My Magazine: Court Ruling Could Doom L.A. Cannabis Deliveries

Monday, 14 March 2016

Court Ruling Could Doom L.A. Cannabis Deliveries

A California appeals court ruling could mean the end for Los Angles cannabis deliveries — legal ones, at least.

A three-judge appellate panel on Monday upheld a lower court’s decision to temporarily shut down Nestdrop, an app that allowed people in Los Angeles to have flower, edibles, and concentrates delivered to their doorsteps.

The opinion is likely to deal a blow not only to Nestdrop, but also to the numerous other delivery services operating within Los Angeles city limits. Justices wrote that under their interpretation, city zoning law Proposition D bars all delivery services from operating in L.A.

“Proposition D is properly understood to prohibit virtually all vehicular delivery of medical marijuana,” Justice Lamar W. Baker wrote for the panel. The conclusion is now binding precedent in Los Angeles, Ventura, Santa Barbara, and San Luis Obispo counties.

If you haven’t been following the L.A. dispensary saga, here it is in a nutshell: In 2013, the city adopted Prop. D, a local zoning law aimed at reducing the number of dispensaries from more than 700 to just 135. Hundreds of shops closed their doors in response, but they didn’t always stay closed. Some quietly opened elsewhere, while others reinvented themselves as delivery services.

For a while the shift to delivery seemed to work. Los Angeles City Attorney Mike Feuer concentrated enforcement actions on illegal storefront dispensaries, and delivery services flourished.

But a year after Prop. D, things changed. The city attorney’s office sued Nestdrop in 2014 and won a court injunction preventing the business from operating in the city. “This app is a flagrant attempt to circumvent the will of the voters who passed Prop D,” Feuer said at the time. Nestdrop appealed. Monday’s ruling upholds the injunction and sends the case back to the trial court.

“The case on the merits,” said attorney Michael Grahn, who began representing Nestdrop after the initial injunction, “is still validly before the trial court.” In the meantime, he said, the company is complying with the injunction.

While Nestdrop can still look forward to its day in court, however, Monday’s appellate ruling limits the business’s ability to defend itself. Delivery services had previously argued that Prop. D didn’t apply to them because the ordinance was a zoning rule that only affected storefront dispensaries. Monday’s opinion, however, expressly says otherwise: “We do not think the ballot pamphlet materials mean what defendants think they mean,” wrote the court, paraphrasing The Princess Bride’s Inigo Montoya.

“Is there precedential value here that’s of concern for anybody? Yeah,” Grahn acknowledged.

The city has at least one other pending suit against a major delivery service. Feuer’s office last month sued Speed Weed, which boasts 25,000 customers across Los Angeles and Orange counties. The company has since ceased operations, according to a prerecorded message at the company’s phone number.

“We’ve made the tough decision to suspend our operations within L.A. city limits until we’ve had our day in court,” Jennifer Gentile, a co-owner and the company’s chief marketing officer, says in the message. “We need to focus our time, our energy, and our resources on protecting not only our right to deliver but the right for all delivery services to continue to operate. Delivery outside the city limits will resume shortly.”

If the city wins out, Gentile warns, “You’ll be forced to use an illegal, black-market dealer” or travel to a storefront dispensary licensed under Prop. D.

Grahn, who also represents Speed Weed in its suit, said he was disappointed the court sided with the city’s interpretation of the zoning ordinance. But he suggested that recent changes to state law could offer a path forward.

“The universe has changed,” he said, referring to a package of state laws known as the Medical Marijuana Regulation and Safety Act, or MMRSA, which takes effect in 2018. The new laws could provide grounds to challenge Prop. D.

The Los Angeles city attorney's office didn't respond to a request for comment.

Regardless of the legal reasoning behind Monday’s ruling, Grahn said, shutting down delivery services is bad public policy. Under Prop. D, only 135 dispensaries are allowed in the city. “The idea that that’s going to satisfy the demand for medical marijuana in Los Angeles city is,” he said, “easily refuted.”

And although his own clients have put deliveries on pause, Grahn doubted the city’s ability to enforce its courtroom win against cannabis deliveries citywide. Hundreds of unlicensed dispensaries, he noted, are still operating in Los Angeles despite the city's best efforts to close them.

“The idea of banning this at the same time that they can’t even control the number of storefronts, it’s nonsense,” he said.