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`E-FILED
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`6/8/2020 1:05 PM
`
`
`Superior Court of California
`
`County of Fresno
`
`By: S. Garcia, Deputy
`
`Exempt from filing fees
`pursuant to Gov. Code, § 6103
`
`XAVIER BECERRA
`Attorney General of California
`Harinder K. Kapur
`Senior Assistant Attorney General
`STACEY L. ROBERTS
`Supervising Deputy Attorney General
`ETHAN A. TURNER
`Deputy Attorney General
`State Bar No. 294891
`600 West Broadway, Suite 1800
`San Diego, CA 92101
`P.O. Box 85266
`San Diego, CA 92186-5266
`Telephone: (916) 210-7898
`Fax: (916) 327-2319
`E-mail: Ethan.Turner@doj.ca.gov
`Attorneys for Defendants
`Bureau of Cannabis Control and Lori Ajax, Chief of
`the Bureau of Cannabis Control
`SUPERIOR COURT OF THE STATE OF CALIFORNIA
`COUNTY OF FRESNO
`
`
`COUNTY OF SANTA CRUZ, ET AL.,
`Plaintiffs,
`
`v.
`
`BUREAU OF CANNABIS CONTROL;
`LORI AJAX, in her official capacity as
`Chief of the Bureau of Cannabis Control;
`and DOES 1 through 10, inclusive
`Defendants.
`
`Case No. 19CECG01224
`DEFENDANTS’ TRIAL BRIEF
`
`403
`Dept:
`Hon. Rosemary T. McGuire
`Judge:
`Trial Date: July 16, 2020
`Action Filed: April 4, 2019
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`TABLE OF CONTENTS
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`
`B.
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`B.
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`B.
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`B.
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`C.
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`Page
`Introduction ..................................................................................................................................... 8
`Legislative History ........................................................................................................................ 10
`Argument ...................................................................................................................................... 12
`I.
`The Case Is Not Ripe for Judicial Review Because No Actual Controversy
`Exists ..................................................................................................................... 12
`A.
`This Case Is Not Ripe Because the Issues Are Not Fit for a Judicial
`Determination ............................................................................................ 14
`This Case is Not Ripe Because Plaintiffs Cannot Show Hardship
`Sufficient to Compel Declaratory and Injunctive Relief ........................... 16
`STANDARD OF REVIEW .................................................................................. 16
`A.
`The Delivery Regulation Is Presumed Valid and Can Be Set Aside
`Only on a Showing That the Bureau Clearly Overstepped Its
`Statutory Authority ................................................................................... 16
`Plaintiffs Must Prove That the Delivery Regulation Cannot Be
`Applied Consistent with the Relevant Statutes in Connection with
`Their Facial Challenge of the Delivery Regulation .................................. 19
`The Delivery Regulation is Consistent with and does not Conflict with
`MAUCRSA and is Reasonably Necessary to Effectuate the Purpose of
`MAUCRSA ........................................................................................................... 20
`A.
`Statutory Interpretation Supports Validity of the Delivery
`Regulation ................................................................................................. 20
`1.
`The Text of MAUCRSA Supports the Delivery Regulation ........ 20
`2.
`The Delivery Regulation Is Also Supported by the Structure
`of MAUCRSA and the Expressly Stated Purposes of
`Proposition 64 ............................................................................... 24
`The Legislative History Confirms the Interpretation Underlying the
`Delivery Regulation .................................................................................. 27
`The Delivery Regulation Is Reasonably Necessary .................................. 28
`C.
`Plaintiffs Fail to Satisfy Their Burden to Establish That the Delivery
`Regulation Is Invalid ............................................................................................. 31
`A.
`The Delivery Regulation Does Not Unlawfully Preempt Local
`Laws .......................................................................................................... 31
`Retail Delivery is Not an Area Traditionally Subject to Local
`Control ...................................................................................................... 32
`Plaintiffs Fail to Offer Any Valid Reason Why the Rule is
`Inconsistent with Relevant Statutes .......................................................... 35
`Conclusion .................................................................................................................................... 37
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`II.
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`III.
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`IV.
