB 94 into law

October 12, 2009

Gov. Arnold Schwarzenegger has signed SB 94 by Sen. Ron Calderon into law.

SB 94 prohibits anyone, including loan modification agencies or attorneys, from collecting up front fees for mortgage loan modification services for residential properties.  The bill also prevents anyone from collecting any security to guarantee future payment (such as a lien) or collecting a “Power of Attorney” for the purpose of negotiating with lenders to perform a residential loan modification.  The bill sunsets in 2013.

SB 94 has received both praise from consumer groups who argue it will crack down on fly-by-night loan modification outfits which take money from desperate homeowners, and criticism from attorneys who argue that the bill will make it more difficult for homeowners to find an attorney who will represent them.

Although it is not clear yet what the long term affect of SB 94 will be, the bill will likely help by immediately inhibiting unscrupulous loan modification companies that have cropped up offering “loan modification” services for a fee without ever following through on their promises.

It will be interesting to see what happens to the many law firms (see here and here) which have become a cottage industry during the mortgage crisis of the past year, offering services such as loan modifications and foreclosure litigation.  Other law firms have already been shut down.

5 Steps to Take When Considering Bankruptcy

October 8, 2009

It’s not often a fast food restaurant closes, much less files for bankruptcy protection. But that’s exactly what happened recently when the owner of 70 Jack In the Box fast food restaurants throughout northern and Central California suddenly shut down all his stores.

Abe Alizadeh of Kobra Associates Inc., who owns and operates the restaurants, suddenly closed all 70 of his restaurants in mid-September when his negotiations with his debtors broke down and he had to file bankruptcy.

Sadly, this story has been more of a common occurrence during the past year, with numerous businesses and individuals going through bankruptcy. It wasn’t so long ago, however, that it seemed Congress had high hopes of dramatically decreasing the number of bankruptcy filings.

When Congress did a major revamp of the bankruptcy law in 2005, the goal was to decrease the number of bankruptcies each year by making it more difficult for people to file bankruptcy. A secondary goal was to force more people to repay their debts over time through a Chapter 13 plan rather than liquidating their debts through Chapter 7. Read the rest of this entry »

Rent Control Regulations and Security Deposits in California

October 5, 2009

Landlord-tenant relationships in California are regulated by numerous statutes at the state level and city ordinances at the city level.  Foremost among all these regulations is the concept of “rent control,” wherein a city regulates the amount a property owner can charge tenants for rent, including increases in rent during the term of a tenancy.  Other forms of rent control limit the circumstances under which a landlord can evict a tenant, or require specific notice before a landlord can order an eviction.  Numerous cities around California have some form of rent control, from many of California’s largest cities such as  Los Angeles, San Francisco, Oakland, and San Diego, to many smaller cities such as Gardena and Los Gatos.

Several of these cities have well-established procedures and regulations with appointed boards or staff who mediate disputes concerning rent levels, rent increases, unlawful detainers and wrongful evictions.  The regulations often make up phonebook-sized volumes of guidelines and many attorneys focus 100% of their practice on landlord-tenant work.

In spite of the numerous regulations governing rent however, it may be a surprise to learn that relatively little regulation governs another area of landlord-tenant financial compensation – security deposits. Many tenants pay one month’s rent as a security deposit when they first move in. But what happens if a tenant lives in an apartment for 10 or 20 years and their initial security deposit remains the same? If the purpose of a security deposit is to compensate a landlord in case a tenant causes damage, then one month’s rent will eventually provide little “security” as costs to repair rise over time while the amount of the security deposit remains the same.

Cal. Civ. Code 1950.5 governs security deposits in California.  Under the code, a landlord’s security deposit can be collected as advance rent for many purposes, including (1) compensation for a tenant’s default, (2) repair for damage to the premises beyond ordinary wear and tear, or (3) cleaning of the premises after a tenant moves out to bring the unit to the same level of cleanliness it was in before the tenant moved in.

Under California law, a landlord can charge up to two months’ rent as a security deposit for an unfurnished rental or three months’ rent for a furnished unit.

As for increasing security deposits after they have been set, the general rule is a landlord may increase a security deposit during a tenancy up to these levels unless a local rule bars such increase.  No statewide law bars a landlord from increasing a security deposit during a tenancy up to the amounts listed above.

The city of Santa Monica is one of the few cities which does not allow security deposits. Santa Monica Rent Control Board Regulation 14002 prevents a landlord from increasing a security deposit during a tenancy at all.

In San Francisco, the S.F. Rent Board regulations do not prevent a landlord from increasing security deposits during a tenancy.  The S.F. Rent Board has stated:

There is nothing in the law that specifically allows the landlord to raise the security deposit amount over time, although some landlords believe that the deposit can be brought up to reflect two months of the current rental amount with proper notice. Since this is a matter of state law, the Rent Board does not handle such disputes.

Other cities may have a different approach to security deposits so it is important to check the local ordinance and regulations in order to know whether landlords are entitled to raise a security deposit after it has been initially set.

If you are a landlord, property owner, or a tenant and have additional questions about rent control, feel free to contact John Corcoran at (415) 472-8100 x211 or