The Fine Line Between Tolerating and Authorizing Medical Marijuana Dispensaries

This week a California appeals court ruled that Long Beach's medical marijuana ordinance is largely pre-empted by federal law because it "goes beyond decriminalization into authorization." Like other California courts that have addressed the issue, the 2nd District Court of Appeal said creating a medical exception to state drug laws does not in itself obstruct enforcement of the federal Controlled Substances Act (CSA), which recognizes no legitimate use for marijuana. But it said Long Beach did not merely lay out the conditions that medical marijuana suppliers must meet to be exempt from criminal penalties; it established a licensing system that affirmatively permits certain dispensaries to operate. The court distinguished the city's permits, which are distributed by lottery to a subset of applicants (each of whom has to pay a $14,742 fee), from the government-issued ID cards that patients can use to avoid arrest for possession or cultivation. While the dispensary permits are necessary to operate legally in Long Beach, the court noted, the patient ID cards are optional; they merely identify people who have obtained doctor's recommendations and are therefore exempt from the state's marijuana ban. Because the city's ordinance "permits and regulates medical marijuana collectives rather than merely decriminalizing specific acts," the court said, it creates an "obstacle" to achieving the CSA's aims. And although the ordinance for the most part does not create a "positive conflict" with federal law (since it does not require anyone to open a dispensary), the court concluded that one provision does directly conflict with federal law: The ordinance requires dispensary operators, who are already violating the CSA by selling marijuana, to violate the law further by delivering marijuana to labs for independent testing, which qualifies as "distribution" under federal law.

The appeals court's reasoning casts doubt on the validity of dispensary licensing schemes in Los Angeles and other California cities as well as in states such as Colorado, New Jersey, and Arizona, where Gov. Jan Brewer has asked a federal judge to address the pre-emption issue. It is debatable whether obstacle pre-emption is the appropriate standard in this context. In the Arizona case, the American Civil Liberties Union argues that "preemption under the CSA is limited to the narrow set of circumstances in which there is a 'positive conflict' between state and federal law," meaning it is impossible to obey one without violating the other. No one is required to run a medical marijuana dispensary, the ACLU notes, and a state does not create a positive conflict simply by declining to punish people who do. But even if the California court is right, there are ways around the problem: By the court's logic, dispensary permits would be OK if they worked like patient ID cards, merely certifying that people carrying them have met the criteria for exemption from state and local penalties. The court also allows that a city may impose all manner of restrictions on dispensaries; it left in place Long Beach's rules regarding location, hours of operation, and customer age, for instance. As long as a city does not charge a fee for a mandatory permit or require independent testing of marijuana, its ordinance should pass muster under the standard applied in this case.

Still, the decision creates further legal uncertainty for dispensaries that already have to worry about federal prosecution, ruinous IRS audits, and threats to their landlords and banks. Ironically, it came in response to a challenge by dispensary operators who were shut down for violating Long Beach's ordinance. "This clearly falls into the category for the medical marijuana advocates of 'be careful what you ask for,'" City Attorney Robert E. Shannon told the Los Angeles Times. "The most logical thing to do is to ban that which we cannot regulate and permit."

The appeals court's decision is here (PDF).