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`TABLE OF AUTHORITIES
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`Page
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`CASES
`
`American Financial Services Assn. v. City of Oakland
`(2005) 34 Cal.4th 1239,1267 ..............................................................................................34, 35
`
`Assn. of Cal. Insurance Companies v. Jones
`(2017) 2 Cal.5th 376 ......................................................................................................... passim
`
`Cal. Chamber of Commerce v. State Air Resources Bd.
`(2017) 10 Cal.App.5th 604 .................................................................................................17, 35
`
`Cal. Redevelopment Assn. v. Matosantos
`(2011) 53 Cal.4th 231 ...............................................................................................................23
`
`Cal. Water & Telephone Co. v. County of L.A.
`(1967) 253 Cal.App.2d 16 ...................................................................................................13, 23
`
`City of Oakland v. Brock
`(1937) 8 Cal.2d 639 ..................................................................................................................32
`
`City of Riverside v. Inland Empire Patients Health & Wellness Center, Inc.
`(2013) 26 Cal.4th 729 .........................................................................................................10, 33
`
`Conejo Wellness Center, Inc. v City of Agoura Hills
`(2013) 214 Cal.App.4th 1534 (Conejo) ..............................................................................10, 32
`
`Copley Press, Inc. v. Super. Ct.
`(2006) 39 Cal.4th 1272 .............................................................................................................22
`
`Credit Ins. General Agents Assn. v. Payne
`(1976) 16 Cal.3d 651 ................................................................................................................16
`
`Dyna-med v. Fair Employment and Housing Com.
`(1987) 43 Cal.3d. 1379 .............................................................................................................36
`
`Ford Dealers Assn. v. Dept. of Motor Vehicles
`(1982) 32 Cal.3d 347 ................................................................................................................19
`
`Great West Shows Inc. v. County of L.A.
`(2003) 27 Cal.4th 853 ...............................................................................................................34
`
`Horwich v. Superior Court
`(1999) 21 Cal.4th 272 ...............................................................................................................24
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`TABLE OF AUTHORITIES
`(continued)
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`Page
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`O’Connell v. Stockton (2007)
`41 Cal.4th 1061 .........................................................................................................................26
`
`Pacific Legal Foundation v. Cal. Coastal Comm.
`(1982) 33 Cal.3d 158 ..............................................................................................13, 14, 15, 16
`
`PacifiCare Life & Health Ins. v. Jones
`(2018) 27 Cal.App.5th 391 (PacifiCare) ......................................................................19, 20, 35
`
`People ex rel. Reuer v. Nestdrop, LLC
`(2016) 245 Cal.App.4th 664 .....................................................................................................32
`
`People v. Anderson
`(2002) 122 Cal.4th 767 .............................................................................................................36
`
`Ralph’s Grocery v. Reimel
`(1968) 69 Cal.2d 172 ................................................................................................................17
`
`Ramirez v. Yosemite Water Co.
`(1999) 20 Cal.4th 785 ...............................................................................................................18
`
`Sherwin Williams Co. v. City of Los Angeles
`(1993) 4 Cal.4th 893 .................................................................................................................32
`
`Stonehouse Homes LLC v. City of Sierra Madre
`(2008) 167 Cal.App.4th 531 .....................................................................................................14
`
`T-Mobile West LLC. v. City and County of S.F.
`(2019) 6 Cal. 5th 1107 ..............................................................................................................26
`
`T.H. v. San Diego Unified School Dist.
