SCOCA Holds City’s Environmental Impact Analysis of Cannabis Dispensary Laws Are Deficient

Updated: Nov 18, 2019

The California Environmental Quality Act, or CEQA, now appears to be the latest among several obstacles to California’s cannabis industry, and, specifically, to those attempting to establish a new business in the space. CEQA governs discretionary “projects” subject to public agency approval that may cause a direct or indirect physical change to the environment. “Project” is broadly defined. When changes to a zoning ordinance might result in significant environmental impacts, the ordinance is subject to CEQA review. The CEQA review process is often long, expensive, and cumbersome.


The California Supreme Court recently decided Union of Medical Marijuana Patients, Inc. v. City of San Diego (2019) 7 Cal.5th 1171 (“UMMP”). The Court held that a San Diego medical marijuana ordinance limiting the number of dispensaries and areas in which they could be established constituted a “project” under CEQA. The Court also held that the possibility of new construction and changed vehicle traffic patterns was enough to constitute a reasonably foreseeable indirect physical change to the environment.


This ruling has significant implications for localities still looking to implement rules that will integrate cannabis businesses into their communities. An overwhelming majority of localities in California have yet to implement local zoning ordinances facilitating business within the cannabis industry, and these localities are now at a disadvantage to those which have already done so. The CEQA statute of limitations is, generally, 180-days, meaning localities that have had ordinance approval for over six-months are immune to CEQA challenge.


The UMMP holding is probably bad for the cannabis industry. It is well-known that CEQA is wielded as a weapon by interest groups to stop projects from using non-union labor, to extract settlements, and to promote NIMBY-ism. The holding of UMMP affirms the ability of opposition and interest groups to do the same in the cannabis industry.


In sum, it is clear that municipalities and counties seeking to get into the cannabis business must now pay careful attention to CEQA when drafting their ordinances. With many tools available to project opponents who wish to delay implementation, the specter of long lead times from local voter approval to actual implementation is real.


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