`(2004) 122 Cal.App.4th 1276 ...................................................................................................20
`
`Today’s Fresh Start, Inc. v. L.A. County Office of Education
`(2013) 57 Cal.4th 197 (Today’s Fresh Start) ............................................................................20
`
`Western States Petroleum v. State Bd. of Equalization
`(2013) 57 Cal.4th 401 ...............................................................................................................28
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`STATUTES
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`Administrative Procedure Act .........................................................................................................20
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`TABLE OF AUTHORITIES
`(continued)
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`Page
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`Business and Professions Code
`§ 19320 ......................................................................................................................................11
`§ 19340 .............................................................................................................................. passim
`§ 19340, subd. (a) ......................................................................................................................23
`§ 26000 ........................................................................................................................................8
`§ 26000, subd. (b) .....................................................................................................................22
`§ 26001, subd. (p) .....................................................................................................................23
`§ 26010 ..........................................................................................................................17, 18, 20
`§ 26013 ..................................................................................................................................8, 36
`§ 26013, subd. (a) ..........................................................................................................17, 18, 20
`§ 26014 ..................................................................................................................................8, 36
`§ 26014, subd. (a) ......................................................................................................................18
`§ 26014, subd. (b) ...............................................................................................................18, 19
`§ 26055 ......................................................................................................................................11
`§ 26055, subd. (e) ........................................................................................................................8
`§ 26080, subd. (b) .....................................................................................................................25
`§ 26090 .............................................................................................................................. passim
`§ 26090, subd. (e) .............................................................................................................. passim
`§ 26200 ....................................................................................................................12, 22, 23, 24
`§ 26200, subd. (a) ......................................................................................................................35
`§ 26200, subd. (a)(1) ...............................................................................................20, 21, 22, 24
`§ 26900 ......................................................................................................................................11
`§ 29200, subd. (e) ......................................................................................................................31
`
`Code of Civil Procedure
`§ 1060 ........................................................................................................................................13
`§ 1061 ........................................................................................................................................13
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`Compassionate Use Act ..................................................................................................................10
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`Evidence Code
`§ 350-352 ..................................................................................................................................15
`§ 1200 ........................................................................................................................................15
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`Government Code
`§ 11324.1 ...................................................................................................................................17
`§ 11342.2 .................................................................................................................17, 19, 20, 28
`§ 11350, subd. (a) ......................................................................................................................13
`§ 11350, subd. (d) ...............................................................................................................15, 16
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`TABLE OF AUTHORITIES
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`Health and Safety Code
`§ 11362.1 .............................................................................................................8, 12, 32, 35, 36
`§ 11362.1, subd. (a) .............................................................................................................11, 25
`§ 11362.1, subd. (b) ..................................................................................................................11
`§ 11362.2, subd. (b)(1) ..............................................................................................................31
`§ 11362.2, subd. (g) ..................................................................................................................25
`§ 11362.2, subd. (h) ..................................................................................................................25
`§ 11362.4 ...................................................................................................................................25
`§ 11362.5 ...................................................................................................................................10
`§ 11362.45 .................................................................................................................................25
`§ 11362.71. ................................................................................................................................10
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`Medical Marijuana Regulation and Safety Act ...............................................................................10
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`Medicinal and Adult-Use Cannabis Regulation and Safety Act ............................................. passim
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`Medicinal Cannabis Regulation and Safety Act ..................................................................... passim
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`Proposition 64 ......................................................................................................................... passim
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`Proposition 64
`§ 4 ..............................................................................................................................................12
`§ 6.1 ...........................................................................................................................................12
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`CONSTITUTIONAL PROVISIONS
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`California Constitution
`Article XI § 7 ............................................................................................................................32
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`OTHER AUTHORITIES
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`Assem. Bill No. 243 (2015-2016 Reg. Sess.) § 1 ...........................................................................10
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`Assem. Bill No. 266 (2015-2016 Reg. Sess.) § 1 ...........................................................................11
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`California Code of Regulations, Title 16
`§ 5416 ......................................................................................................................................8, 9
`§ 5416, subd. (d) .......................................................................................................................21
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`Sen. Bill No. 94 (2017-2018 Reg. Sess.) § 4 ..............................................................................8, 11
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`Sen. Bill No. 420 (2003-2004 Reg. Sess.) ..................................................................................8, 10
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`Sen. Bill No. 643 (2015-2016 Reg. Sess.) § 1 ................................................................................11
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`Senate Bill 837 (2015-2016 Reg. Sess.)..........................................................................................11
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`TABLE OF AUTHORITIES
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`Page
`Senate Bill 1302 ..............................................................................................................................36
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`INTRODUCTION
`The Control, Tax and Regulate Adult-Use of Marijuana Act (“Proposition 64”) mandated
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`the licensing agencies, including the Bureau of Cannabis Control1 (“Bureau”) to promulgate
`regulations effectuating the purpose and intent of the initiative measure. (Bus. & Prof. Code, §§
`26013 and 26014.)2 In 2017, Proposition 64 and the Medicinal Cannabis Regulation and Safety
`Act (“MCRSA”) were combined into the Medicinal and Adult-Use Cannabis Regulation and
`Safety Act (“MAUCRSA”), consolidating the state’s medicinal and adult-use cannabis regulatory
`systems. (Sen. Bill No. 94 (Reg. Sess. 2017-2018) § 4, Bus. & Prof. Code, § 26000 et seq.).3
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`From 2016 to 2018, the Bureau drafted and issued emergency regulations, received public
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`comments in writing and held public hearings for people to provide oral comments as part of the
`rulemaking process. The Bureau issued final regulations setting forth the requirements for the
`licensing and operations of commercial cannabis businesses engaged in retail sales, distribution,
`testing, microbusiness, and temporary events. (AR000001-000138.)4 The final regulations,
`adopted on January 16, 2019, included comprehensive regulations that contained rules for the
`licensing and implementation of commercial cannabis businesses, including the retail delivery of
`cannabis5 to consumers, the regulation at issue in this matter. (Cal. Code Regs., tit.16, § 5416; AR
`000065.) Through Proposition 64, the voters made it lawful throughout the state for adults to
`possess and purchase cannabis, while otherwise preserving a level of local control over
`commercial cannabis activities. (Plaintiffs’ RJN, Ex. 46 [Ballot Pamp., Primary Elec. (Nov. 8,
`2016) text of Prop. 64, pp. 180, 197]; Health & Saf. Code, § 11362.1 et seq.; Bus. & Prof. Code,
`§§ 26055, subd. (e), and 26200; Cal. Code Regs., tit. 16, § 5416; AR000065-66.) Based on this
`balancing of interests, the Bureau promulgated the following regulation for delivery of cannabis:
`
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` 3
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`1 Referred to as the “Bureau of Marijuana Control” in Proposition 64, and later renamed as a
`result of Senate Bill 94 in 2017.
` All references are to the Business and Professions Code, unless otherwise indicated.
` The consolidation included changing “marijuana” to “cannabis” in all statutes.
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`4 The Administrative Record is referenced as “AR” followed by the page number.
` The term “cannabis” is used to refer to cannabis flower and products containing cannabis.
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`§ 5416. Delivery to a Physical Address
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`(a) A retailer may only deliver cannabis goods to a physical address in California.
`(b) A retailer delivery employee shall not leave the State of California while
`possessing cannabis goods.
`(c) A retailer shall not deliver cannabis goods to an address located on publicly
`owned land or any address on land or in a building leased by a public agency. This
`prohibition applies to land held in trust by the United States for a tribe or an
`individual tribal member unless the delivery is authorized by and consistent with
`applicable tribal law.
`(d) A delivery employee may deliver to any jurisdiction within the State of California
`provided that such delivery is conducted in compliance with all delivery provisions of
`this division.
`(e) A delivery employee shall not deliver cannabis goods to a school providing
`instruction in kindergarten or any grades 1 through 12, day care center, or youth
`center.
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`(Cal. Code Regs., tit. 16, § 5416; AR 001299.)
`
`The Plaintiffs in this case are challenging only subdivision (d) of California Code of
`Regulations, title 16, section 5416 (Delivery Regulation), which allows cannabis to be delivered
`by a licensed retail commercial cannabis business “to any jurisdiction within the State of
`California provided that such delivery is conducted in compliance with all delivery provisions …”
`(Ibid.) This Court should:
`
`1) Decline to issue a declaration in this matter because no actual controversy exists
`between the parties; and
`
`2) Deny declaratory and injunctive relief in this “facial” challenge because the Bureau had
`authority to promulgate the Delivery Regulation, and the regulation is consistent with and
`necessary to effectuate the purpose of MAUCRSA.
`
`As detailed below, the Delivery Regulation is based on the plain language of MAUCRSA,
`which states that “[a] local jurisdiction shall not prevent delivery of cannabis or cannabis
`products” by licensees acting in compliance with state and local law. (Bus. & Prof. Code, §
`26090, subd. (e).) In the regulation, the Bureau merely recognized that the Legislature meant
`what it said, a conclusion that is supported by the overall structure and purpose of the statute as
`well as the repeal of a statute granting local jurisdictions the authority to prohibit deliveries of
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`medicinal cannabis. (see Former Bus. & Prof. Code, § 19340.) Indeed, Plaintiffs are able to
`challenge the Delivery Regulation only by ignoring the structure, purpose, and history of
`MAUCRSA and urging this Court to reach the bizarre conclusion that a statute stating that local
`jurisdictions “shall not prevent delivery of cannabis or cannabis products” actually gives local
`jurisdictions unfettered power to ban such deliveries.
`
`LEGISLATIVE HISTORY
`Cannabis was first legalized in California in 1996 and focused on medicinal patient access
`through Proposition 215, also known as the Compassionate Use Act (CUA). For twenty years,
`medicinal cannabis cultivators and medicinal retailers were subject almost exclusively to the
`oversight and control of local jurisdictions. CUA created a limited statute with a narrow scope
`by giving “only qualified patients and their primary caregivers a defense to the state crimes of
`marijuana possession and cultivation when that possession or cultivation is for medical
`purposes.” (Conejo Wellness Center, Inc. v City of Agoura Hills (2013) 214 Cal.App.4th 1534,
`1554 (Conejo); Health & Saf. Code, § 11362.5.) The CUA also had a limited reach into local
`governmental affairs as it “never expressed or implied any actual limitation on local land use or
`police power regulation of facilities used for the cultivation and distribution of marijuana.” (City
`of Riverside v. Inland Empire Patients Health & Wellness Center, Inc. (2013) 26 Cal.4th 729,
`759-760.)
`Control over cannabis regulation began shifting to the state level in 2004 when Senate Bill
`420, the Medical Marijuana Program Act (“MMPA”), was passed. (Sen. Bill No. 420 (2003-
`2004 Reg. Sess.).) The central purpose of the bill was to resolve “uncertainties” created by
`disparate regulation and enforcement in various jurisdictions and to “promote uniform and
`consistent application of the act among the counties within the state.” (Id. at § 1). As a result,
`the MMPA developed a state-directed program for the issuance of identification cards to
`qualifying medicinal cannabis patients. (Health & Saf. Code, § 11362.71 et seq.)
`In 2015, control shifted even further to the state level when the Legislature passed the
`Medical Marijuana Regulation and Safety Act (“MMRSA”), implementing a statewide
`regulatory program for commercial medicinal marijuana activities. (Assem. Bill No. 243 (2015-
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`2016 Reg. Sess.) § 1; Assem. Bill No. 266 (2015-2016 Reg. Sess.) § 1; Sen. Bill No. 643 (2015-
`2016 Reg. Sess.) § 1.) MMRSA specifically provided that “[N]o person shall engage in
`commercial cannabis activity without possessing both a state license and a local permit license
`or other authorization.” (Former Bus. & Prof. Code, § 19320, added by Stats, 2015, ch. 689, and
`repealed by Stats. 2017, ch. 27, § 2; emphasis added.) While MCRSA, which MMRSA became
`known as,6 stated that it did not disturb the authority of local governments to exercise their
`police powers regarding cannabis, it had the effect of conditioning all local regulations on
`compliance with the new statewide regulatory scheme and restricted the activities that local
`jurisdictions could allow.
`
`In 2016, state authority again expanded and local control correspondingly contracted when
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`the people of California voted to legalize and regulate the adult-use of cannabis as part of
`Proposition 64, a statewide initiative. These sweeping changes to California law were intended to
`“establish a comprehensive system to legalize, control and regulate the cultivation, processing,
`manufacture, distribution, testing, and sale of non-medical marijuana.” (Plaintiffs’ RJN, Ex. 46
`[Ballot Pamp., Primary Elec. (Nov. 8, 2016) text of Prop. 64, p. 179].) Proposition 64 guaranteed
`the right of Californians to possess, purchase, and obtain certain amounts of cannabis or cannabis
`products (Health & Saf. Code §11362.1, subd. (a)), but also reserved to local governments the
`ability to regulate, but not ban, adult-use cannabis activities (Health & Saf. Code §11362.1, subd.
`(b)), and to regulate, and even ban the commercial adult-use cannabis businesses within their
`jurisdictions (Bus. & Prof. Code, §§ 26055 and 26900).
`The MCRSA and Proposition 64 were two separate regulatory programs for cannabis.
`MCRSA and Proposition 64 were consolidated into the MAUCRSA, creating a comprehensive
`and uniform state system of medicinal and adult-use cannabis regulations. (Sen. Bill No. 94
`(2017-2018 Reg. Sess.) § 4.) Both the MCRSA and Proposition 64 had included provisions for
`the delivery of cannabis. However, the delivery provisions in the MCRSA and in Proposition 64
`
`
`6 The MMRSA became the Medicinal Cannabis Regulation and Safety Act (“MCRSA”) pursuant
`to Senate Bill 837 (2015-2016 Reg. Sess.).
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`were different: MCRSA’s delivery provision allowed local jurisdictions to ban retail deliveries7
`while Proposition 64 prohibited local jurisdictions from preventing deliveries and outlawing the
`purchase of cannabis.8
`In consolidating MCRSA and Proposition 64 into a single comprehensive scheme, the
`Legislature repealed the section of MCRSA allowing local jurisdictions to ban delivery. Instead,
`it chose to adopt the guaranteed right to access and the express prohibition against local
`interference with retail deliveries found in Proposition 64. Accordingly, MAUCRSA provides
`that “[a] local jurisdiction shall not prevent delivery of cannabis or cannabis products on public
`roads by a licensee acting in compliance with this division and local law as adopted under
`Section 26200.” (Bus. & Prof. Code, § 26090, subd. (e).)
`
`ARGUMENT
`This matter is not ripe for judicial review as the Plaintiffs have failed to allege any facts
`
`demonstrating that there is a current controversy that would be resolved, or any harm that would
`be avoided, by the relief requested. If this matter were ripe for review, the Plaintiffs would have
`to overcome the presumption of the challenged regulation’s validity by demonstrating that there
`are no circumstances in which the regulation could be valid. Plaintiffs’ effort to overcome that
`burden consists entirely of an interpretation of the authorizing statute that attempts to interpret the
`statute to do exactly the opposite of what it says. This interpretation should be rejected, and the
`Court should find the Delivery Regulation consistent with the authorizing statutes and necessary
`to effectuate the purpose and intent of the regulatory scheme.
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`I.
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`THE CASE IS NOT RIPE FOR JUDICIAL REVIEW BECAUSE NO ACTUAL
`CONTROVERSY EXISTS
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`Plaintiffs’ complaint is founded on the supposition that, in a hypothetical conflict between
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`one or all of their local policies and the Delivery Regulation, their local regulations would be
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`7 Former Bus. & Prof. Code, § 19340, added by Stats, 2015, ch. 689, and repealed by Stats. 2017,
`ch. 27, § 2.
` Bus. & Prof. Code, §§ 26090 added by Initiative Measure (Proposition 64 § 6.1 approved Nov.
`8, 2016, eff. Nov. 9, 2016 and Health & Saf. Code 11362.1 added by Initiative Measure
`(Proposition 64 § 4 approved Nov. 8, 2016, eff. Nov. 9, 2016.
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`Defendants’ Trial Brief (19CECG01224)
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`uniformly preempted. But there is currently no dispute over the relationship between any of the
`Plaintiffs’ specific ordinances and the Delivery Regulation. As such, the Court should decline to
`issue a declaration in this matter because no actual controversy exists between the parties.
`
`The challenger of the validity of a regulation may bring a declaratory relief action against
`the state agency that adopted the regulation in accordance with the Code of Civil Procedure
`section 1060. (Gov. Code, § 11350, subd. (a).) However